A combination of factors records high copper prices coupled with aggressive buying by China and the largest copper smelter in India remaining shut for the second year in a row will make copper imports 35 per cent more costly in 2021.

“LME copper prices touched nine years high in January to average $7,961 per tonne. Prices have touched the highest level since 2012 due to supply crunch of copper concentrates caused by disruptions in mining operations due to Covid-19 challenges amidst rising demand ..“ wrote Madan Sabnavis, chief economist at Care, in a research report. “The on-going concentrate supply issues and strong demand, particularly from China, is expected to keep copper prices elevated over the next quarter before the supply issues get resolved in 2021.” The report said that refined copper production fell by a sharp 24.4 per cent to 231.7 thousand tonnes during Apr-Dec FY21 compared with Apr-Dec FY20 as the Covid-induced lockdown that brought business activities to a sudden halt. Overall domestic refined copper production fell sharply by 39.5 per cent y-o-y in Q1FY21

Refined copper prices are expected to average $6,500-6,800 per tonne in FY21 vs $5,923 in FY20, thereby impacting import-dependent countries, analysts said. “India could spend up to 30-35 per cent more just to import the same level of refined copper it does today,” said Pankaj Kumar, CEO of Sterlite Copper. He said that the consequential effects on forex will be significant.