India's copper scrap imports dip 7% in H1CY'24. Know why?

• UAE exports to India plunge on higher Pak, Korea offers
  
  
• Finished longs imports rise as scrap imports decline
  
  
• Customs duty removal on concentrate may discourage scrap import
  
  

Morning Brief: Imports of copper scrap into India saw a dip of 7% y-o-y in the first half of 2024 (H1CY'24) to around 135,000 t from 145,500 t seen in the same period in CY'23, as per data collated by BigMint.

The United States was the largest exporter of the material to India, followed by the UAE and Germany.

Factors that pulled down copper scrap imports in H1

• Rise in imports of finished longs: The decline in scrap imports can be attributed to a significant increase in India's imports of finished copper long products. Imports of wires, rods and profiles surged by over 53% to around 88,160 t in H1CY'24 compared to 57,462 t in the same period last calendar, making scrap imports redundant to an extent. The countries from which India mainly imported longs in H1 included the UAE, Thailand, Malaysia, China, and Japan.
  
  
• Decline in scrap exports from the UAE: A key reason for the decline in scrap imports can be attributed to a significant drop in exports by the UAE. Volumes from here plummeted 83% to a mere 5,300 t amid evolving trade dynamics in the UAE's key export markets, including India, Pakistan, and South Korea.For instance, during this period, the UAE exported approximately 7,000 t of copper scrap to South Korea as the latter's shipbuilding and electronics sectors are significantly reliant on recycled copper. Around 4,500 t went to Japan, while exports to India were limited to 5,300 t as against the previous 30,000 t. The UAE shifted more exports to Pakistan and South Korea due to competitive pricing and more favourable trade terms offered by these countries.
  
  

• Reducing reliance on raw material imports: The decline in scrap imports also suggests a shift in sourcing strategies. Indian players are putting greater emphasis on domestic recycling efforts, to reduce the reliance on imports. Lower scrap imports are also a pointer to lower availability of the same globally. As India enhances its recycling capabilities amid potentially rising domestic demand, the reliance on imported copper scrap may have decreased.
  
  
• Increase in anodes imports: Copper anodes (a substitute of scrap) imports increased 19% y-o-y in H1 to 124,806 t. This also had a reducing impact on scrap imports. Anodes imports rose on the back of an increase in production of semi-finished copper in H1 by 6% y-o-y to 256,000 t (241,000 t).

   
  
  

• India manufacturing PMI up in H1: Copper's demand is said to have a direct correlation with economic activities considering its wide usage across construction, home appliances, and other sectors. The India Manufacturing PMI increased to 57.8 in January-June, 2024, compared to 56.6 in the first half of 2023. Also, on m-o-m basis, the PMI rose to 58.3 in June 2024, up from 57.5 in May. This trend reflects a strong improvement in the business environment, driven by robust consumption that fuelled expansions in new orders, output, and purchasing levels.
  
  

Outlook

In the Union Budget, 2024-25, India eliminated the 2.5% basic Customs duty (BCD) on copper ores and concentrates. This policy aims to support the growing demand for copper by lowering raw material costs.

In FY'24, India imported 1.02 million tonnes of copper concentrates, with ores and concentrates making up significant import volume.

The removal of the duty is expected to boost domestic production by reducing costs.

The concessional BCD on copper scrap will continue at 2.5%. However, the BCD on blister copper has been reduced to zero from the previous 2.5%. This adjustment further aims to support the copper industry by lowering import costs and this step may further reduce dependency on imported copper scrap.