You can buy the same copper at the same London price and still lose eight percent. The third corner of the triangle is why.
Picture a tailor in Kolkata who buys cloth priced in dollars and sells suits priced in rupees. When the rupee slips, the cloth gets dearer and the price on the suit board stays put. Metal manufacturing works the same way. LME prices are in dollars. Most of your domestic sales are in rupees. The margin is whatever survives between the two.
In January the rupee averaged about ₹85 to ₹88 to the dollar. Oil then jumped toward $118 a barrel during the Iran war, India’s trade deficit widened, and by April the rupee had fallen around 7% to near ₹96. It was at ₹95.63 on 13 May and ₹94.58 on 30 June. In June the government more than doubled import duty on gold and silver to 15% from 6% in an effort to support the currency.
Take LME copper at $14,413 a tonne, the 23 October level, before duty and premiums.
| Rupee level | Copper cost per kg | Extra on a 100-tonne monthly buy |
|---|---|---|
| ₹88 per dollar | about ₹1,268 | Base |
| ₹95 per dollar | about ₹1,369 | about ₹1.01 crore more |
Same London price, about 8% more in rupees. Any quote written in January at the old rate and delivered after April would have carried that gap as a loss.
A manufacturer that buys LME-priced metal in dollars and sells exports in dollars has a natural hedge. The rupee’s fall affects both sides equally, so the margin is protected. The exposed party is the one who buys in dollars and sells in rupees. Growing the export share is therefore both a growth plan and a currency plan.
The triangle has three corners: the LME price, the rupee rate and your domestic selling price. A margin survives only when you watch all three.
General market information, not financial advice.
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