Bloomberg News

Copper Substitution May Reduce Usage by 500,000 Tons, CRU Says

October 04, 2011

Oct. 4 (Bloomberg) -- Replacement of copper with other materials may reduce demand for the metal by about 500,000 metric tons this year, according to researcher CRU.

Use of plastic for tube production, aluminum for high- voltage energy cables and fiber optics for communications cabling is driving substitution, Paul Robinson, non-ferrous metals group manager at London-based CRU, said by e-mail yesterday. Aluminum may replace about 250,000 tons of copper, he estimates.

Copper, used in tubing and wiring, more than tripled in two years through 2010 on the London Metal Exchange, exceeding aluminum’s 60 percent climb. Concern that copper supply would fall short of demand helped prices to reach a record high of $10,190 a ton in February of this year, discouraging consumption of the metal.

Lost copper demand “constrains longer-term growth rates,” Robinson said. “As copper loses these sectors, it also loses any growth potential in the future.”

Copper demand is set to advance 3.7 percent to 19.9 million tons this year, according to Barclays Capital. About 22 percent of production is used in the power-generation industry and 13 percent is consumed by electronics manufacturing, according to RBS Global Banking & Markets.

Copper substitution may continue, particularly use of aluminum, Robinson said yesterday at an LME conference in London. Aluminum will have the strongest demand growth among industrial metals in coming years, he said.

Copper for three-month delivery fell 1.8 percent to $6,865 a ton by 12:17 p.m. on the LME, extending this year’s drop to 28 percent. Aluminum rose 0.2 percent to $2,207.75 a ton, for an 11 percent annual decline.

--Editors: Dan Weeks, Claudia Carpenter.

To contact the reporter on this story: Agnieszka Troszkiewicz in London at atroszkiewic@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net


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