Electricity transmission poles and cables stand against the setting sun in Malegaon. (Photographer: Dhiraj Singh/Bloomberg)

Electric Cablemakers Cut Prices As Copper Turns Cheaper

Electric cables have become cheaper as global copper prices fell, according to a BloombergQuint survey of dealers.

Price cuts were in the range of 5-12 percent across brands, according to the survey of eight dealers across Mumbai, Kolkata, Delhi and Bengaluru.

The commodity—which comprises over two-thirds of raw material costs for cablemakers—has turned cheaper by nearly 13 percent in the last two-and-half months, according to data with London Metal Exchange. Copper, which stood at $7,020 per tonne on June 15, costs $6,147 on Aug. 27.

Electric Cablemakers Cut Prices As Copper Turns Cheaper

The reasons for the fall included concerns over the economic crisis in Turkey, the U.S.-China trade war and a slump in the Chilean peso. The south American nation is the world’s largest miner of the metal.

Investec said in a research report that a reduction in Goods and Service Tax rate on wires and cables from 28 percent to 18 percent should accelerate the market shift to the organised sector. The brokerage said the drastic fall in power deficit from 9 percent in the year ended March 2013 to less than 1 percent in 2018 will boost demand for electrical appliances, aiding cable manufacturers.

Key listed cablemakers include Finolex Cables Ltd., Havells India Ltd., KEI Industries Ltd. and V-Guard Industries Ltd. Organised industry has a market share of 65 percent, with unlisted firms contributing the rest.

“There’s been a benefit in lower raw material costs, which the organized players have passed on to consumers in the form of price reduction,” Harshit Kapadia, research analyst at Elara Capital, said.

Finolex Cables leads with a market share at 14 percent in the domestic wires segment. KEI Industries is the leader in the industrial cables segment, with 9 percent share.