Sterlite and Birla Copper, who had followed HCL in its price hike during the first of August soon lowered their prices on August 17 to Rs 110,500. Both the private sector producers price their cc rods a shade lower than HCL. They are also more flexible in their pricing and marketing than the public sector HCL.

There is tremendous increase in the capacity for continuous cast copper rods, during the last few years, after liberalisation. Advisor to Birla Copper A Nag, in an article in `Metal Bulletin' of August 1998, said, "Unless the primary producers, and may be SWIl, develop export markets by 2000, there may be a price war in rod market and also between primary and secondary metal."

According to sources with Finolex Essex, they are now operating the plant at the level of 2000 tonnes per month and would be reaching 4000 tonnes by about December 1998. 50 per cent of the firm's production goes to their own cable factory and the company feels that they would be able to market their full production as they are producing premium product catering to the niche market segment.

But whether exports would be possible remains to be seen. The new smelters and the cc rod plants have come up because the import duty structure on finished product and raw materials provide them some protection in the domestic market. While the basic duty on concentrates is only five per cent that on cc rods it is 35 per cent, thus giving the smelters sufficient margin on their operations.

Then these capital intensive plants will have to compete with the secondary sector, who can sell their product much cheaper. Both HCL and Sterlite in the past have not been able use their capacities adequately but now with increased capacity there will be struggle for a limited market.

The demand for copper as a whole has not picked in the country with power industry, autos, electronics not growing as anticipated and the copper projects, which were built on the premises or large growth in domestic demand, may find themselves in trouble.

Copper consumption primary has been estimated at 238,387 tonnes and secondary at 101,896 tonnes in 1999-2000. As against the above the smelter capacity in Birla Copper, Sterliet, Swil and HCL adds up to 300,000 tonnes, much in excess of primary copper demand. In addition, if Birla, Sterlite and HCl add another 170,000 tonnes of new capacity, there is a chance for over production.

HCL is in dire straits and, fearing BIFR trap, has extended its financial year by six months. Things have gone worse with prices falling. Therefore its expansion of the Khetri complex by another 70,000 tonnes will be difficult unless there is a strategic sale of the unit to somebody who can bring in technology and finance. Sterlite and Birla Copper have just started production and are yet to prove themselves in adverse conditions of the market. SWIL is still struggling to complete the project. Unless there is a spurt in world market there will be difficult days ahead for the copper smelters and cc rod producers in the country.