India bucks global trend with robust copper demand
NEW DELHI/HANOI: India is set to be one of the world’s fastest growing copper markets in 2022, bucking the trend of softening demand expansion elsewhere, including top consumer China, amid a slowing global economy.
Despite the global downturn, India’s economy is humming across manufacturing to infrastructure and property sectors, as pent-up demand post the pandemic, rising income and a series of government policies have boosted consumption.
Refined copper consumption in India during January-August this year jumped 45% from 2021 to 435,466 tonnes, outpacing 4% growth globally and a 5% uptick in China in the same period, World Bureau of Metal Statistics data showed.
“Copper demand is back to pre-pandemic levels,” Satish Pai, managing director at metal maker Hindalco Industries told Reuters.
“We see a robust domestic growth trajectory driven by revival in housing demand, automation and shift towards e-mobility (including railway electrification and metros) and a strong pipeline of renewable energy and infrastructure projects.”
While its copper usage is dwarfed by China’s, which made up for 55% of the world’s demand for the red metal last year, India’s surge may result in consumption reaching a record this year.
Copper’s main consumers include the property sector, home appliance makers and green energy transition industries such as electric vehicles, solar and wind power plants.
“We are not seeing any sort of noticeable slowdown,” Pai told a post-results press conference on November 11.
Hindalco reported record high copper metal and copper rod sales during the first half of financial year 2022/2023, or April-September.
Strong copper demand in India was underpinned by growing domestic end-use market amid urbanisation and industrialisation and government’s stimulus measures, said Wood Mackenzie analyst Bhavya Laul.
“(The government’s) production-linked incentive scheme for white goods which also incentivises air conditioner copper tube production is attracting investments,” she said.
Growing capacity and utilisation rates at wire rod plants, including Hindalco’s Ryker plant and a new factory developed by Kutch Copper, a subsidiary of Adani Enterprises Ltd, will also boost consumption, Laul added.
Wood Mackenzie forecast India’s refined copper consumption in 2022 to expand by over 15% from a year earlier to around 620,000 tonnes, and the annual growth rate is seen averaging at more than 12% during 2022-2027.
That is compared to a projected 0.7% increase in global refined copper consumption this year, and an average annual global growth of 2.5% during 2022-2027, Wood Mackenzie analyst said.
India’s economy grew 13.5% in the second quarter, its fastest pace in a year, driven by expansion in the manufacturing and services sectors.
The country’s factory activity, which has been consistently expanding since July last year, picked up speed in October, with firms hiring workers at the fastest pace in nearly three years.
Growth in consumer spending rose nearly 26% year-onyear in the April-June quarter, more than double from 12.3% in January-March, government data showed.
“We are seeing a post-pandemic boom across most of the consumer driven sectors,” said Snehdeep Bohra, a director at Fitch Ratings in India.