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| Copper consumption likely to rise by 5-6% |
| Dilip Kumar Jha / Mumbai Dec 16, 2009, 00:11 IST |
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Spurred by huge demand from power, telecommunication and housing sectors, India’s copper consumption is likely to rise 5-6 per cent this year. The three sectors account for 65 per cent of the total demand in India.
At this growth rate, India’s total copper consumption will hit 550,000 tonnes next year, as the red metal, despite cheap alternatives, remains the preferred choice for electricity, industrial machinery and equipment, consumer electronics and construction industries. The metal also finds applications in hospitals due to its anti-bacterial properties.
According to the latest report by ICRA Management Consulting Services, the country’s copper consumption grew 5.3 per cent last year to 520,000 tonnes, despite higher prices and slowdown in industrial production.
Copper consumption in the country remained at 100,000-150,000 tonnes during the 1990s. The slow growth in consumption was primarily because of limited domestic capacity and supply, high import duties on both concentrates and finished products, low investments in the country’s telecom and power infrastructure, and high prices.
However, over 2004-08, consumption rose by a compounded annual growth rate (CAGR) of 10 per cent.
Still, India’s per capita consumption is only 0.4 kg, against four kg in China.
Till the late-1990s, the telecom sector was the major customer segment (accounting for 30-35 per cent of demand). Because of the rapid expansion of the telecom network during the late-1990s, copper usage in the sector increased from 20,000 tonnes annually in the early 1990s to 105,000-110,000 tonnes in the late1990s. However, since then, demand has declined to 65,000 tonnes at present.
The growth of the copper industry is highly dependent on the performance of and demand for products like power and telecommunication cables, transformers, generators, radiators and other ancillary components. Hence, its growth is closely linked to the country’s economic and industrial growth. Since the country’s GDP growth is forecast at over 7 per cent for the full year, consumption may maintain the conservatively estimated growth of over 6 per cent, an analyst said. Generally, copper consumption tracks the country’s GDP growth.
With the slump in demand from telecom, the electrical sector has become the largest consumer of the red metal. Government initiatives in recent years (restructuring of electricity boards, the Electricity Act of 2003, and thrust on transmission & distribution) have created an environment for rising investments in the power sector.
Power generation capacity additions during the 2007-12 Plan period are expected to be 78,700 Mw. Based on the expected capacity expansions during the Plan and associated investments in transmission and distribution, the Working Group on Power for the Eleventh Plan had estimated the copper requirement of around 800,000 tonnes during 2007-12, and 810,000 tonnes during 2012-17.
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