Copper :Cowed down
Budget provisions
|
Particulars |
Excise Duty (%) |
Customs Duty (%) |
| Existing |
Proposed |
Existing |
Proposed |
| Copper |
16% |
16% |
35% |
25% |
| Copper Scrap |
16% |
16% |
35% |
25% |
Current Status of the Industry
The domestic copper industry is buoyed by the growth in demand for copper, especially from telecom cable industry. The production of copper in FY 2001-02 is expected to be 320000 tonne as against an expected demand of around Rs 325000 tonne, thereby supply almost matching demand.
The international copper prices crashed by 20.12% from US$1787.05 per tonne in Jan’01 to US% 1427.02 per tonne in Nov’01 and subsequently recovered to US$1503.6 in Jan’02. The sharp depreciation of the rupee and the cushion of import duty protected the domestic copper prices from free fall.
Industry impact
Primary copper producers will be adversely affected on account of reduction in the import duty on copper. The margins of Indo Gulf Corporation, Sterlite Industries and Hindustan Copper are likely to be affected as a result.
Whether the reduction in the domestic prices, consequent to reduction of import duty, will lead to proportionately higher demand for copper is to be seen. If this happens, the negative impact will come down relatively, due to better capacity utilisation and marginal firming up of prices.
Company impact
Indo Gulf Corporation will be adversely affected on account of negative sentiments in both its fertilizer and copper segments. Sterlite Industries and Hindustan Copper are also likely to be affected by reduction in customs duty on copper.
Companies to Watch
Indo gulf corporation for negative impact. Also, Sterlite Industries and Hindustan Copper for negative impact.
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