Copper prices up Rs 100/kg, motor production in Coimbatore grinds to a halt

Due to fluctuations in the raw material price, MSME operators struggle to match the cost. Due to a hike in price for the end product, dealers are reducing the volume of orders given earlier.
A grinder motor making industry in Coimbatore
A grinder motor making industry in Coimbatore(Photo | S Senbagapandiyan, EPS))

COIMBATORE: Industrial units in Coimbatore, particularly MSMEs, are in dire straits as the volatility in copper prices has affected their production heavily.

MSME units, particularly wet grinder and pump motor manufacturers, who use copper as their major raw material, say that the change in copper price has been frequent in recent times and they are struggling even to match the operating cost of the end product with the price offered by buyers.

They pointed out that the copper price has increased by Rs 100 per kilogram from Rs 950 to Rs 1,050 in the last 30 days between April 22, 2024 and May 22, 2024.

J Leela Krishnan, a wet grinder manufacturer in New Siddhapudur in Coimbatore, said, “Compared to May last year (2023), the price of copper has increased by Rs 300 from Rs 750 per kg. It takes around 45 days to deliver manufactured table-top grinders after getting a job order from a buyer or dealer. Buyers expect us to deliver the product as per the agreement. Due to fluctuations in the raw material price, MSME operators struggle to match the cost. Due to a hike in price for the end product, dealers are reducing the volume of orders given earlier.”

“Our unit’s turnover was up to Rs 5 crore in 2020 but this year the turnover has come down to Rs 1 crore. I have been struggling to run the business in the recent period. Most unit operators are afraid of taking job orders as prevailing challenges make it difficult to get even 5% profit from a job order,” he added.

Kanhaiya K Vasani, a businessman in copper wire distribution in Coimbatore, said, “The copper market has become more volatile in recent times. On May 22, the price of copper based on the price fixation by London Metal Exchange Rate was Rs 1,050. The price had come down to Rs 1,010 on May 23. Again, the price will surge tomorrow.

There are two prime reasons for the price volatility in the market: (i) increasing production of electric vehicles in which copper usage is high, and (ii) more investment in copper on the stock market in the recent period. Small-medium operators have been impacted by the price volatility. Large-scale operators of pump set motors are not affected as they have shifted to Copper-clad aluminium (CCA) wire, which is priced Rs 350 per kg, as an alternative to copper wire.”

V Vignesh, president of the Southern India Engineering Manufacturers’ Association (SEIMA) said, “Though CCA wire can be used as an alternative to copper wire, it cannot be used for motors above 1hp. Due to prevailing volatility in copper price, our members have decided to increase end-product cost by 6% from June.”

J James, president of the Tamil Nadu Association of Cottage and Tiny Enterprises (TACT) said, “Due to abnormal fluctuations in the raw material price, MSME operators have been affected badly after the electricity tariff hike for fixed charge by 430% from Rs 35 to Rs 153 per kW. MSME industries cannot sustain in Coimbatore unless the government intervenes with regard to the raw material cost.”

P Shanmuga Siva, General Manager of the District Industries Centre (DIC), coming under the Department of Industries said, “The price of copper is less in Andhra Pradesh and Gujarat due to the geographical location. Hence, they can manufacture with less operating cost than manufacturers in Coimbatore. However, the manufacturers in Coimbatore are holding on in the market due to the efficiency and effectiveness of the end product.

To support the manufacturers, the DIC has sent a recommendation to the state government for setting up raw material banks for copper and iron and steel. It is under consideration by the state government. Once it is approved, the raw material will be distributed to the manufacturers on a need basis so that they can compete with the other markets.”

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