Last week due to a sharp drop in inventories to around 350,000 tonnes, copper prices jumped more than $100 per tonne on the London Metal Exchange, touching a high of $1,860 a tonne.

On March 31, Hindustan Copper raised copper prices by Rs 200 per quintal. However, traders feel that the latest jump in prices is mainly speculative than demand led. For the last two years, lower copper prices have been affecting Hindustan Copper's financial performance. During 1996-1997, sales of the company declined from the previous year's Rs 1,118 crore to Rs 970 crore and net profit from Rs 93 croreto net loss was Rs 129.5 crore respectively. The production of copper cathode at Hindustan Copper was 38,843 tonnes from April 1997 through February this year. The full year production is likely to touch 42,000 tonnes. Demand has been very poor in the recent past and imports in the last three months are almost negligible. In Mumbai, there are about 100 traders involved in the business of copper imports. The slump in demand, unfavourable import duties, and surplus domestic production, business of importers have been adversely affected. This will be further affected by the new capacities being added by Birla Copper, a division of Indo-Gulf Industries and SWIL.

Industry observer suggest that various uses of copper are expected to grow at an average rate of 8 per cent per year by the year 1999-2000. This is likely to push the demand to a high level of 3,60,900 tonne of copper products used in electricals, telecommunications, transport, general engineering, consumer durables, construction, defence and processindustry. However, the demand-supply gap would not be as high as it was seen three years ago.

Birla Copper partially commissioned its 80,000-tonne plant at Dahej in Gujarat in the first quarter of 1997-1998. The smelter capacity will be increased to 1.5 lakh tonne. Besides, Birla Copper, SWIL is also putting up a 50,000 tonne plant which is likely to go on stream in the second quarter of current year.

With these additions, the domestic capacity will double at four lakh tonnes. Additional production is seen reducing the dependency on copper imports. BHP of Australia, a major global player, has also seen its copper output slumping due to unseasonably dry weather in Papua New Guinea. The Ok Tedi mine of the company has recorded a fall in production, although BHP's shipments of copper in concentrate were higher in March. u