Electric vehicles and consumer appliances will likely become pricier soon as the price of copper — a key raw materials -has soared above $14,000 a tonne.
Indian industry, mainly automobile, electronics, telecom, infrastructure, construction and agriculture, is likely to bear the impact of rising copper prices. The surge has left the industry in a dilemma on how much cost it has to bear and how much to pass on to the consumer. However, some of them are indicating a hike in prices within a short span of time.
Solar module makers and data centres, which are seen as the current factors driving the metal higher, are, however, switching to aluminium as an alternative. After rising to a record high of $14,858 a tonne, the red metal’s prices ended at $14,240 during the weekend.
Options before manufacturers
Prices, which surged on fears that the US may impose higher tariffs on copper, retreated on reports that Washington is reconsidering its plans. US officials are reportedly worried that the tariffs could drive domestic copper prices even higher and increase manufacturing costs. The surge leaves manufacturers with the option of having either have to absorb the increase, extract savings elsewhere, substitute materials or pass on a part of the burden.
Maruti Suzuki faces an estimated ₹204 crore of incremental monthly exposure, Tata Motors ₹171 crore and Mahindra & Mahindra ₹110 crore, according to industry estimates and calculations corroborated by businessline.
The increase is from an assumed $9,500-a-tonne benchmark, translating roughly into ₹10,000-13,000 of additional underlying copper cost for an ICE (internal combustion engine) car, more than ₹40,000 for some electric cars and ₹1.27-1.52 lakh for an electric bus.
Copper sulphate up 8 times
For white goods, the corresponding increase could reach ₹3,300-4,300 for a 1.5-tonne split air conditioner and ₹1,300-1,800 for a double-door refrigerator.
In the agriculture sector, prices of copper sulphate, a key component of Bordeaux mixture used to control fruit rot disease, have increased over six times from ₹80 a kg to ₹500.
For the construction sector, the metal’s prices have increased over 12 per cent between April and September this year, translating into an estimated 0.75–1 per cent impact on overall construction costs. At this stage, the sector finds it manageable.
Renegotiation of long-term contracts
An executive of a company that is a key supplier to Tamil Nadu’s biggest electronics manufacturing enterprises said copper, tin and silver are the three most critical materials, and prices of all three have been volatile. “This has impacted margins, and many of us are renegotiating our long-term contracts into shorter ones,” he said.
SR Satishchandra, President of the Central Arecanut and Cocoa Marketing and Processing Cooperative (Campco) Ltd, said the cooperative places orders for procurement of copper sulphate during November-December. “We will have to see how the market behaves then. However, it will definitely have an impact on the price of copper sulphate in the next season,” he said.
Paritosh Prajapati, CEO, GX Group, said: “Rising copper prices are increasing input costs across electronics and telecom manufacturing, particularly for printed circuit boards, power supplies, transformers, connectors and cabling.”
Indirect pressure for construction
Ajinkya Firodia, Managing Director of Kinetic Engineering, said higher copper prices are another headwind for EV economics. Avalon Consulting said EVs’ additional copper requirement is a structural disadvantage when metal prices spike.
An ICE passenger vehicle contains about 20-25 kg of copper, compared with 80-85 kg in some electric cars, while an ICE two-wheeler uses 2.5-3 kg against 8-10 kg for an electric model. An electric bus can require 250-300 kg.
Aditya Chellaram, Executive Director at Bengaluru-based Featherlite Developers, said the larger pressure on the construction sector is indirect, as copper-intensive equipment such as transformers, DG sets, chillers, lifts and motors are seeing faster cost revisions from vendors.
Avneesh Singh Marwah, CEO, SPPL – the Indian licensee of brands such as Kodak, Blaupunkt and Thomson – said: “All ‘A-Class components’, including copper, which are critical for production, have seen a surge in price. This has led to huge margin pressure for consumer appliance and electronics makers. We are hiking prices by 7 per cent this month and will look at another price hike in the next quarter.”
Long-term plans
Haier Appliances India MD NS Satish said, “We have, in the past few months, taken a price increase of 10-12 per cent. We may take a marginal price hike of about 2 per cent in October in the mid and premium segments.”
Arulkumar Shanmugasundaram, Managing Director and CEO at Chennai-based solar module maker Swelect Energy Systems said: “The percentage of copper in the overall manufacturing cost is not very high. But for this particular high-grade copper, we are completely dependent on imports, and there has been some impact.” The company has shifted many components to aluminium from copper.
Mahesh Puchhappady, President of All India Arecanut Growers’ Association, said rising global copper prices could impact the availability of quality copper sulphate and lead to a price increase also. It could increase input costs for crops such as arecanut.
GX’s Prajapati said the group is managing the price spike through longer-term procurement planning, diversified sourcing and material-cost tracking.
‘Every rupee matters’
BGauss Founder and Managing Director Hemant Kabra said: “Copper is not a material that an EV manufacturer can simply eliminate. Sustained increases require supplier negotiations, design efficiency, localisation and, eventually, pricing.”
For commercial-EV customers, every rupee matters because the purchase decision is based on total cost of ownership, said Uday Narang, Chairman and Founder of Omega Seiki Mobility.
Appliance makers can substitute aluminium for copper in selected applications, though brands have long marketed “100 per cent copper” condensers as a performance and durability advantage.
Distributors fear the cost pressure could also travel down the supply chain .“Our concern is that companies may use the sharp increase in copper and other input costs as another reason to squeeze distributor margins, which are already under pressure,” said Dhairyashil Patil, National President of the All India Consumer Products Distributors Federation (AICPDF).”
Mallanna Sasalu, CEO-South of Puravankara Limited, said at this stage, the increase remains manageable, and we are absorbing it within our existing project budgets through procurement and value-engineering initiatives.
“We are consolidating demand across projects and leveraging bulk procurement, fixed-price supply agreements and direct sourcing from OEMs and manufacturers to improve cost efficiencies,” he said.
A senior industry executive in New Delhi said leading companies are focusing on stocking up raw material and components in advance for the festival season. “The inventories are usually for about 2-3 months. So margin pressures are likely to increase in the coming weeks,” he said.
(With inputs from SIndhu Hariharan, Chennai; AJ Vinayak, Mangaluru; Meenakshi Ambwani, New Delhi; Aishwarya Nandakumar, Bengaluru, Amit Vinay Mohile and Vallari Sanzgiri, Mumbai.)