India may turn into net importer of copper by FY20: Report

India may turn into a net importer of copper by fiscal 2019-20 if healthy demand continues and no new plant is commissioned in this period, a report said.

If domestic demand for copper grows at the current rate of 7-8 per cent, the market is likely to turn into a deficit in the next couple of years.

Rating agency Icra in a report today said the scope of increasing copper production in the country is limited as the refiners are already running their plants at high capacity utilisation levels.

"Hence, with demand increasing at a healthy rate, India may turn into a net importer of copper by FY20 if no new plant is commissioned in this period," it added.

Meanwhile, regarding the domestic demand-supply scene, consumption of the three key non-ferrous metals - aluminium, copper and zinc - have registered a 7-10 per cent growths in the 9-months of FY18. However, domestic non-ferrous metal production remained in excess of consumption despite the healthy growth rates.

Icra said the excess supply situation in aluminium and zinc is likely to persist going forward as well, as domestic capacity is high and manufacturers are expected to operate the plants at a high asset utilisation level, which would lead to large export volumes.

"A high proportion of export sales, however, would have an impact on margins, as typically export realisations are lower compared to domestic prices because of duty protections available on domestic sales," the report said.

The rating agency indicated that the global non ferrous metal prices are likely to remain range bound in the coming quarter as a result of improvements in non-ferrous metal supply globally.

Supply bottlenecks in 2017 had resulted in a sharp increase in international non-ferrous metal prices, which strengthened by 24-35 per cent during the year.

As for global output of non-ferrous metals, while aluminium production witnessed a de-growth as a result of the regulatory steps taken in China to control production from "illegal" and polluting sources, copper and zinc outputs suffered from issues in mine production and degradation in quality of ore.

Jayanta Roy, senior vice-president, Icra said the end of the restrictions on production in China during the winter months, would temporarily improve supply of aluminium in the global market.

"On the other hand, higher production from copper and zinc mines would result in balanced copper and zinc markets globally in the coming months," he added.

The improvement in aluminium supply is, however, likely to be temporary, according to Icra, as the restriction of aluminium production in China is likely to be implemented during the next winter months as well.

The agency expects the overall production from the existing aluminium capacities in China in CY2018 to remain largely at a level as in CY2017, even as consumption in the country is likely to expand by 8-9 per cent on the back of healthy demand from the automobile and construction sectors.

It said around 3.5 million tonnes of new aluminium smelters are expected to get commissioned mostly in China in this calendar year.