EoW May 2011

“It’s reasonable to think that our aluminium building wire sales will go up a minimum of 10 per cent” this year over last, Mr Duran told Dow Jones Newswires . ❈ Talbot Gee is chief operating officer with Heating, Airconditioning & Refrigeration Distributors International (HARDI), the trade organisation whose members represent 80 per cent of the dollar value of HVACR products sold through distribution. In Mr Gee’s view, condenser coils and heat exchangers in commercial refrigeration applications are likely candidates for copper-to-aluminium substitution. To this point, commercial customers have shown themselves willing to spend on large refrigeration units; thus these items have been less sensitive to high copper prices. Now, however, Mr Whittaker wrote, the price of copper has risen to such heights that aluminium will probably crowd out copper even here. ❈ According to estimates by major aluminium maker Alcoa Inc (Pittsburgh), if copper prices keep rising aluminium could displace copper to the extent of 20 per cent of the global refined copper market of 19 million metric tons annually. At current copper prices, that figure is 4-5 per cent, or about 800,000 fewer tons of copper being used. Over the last five years annual copper losses-through- substitution have averaged 425,000 metric tons, or about two per cent of the market, according to estimates by Anglo- Australian mining giant Rio Tinto cited by Mr Whittaker. The mining company expects those losses to deepen to around three per cent of the market in 2010 and 2011. Steel in particular . . . ❈ With the global economy in recovery since late 2009, the World Steel Association expects the industrial sector to drive an increase of 5.3 per cent in steel demand worldwide. In the US, where steel demand was down 41.6 per cent (to 57.4 million tons) in 2009, the steel industry should continue on a gradual improving trend as global demand picks up. During this period, highly efficient and cost-effective steel making technologies are enhancing the appeal of American steel in Asia and the Middle East, in particular.

As noted by Matt Whittaker of Dow Jones Newswires , the differential in price between copper and aluminium is now wide enough to justify the costs both to retool some manufacturing processes and to pay for the extra aluminium required to conduct the same amount of electricity as copper. “There is a lot more engineering and development activity as these companies think about how to replace copper with aluminium,” Mr Whittaker was told by Charles Belbin, spokesman for Atlanta-based aluminium producer Novelis Inc, a unit of India’s Hindalco Industries Ltd. (“Record Copper Prices Prompting a Switch to Aluminium,” 24 th March). A corroborating opinion was offered by Joe Walton, owner of Williams Metals & Welding Alloys Inc (Wayne, Pennsylvania), a processor and distributor of metals including copper and aluminium. He predicted “a new wave of relooking at products and seeing if there is a substitution available.” In fact, such substitution has been on the rise over the past decade as constrained mine output and demand from China boosted copper prices. From February 2001 to February 2011, copper rose more than fivefold in price while aluminium gained only 66 per cent. Concerns about Japan’s nuclear crisis and high oil prices have clipped copper’s recent record-setting rally to more than $4.60 a pound. But Mr Whittaker pointed out that that price is still well above the key $3.50 point at which it often becomes economical for a customer to switch to aluminium (now at around $1.15 a pound). ❈ Sales patterns at Graybar, a St Louis-based distributor of electrical products for the construction industry, suggested to Mr Whittaker that builders are likely to use more aluminium wiring during this summer’s construction season than they have in recent years. Graybar’s sales of a type of copper wire commonly used in construction slipped six per cent from the last half of 2009 to the same period last year, while sales of similar aluminium cable rose six per cent, said Kent Duran, national product manager with Graybar.

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EuroWire – May 2011