Mumbai: India’s copper demand will likely grow by at least 7% in financial year 2010-11, fed by power sector, while demand from real estate and construction remains weak, a top industry official told Reuters on Wednesday.
“The power infrastructure sector is strong... If construction picks up, we’ll see even higher growth rate, much higher than 7%,” said Ajit Advani, Asia-Pacific deputy regional director at International Copper Association.
According to India’s eleventh five year plan (2007-2012), investment requirement in the country’s power generation sector is over Rs4 trillion ($86.9 billion) with 150 power projects in various stages of installation.
India suffers from a peak power deficit of about 12%, and power firms are raising funds to expand generating capacity.
Beset by power blackouts, crumbling roads and choked ports, India stacks up poorly against larger neighbour China, whose rampant growth has been helped by Beijing’s development of world-class infrastructure.
Indian businesses large and small, for example, are forced to self-generate power in order to ensure supply.
Demand for the red metal, used in wiring and electronic appliances, turned weak in 2008 as major global economies slipped into recession hurting real estate, construction, automobiles and manufacturing sectors all over the world.
Advani said demand for the red metal, used in wiring and electrical appliances, could grow in double digits once the real estate sector picks up pace.
“Residential segment is reflecting a huge part of pent-up demand with low-cost housing being lapped up and once again we are seeing hardening of prices,” Advani said.
The outlook for India’s real estate remains negative, yet the sector could exhibit signs of stability, Fitch Ratings said recently.
Advani said due to sluggish domestic demand, copper producers are unlikely to plan any capacity expansion.
India’s copper production fell to 640,665 tonnes in 2008-09 from 704,966 tonnes in the year-before period.
“There is no new investment expected. There are two big producers. They have between them a capacity of 1 million tonnes, but the actual consumption in India is much lower. So, they are net exporters,” Advani added.