Copper’s surge to a record $14,617 per tonne on the London Metal Exchange (LME) in September is raising costs across India’s metal industry, from imports and refining to electronics and infrastructure. With only half of the country’s refined copper demand met through domestic production, higher prices and a weak rupee threaten to widen India’s import bill even as domestic manufacturers face rising raw material costs.

Only half of India’s refined copper needs is met through domestic production; the impact is already reaching consumers, with electronic goods makers indicating price hikes as India’s metal makers are staring at a longer working capital cycle and India at a higher import bill.

Even when higher prices can be passed on to customers, companies need more working capital to finance the same volume of metal.

Copper prices have been firm over the past few years. But the recent surge has been driven more immediately by supply concerns, speculation, and expectations of US tariffs on refined copper imports from 2027.

Investors and traders are more convinced of US tariffs on refined copper imports starting in 2027, encouraging stockpiling and moving metal into the US ahead of their possible introduction. With copper prices elevated and the rupee weak, Indian buyers face higher procurement costs and continued uncertainty over the availability and price of imported metal.

The pressure comes as India’s copper demand is projected to rise sharply, driven by infrastructure and construction, renewable energy, electric vehicles and growing demand from electronics and automotive automation. Domestic production is increasing, but may struggle to keep pace with that growth.

The New All-Time High

BigMint, a metal market intelligence company, said three-month LME copper prices continued to strengthen in September, with the monthly average rising to $14,440 per tonne from $14,170 in August, an increase of nearly 2% month on month.

“The recent gains have been driven by ongoing concerns over copper supply. Tight concentrate availability, deeply negative spot treatment charges and low inventories in key consuming regions have continued to support market sentiment. A key factor supporting copper prices in recent months has been the substantial movement of metal into the United States ahead of potential tariffs on refined copper imports from 2027,” BigMint told The Core.

The apprehension over US tariffs has added to concerns over supply, with metal moving into the US ahead of the proposed duties. Tight availability of copper concentrates and low inventories in key consuming regions have also supported prices.

For India, the combination of higher international prices and a weaker rupee makes imported copper more expensive. In FY26, the country's import bill for copper imports ( concentrates, unrefined, refined, scrap) crossed the Rs 1.3 trillion mark. .

The import bill is expected to rise this year as prices increase, although the final impact will also depend on import volumes and the pricing of different forms of copper.

India’s Supply Gap

India’s dependence on imports persists despite the addition of domestic refining capacity. In the first quarter of FY27, from April to June 2026, the country’s refined copper demand stood at 360 kilotonnes. Domestic production met only half of that demand, while scrap accounted for 40% and imported refined copper 10%.

Adani’s Kutch Copper has been ramping production, narrowing the gap between domestic and imported refined copper. But rising could limit the extent to which additional capacity reduces India’s dependence on overseas supplies.

CareEdge, in a rating note on Kutch Copper, projected that India’s copper demand would increase to about 3.2 million tonnes by 2030 from approximately 1.2 million tonnes in 2026. The increase is expected to be driven by infrastructure and construction, renewable energy capacity, electric vehicles, electronics and automotive automation.

The report pegged Kutch Copper’s copper cathode capacity at 5 lakh tonnes per annum, with utilisation at 58% at the end of FY26. At full utilisation, the plant could plug the current import gap. However, the projected growth in demand could make it difficult for domestic production to keep pace in the coming years.

The price surge affects both imported refined copper and scrap. Domestic smelters such as Kutch Copper and Hindalco also import copper concentrates, although the impact of higher LME prices on their costs depends on the pricing terms negotiated under long-term contracts.

Rating agency ICRA said in a report earlier this month that lower copper production had created a large deficit in the domestic market, resulting in substantial imports, and that the situation was unlikely to improve in the near term.

ICRA also expects demand for non-ferrous metals in India to grow by 8-9% in the current financial year, adding to the pressure on domestic supply.

Bigger Working Capital Needs

India produced 7.04 lakh tonnes of refined copper in FY26, with Aditya Birla Group’s Hindalco Industries accounting for 4.22 lakh tonnes and Adani’s Kutch Copper contributing 1.12 lakh tonnes.

Large companies such as Hindalco and Kutch Copper source copper concentrates from Hindustan Copper, India’s only copper miner, or import them. Smaller smelting and refining units rely largely on scrap, some of which is also imported.

The effects of higher copper prices differ across the value chain. ICRA noted that firm prices support the margins of domestic upstream companies, while downstream firms remain constrained by adverse treatment charges.

For downstream companies such as Hindalco and Kutch Copper, higher copper prices do not necessarily threaten margins because procurement costs and selling prices are both linked to the LME. But the increase raises the amount of money companies must commit to their operations.

“Any person doing the copper business has to block more working capital for the same output, so that is going to add to their cost of operation in terms of the working capital blockage, and that is the major impact to the copper industry that due to higher prices they are blocking more money,” said a senior executive from the industry, who did not wish to be identified.

The executive said the linkage between the price of copper concentrates and the selling price of refined copper limits the impact on margins.

“There will be little change in margins.”

The working capital requirement, however, increases as companies need to finance a more expensive inventory for the same output. Higher copper prices can therefore raise the cost of running the business even when the increase in raw material costs is passed on through higher selling prices.

The impact extends to companies further down the value chain. Electricity infrastructure is a major consumer of copper in India, with the metal used in transmission lines, electrical cables and electronic goods.

In transmission projects, engineering companies may resort to hedging or absorb lower margins to manage raw material price fluctuations when contracts do not allow costs to be passed on. Cable companies have traditionally passed on raw material price increases to customers, and rating agencies expect this trend to continue in the current financial year as commodity prices remain elevated amid the West Asia conflict and other factors.

Electronics manufacturers, meanwhile, have already indicated price hikes to pass on higher raw material costs. The increase in copper prices is thus moving through the value chain, with the eventual burden depending on the ability of each business to recover higher costs from its customers.

Mixed Signals For Refiners

For Indian copper refiners, higher prices present both an opportunity and a challenge. Their profitability depends not simply on the price of copper but also on treatment and refining charges, which are influenced by global market conditions.

China’s excess smelting capacity has been suppressing these charges, putting pressure on refiners even as copper prices rise.

A separate development has provided some relief. Sulphuric acid, a by-product of copper refining, has become more expensive amid a sulphur shortage linked to the US-Iran conflict. Higher sulphuric acid prices supported refining margins in the April-June 2026 period and are expected to continue providing some support.

The competing pressures mean that higher copper prices do not automatically translate into higher profits for refiners. While firms may benefit from higher realisations and by-product prices, they remain exposed to treatment and refining charges and the additional working capital required to finance their operations.

Outlook For The Rest Of The Year

Copper demand in India is expected to remain firm, with limited scope for substitution as infrastructure needs grow.

“Our copper usage in different end-products compared to countries like China or US or Japan or Europe is lower intensity, at hardly four or five percent in the utility network. With little scope for further reduction in copper intensity and with India’s growing infrastructure needs, copper demand is set to increase,” the senior industry executive said.

Prices, meanwhile, are expected to remain volatile as global inventories, supply conditions and trade policy continue to influence the market.

BigMint said, “With global inventories increasingly concentrated in the US while freely available LME stocks remain tighter, Indian buyers may continue to face volatile import offers and premiums.”

The combination of higher LME prices and a weaker rupee is making imported scrap and refined copper more expensive for Indian buyers. BigMint cautioned that this could prompt companies to focus on immediate requirements rather than build inventories aggressively.

“This could encourage buyers to focus on immediate requirements rather than aggressively building inventories.”

For India, the challenge is that rising domestic production may not be enough to keep pace with growing copper demand. With imports continuing to meet a significant share of requirements, Indian buyers remain exposed to global price movements and supply disruptions. Higher prices could therefore increase the cost of meeting the country’s infrastructure and electrification needs while placing additional pressure on the working capital of businesses across the copper value chain.