Copper price may drop to Rs 720 per kg in FY23: Crisil
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.
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 percent 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 rising 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 percent 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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