The Indian copper market is expected to see a significant increase in demand, with a projected 1.55-1.65 million tonnes required in the fiscal year 2026. Recycled copper is expected to play a crucial role in meeting this demand, accounting for 25-30% of the total. According to Sehul Bhatt, Director of CRISIL Intelligence, the near-term economics of secondary refining have become favorable again, with recycling margins being significantly better than primary smelting.
However, the key challenge facing the industry is scrap sourcing. India relies heavily on imports to meet its scrap needs, with around 50% of copper scrap being imported. This dependence on imports makes the industry vulnerable to fluctuations in global copper prices. Whenever there is a price movement, copper recyclers’ margins are affected due to inventory cost adjustments. Although manufacturers hedge against adverse price fluctuations, it eats into their margins.
Despite these challenges, the outlook for the copper market remains positive. Bhatt expects copper prices to increase by 4-6% in the fiscal year 2026, driven by disruptions in global copper ore supply. This increase in prices is likely to have a positive impact on recycling margins, making the secondary refining business even more attractive.
The importance of scrap sourcing cannot be overstated, and the industry needs to explore ways to increase domestic scrap collection and recycling. This could involve implementing policies to encourage the collection and recycling of copper scrap, as well as investing in technology to improve the efficiency of the recycling process. By doing so, the industry can reduce its dependence on imports and improve its overall sustainability.
In conclusion, the Indian copper market is expected to see significant growth in the coming year, driven by increasing demand and favorable recycling margins. However, the industry needs to address the challenge of scrap sourcing and explore ways to increase domestic scrap collection and recycling. With the right policies and investments in place, the industry can reduce its dependence on imports and improve its overall sustainability, while also benefiting from the expected increase in copper prices.