White goods likely to cost more now
With the copper prices going across the roof, home appliances may see a price hike in near future.
Mumbai: With the copper prices going across the roof, home appliances may see a price hike in near future. Copper prices at MCX were hovering at Rs 638.50 a kg on Wednesday last from Rs 420 a year ago, thus showing an increase by 50 per cent.
A deficit in the copper market is set to deepen over the next several years as supply of the widely used metal struggles to keep up with strong demand from the power and construction sectors, compounded by the proliferation of electric vehicles. Besides, copper is mostly used in home appliances like TV, fridge, fans and refrigerators.
Kamal Nandi, Executive Vice President, Godrej Home Appliance, said that the industry uses copper for manufacture of AC and refrigerators and hence spike in copper prices will definitely have its impact on these items. "Currently, we are busy working out the modalities," he added. Interestingly, Union Finance Minister Nirmala Sitharaman, while presenting the Budget on February 1 in the Parliament, had announced the deduction of import duty on copper by half to 2.5 per cent from five per cent earlier.
"Copper demand is likely to witness healthy growth on the back of strong demand from user segments. This, coupled with lower supplies globally, has already pushed copper prices sharply, which are expected to remain firm in the medium-term during 2021,"said Avinash Gorakshakar, Head (research), Profit Mart Securities. Refined output is expected to increase by 4.3 per cent, year-on-year, to 24.7 million tonne in 2021 after decreasing by 2.1 per cent to 23.6 million tonne in 2020, primarily as a result of disruptions caused by the coronavirus pandemic, says a report.
Fitch Solutions expects the global copper market deficit to ease from an estimated 416,000 tonne in 2019 to 299,000 tonne in 2020,before widening again from 2022. The analytics provider forecast a shortfall of 489,000 tonnein 2024, rising to 510,000 tonne in 2027.
The price of copper has climbed 6.9 per cent since the start of 2020, defying a massive slump in March, and stood at USD 6,574 per tonne as of Sept 29. A rising tide of electrification, as many countries seek to lower their emissions through developing new technologies, promises robust demand for years to come. Global copper production would need to rise by between 3 per cent and 6 per cent per annum by 2030 for countries to meet the targets of the Paris Agreement on climate change. Fitch expects mine output to rise at an average annual rate of 3.2% from 2020 to 2029, from 20.4 Mt to 27.7 Mt.