Copper, the major raw material of the industry hit the recent high of USD 5,900 per tonne on the LME.
December 8, 2016
manufacturers and hence, its price movement directly affects their margins.
Wire and cable manufacturers have raised their products’ prices by over 10 percent in the last two weeks as the demand lowered by over 25 to 30 percent. Passing on the surge in raw material, copper has seen a sharp increase in its price over last five weeks. After hitting the recent low of USD 4,619 a tonne on the benchmark London Metal Exchange (LME), copper price jumped to hit the recent high of USD 5,900 a tonne. Copper comprises 60 percent of the raw material requirement for wire and cable manufacturers and hence, its price movement directly affects their margins. To retain their production margins, therefore, cable manufacturers revised products’ prices frequently.
Indian primary and secondary copper manufacturers including Hindustan Copper, Sterlite Industries and Hindalco Industries, normally follow LME price for selling their output to users. Hence, the price of raw material i.e. copper is revised at the time of purchase by consumers. In fact, sharp variations in copper prices have forced user industries to revise their products’ prices frequently without any lag for absorbing even the minor variations. In fact, many wire and cable manufacturers have decided to revise their products prices on daily basis with the revision in the raw material prices.
The data compiled by the global agency International Copper Study Group (ICSG) indicate that the copper market should remain essentially balanced. While in 2017, ICSG forecasts a surplus of around 160,000 tonne as against a deficit of 55,000 tonne for 2016. Upward revisions have been made for both production and usage in view of better than expected actual growth so far this year. Meanwhile, demonetization of Rs. 500 and Rs. 1,000 currency notes as announced on November 8 has affected demand for wires and cables.
