Hindustan copper burns under declining copper price

Author: Paul Ploumis
07 Jan 2015 Last updated at 04:35:22 GMT
NEW DELHI (Scrap Monster):  The price of copper has declined by about 2.4 percent this month, after the closing rate in the year 2014. The price of the commodity in the December quarter has declined by 5.2 percent, over the previous quarter and by 7.4 percent when compared with the previous year.

The decline in the price of  copper directly affects the Hindustan Copper, other than the rest of the copper producers in the country, like the Hindalco Industries, and Sesa Sterlite. Both of these companies purchases their copper concentrate directly from the miners, and then process the concentrates into copper cathodes. The earnings of these companies completely depend on the fees paid by the mining companies to process the copper concentrate. But, at the same time, Hindustan Copper produces copper concentrates from its own copper mines, and  the company will also have to process a small part of their copper concentrates processed externally. Therefore the profit of the company largely depends on the price of the commodity.

Moreover, the  mining output of the company, has been affected badly by the December quarter, mainly due to the temporary closure of the mine, located in Jharkhand. The official data prepared by the government, shows that the total output of copper cathodes in the months, October and November in the Hindustan Copper Ltd, has declined by about 45 percent, when compared to the production in the same months of the previous year. In addition to the decline in the price, it has affected the growth of sales in the company and also profitability of the company in the near term.
The company's September quarter results also had shown a decline in the sales growth by 34 percent, when the period in the previous year.; the net profit of the company in that month declined to 17.2 crores from 62 crores in the previous year. The shares of the company declined to the lowest point by 13 percent, after the announcement of the results. The price of copper is expected to remain under pressure throughout the year 2015, due to the increase in the production as well as supply, and also the decline and uncertainty of the demand.