Copper consumption growth rate likely to decline to 9% on slowdown

The economic slowdown, coupled with a low manufacturing and housing sector growth, is likely to reduce the copper consumption growth rate to 8-9 per cent this financial year as against 15 per cent in the last three years.

According to Ajit Advani, CEO of International Copper Promotion Council (India), commercial buildings, new power projects and other large housing projects may be delayed due to the economic slowdown, which will have repercussions on copper demand too.

Consumers may be temporarily inclined towards much cheaper substitutes such as aluminium and plastics, though health-conscious consumers will stick to copper despite the higher prices, he said.

For the last three years, demand for copper, especially from the electrical and housing sector, was robust on the government’s proposed power sector reforms. But, progress on the Rajiv Gandhi Grameen Vidyutikaran project has been halted as the government is reworking it.

Therefore, demand for the red metal from the electrical sector is set to weaken to 9 per cent from over 19 per cent in the last 3-4 years, said Sunil More, director general of Indian Electrical and Electronics Manufacturers Association (IEEMA).

India consumes about 700,000 tonnes of copper annually while the production is about one million tonnes of primary and secondary copper.

A wide gamut of industries including electrical (36 per cent), telecom (20 per cent), transport (8 per cent), building and construction (9 per cent), consumer durables (6 per cent), engineering (9 per cent) and others (12 per cent) consume the red metal.

The potential for copper demand is projected to be high in India as the per capita consumption in the country is a meagre 0.4 kg. This is extremely low compared to the Chinese and developed countries’ average of 2.6 kg and 15 kg respectively. The world average of copper consumption is also about 10 times more than that of India.
 

REVERSE GEAR Estimates of copper consumption in '000 tonnes
Electrical products	2007-08	2008-09	2009-10	2010-11	2011-12
Transformers	105	117	130	144	160
Power & control cables	25	28	30	34	38
House wiring	80	87	95	104	113
Motor and fans	35	38	45	45	50
Other electrical products	45	49	53	58	64
Rewinding	90	98	107	117	127
Total	550	600	650	700	750
Source: Presentation by Sunil More, DG, IEEMA  at the India Copper Forum 2008, Mumbai

Aluminium substitutes copper in power cables, electrical equipment, automobile radiators, and cooling/refrigeration tube; titanium and steel are used in heat exchangers; optical fibre substitutes for copper in some telecom applications; plastics substitute the metal in water pipe, drain pipe, and plumbing fixtures; and composite materials are a substitute in jet aircrafts.

Aluminium, being cheaper and lighter than copper, is also being increasingly used in manufacturing absorbers for solar collectors. However, in the case of the rotor ‘squirrel cage’ structure in electric motor drive systems, copper rotor motors and magnetic steel motors are replacing aluminium.

The electrical conductivity of these materials is about 60 per cent higher than aluminium, creating a more energy-efficient induction motor.

The copper industry is highly dependent on the performance of and demand for products such as 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.