Domestic copper prices, which had increased sharply over the past year, may drop gradually to average Rs 720-725 per kg in 2022-23, Crisil said on Thursday.
The price of copper wire bars averaged Rs 738 per kg (ex-factory) in FY22, a 42 per cent rise year-on-year, with rates breaching Rs 800 per kg in March before retreating to Rs 790 per kg.
“Domestic copper prices, too, had risen sharply over the past year, in sync with 3-month LME prices, as is the normative…For the rest of this fiscal, however, we see domestic prices declining gradually, to average Rs. 720-725 per kg,” Crisil Research said in a statement.
Lockdown in China, the world’s top consumer of copper, in the wake of rise in COVID-19 cases, has weakened the demand for the metal, leading to prices zooming after a strong run-up over the past two years.
The rally was driven by demand for clean-energy investments and concerns about supply from top producers in Chile and Peru.
The Russia-Ukraine war stoked the supply worries and drove prices up to a record USD 10,720 per tonne on March 7. This was despite China ramping up production of refined copper after the Winter Olympics ended on February 20.
Then COVID-19 cases reappeared in China, stoking both demand and supply fears. The production of refined copper, which was being enhanced in the mainland, thus became available for exports. As a result, LME (London Metal Exchange) inventory doubled in April compared to February.
Copper prices have since crashed to USD 9,200 per tonne in May, a 14 per cent drop from the March peak. They are likely to remain under pressure in the near term on account of factors like softer Chinese demand and improvement in mine supplies.
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