ICA India report: Copper demand rises by 16% in 2023; likely to remain strong

The demand for copper surpassed the previous year to grow by 16% for the financial year 2023, according to the International Copper Association India. The demand is expected to sustain in view of the rising urbanisation.

Mayur Karmarkar, Managing Director at ICA India attributed the strong growth to several factors. A strong foundation of policy reforms increased public and private investments, and rising consumer spending in various end-use sectors played a crucial role, he told CNBC-TV18.  These sectors include building construction, renewable energy, electric mobility, industrial applications, railways and metros, power transmission and distribution, and white goods.

The total demand for copper reached 1,522 kilotons in 2023 from the 1,311 kilotons recorded in 2022. These findings are part of the Copper Demand Study in India (FY23), officially released by ICA India.

This is the second consecutive year in which copper demand in India has registered double-digit growth, following a contraction in the fiscal year 2021, primarily due to the disruptive effects of the COVID-19 pandemic.

The transportation sector, including automotive, railways and metros, is one of the primary drivers of this growth, which has witnessed a 34% increase in copper demand.  This was largely due to the electrification and modernisation of railways,

An 11% growth in copper demand in the construction sector can be attributed to the increased use of copper per square foot, especially in premium, high and middle-income houses.

However, Karmarkar raised a critical concern regarding India's heavy dependence on scrap copper. He emphasised the importance of having a sufficient refining capacity for scrap, as the country currently faces a shortage of refined copper for electrical applications. In the fiscal year, approximately 34% of copper demand was met through scrap, highlighting the significance of scrap in achieving circularity and sustainability. Still, the lack of refining capacity for scrap remains a challenge for the Indian market.

Karmarkar also pointed out that imports of copper have grown by more than 100%. This surge in imports is primarily due to the gap between the demand for refined copper and the country's refining capacity. Japan has become a significant trade partner, supplying a substantial portion of the imported copper.

The government has officially classified the metal as a critical mineral as it is essential for advancement in many sectors including hi-tech electronics, telecommunication, transportation, defense, and clean energy transition.