Indian electrical goods manufacturers will have to rely more on imported copper and are bracing for a rise in costs, after the government in Tamil Nadu this week ordered the permanent closure of Vedanta’s copper smelter there.
Industry executives and analysts say this is likely to lead to an increase in prices of a wide range of products from power cables to electronic appliances, and televisions to auto parts, as manufacturers look to pass on the cost increases at a time when a weaker rupee and a surge in crude oil prices have put pressure on profit margins.
And while international copper prices are not expected to climb as a direct result of the closure in the next few weeks, if the plant is permanently shut there could be an impact.
“It may not impact straight away, but if it’s a sustained shutdown, I’m talking more than a few weeks from here, then it will start to have a meaningful impact,” said Daniel Hynes, senior commodities strategist at ANZ in Sydney. Read More