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EuroWire – May 2011
29
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.
“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.