Indian Domestic Copper Imports Set to Jump Due to Vedanta Smelter Closure

Indian Copper imports are on a rise, a direct linkage from the closed Vedanta Smelter. Copper imports by India are about to rise fourfold as the shuttering of a huge smelter in the south of the country slashes local supply at a time when demand is starting to accelerate. Asias third-biggest economy is facing shortages after a state government ordered a 400,000-ton smelter owned by billionaire Anil Agarwals Vedanta Ltd. to be closed permanently in the wake of deadly protests over alleged pollution. Even if top producer Hindalco Industries Ltd. boosts its run rate, it wont help much because a third of its output is committed for export.

Consumption in India is set to expand more than 15 percent to 535,000 tons through March, Jagasheth said. Demand will continue rising, reaching almost 2 million tons a year in the next decade, driven by infrastructure, power and railways, Hindalco estimated last year. Overseas purchases of refined metal are set to climb to 170,000 metric tons in the year through March from about 40,000 tons in the prior 12 months.

Meanwhile, Bank of Montreal (BMO) has raised their long-term equilibrium price forecast for copper to $ 3.25/lb, in line with current prices, citing higher demand growth for copper from the emerging prominence of renewable energy.

n++Changing long-run commodity prices should be a rare event, and should only take place where there is a marked shift in the future outlook. In our view, that event is the step-change we expect in demand expectations driven by renewables and electric vehicles,n++ the bank said in a recent research report. According to BMOs research, major copper demand will stem from solar and wind power installations, both of which are copper intensive. The automotive sector would also be important for growth as more electric vehicles hit the roads.

n++Our research shows that renewable energy is the largest single driver of copper demand growth over the coming years, owing to the need to connect significant numbers of small-scale electricity generation units into the grid,n++ the report said. The report added that while the electrification of vehicles is an important factor in coppers long-term growth story, the more significant driver remains renewable energy. The number of solar and wind facilities globally is expected to grow 10-14% through 2025.