With copper prices experiencing an unprecedented surge worldwide, a report by research firm Wood Mackenzie warned this will not be good for the metal in the long term, which could be replaced by the cheaper aluminum.
The report states that forecasts related to copper demand ignore the fact that aluminium is a serious competitor to copper in a number of high volume applications, including power cable, busbars, transformer windings and motor windings — vital for green energy transitions.
Copper prices fell almost 4pc on Wednesday after China, one the largest consumer of the metal, vowed to control the supply and demand to curb the “unreasonable” hike in prices. At Friday’s close last week, LME copper traded 95.52 per cent higher than the lowest value in last one year. It had hit a record high of $10,724/mt on May 10 this year.
Julian Kettle, senior vice president and vice-chair of metals and mining at WoodMac stated despite forecasts of copper prices touching $15,000-$20,000/mt, it could see a massive demand destruction as aluminium is priced around $5,000-7,000/mt. With copper demand on uptrend, there could be a time lag for supply to catch up.
While aluminium’s conductivity is 40pc less than copper but its density is just 30pc of that of copper — meaning an aluminium cable is around 52pc of the weight of a copper cable with the same conductivity, a property offering handling and installation advantages to consumers.
The WoodMac report mentioned Indian manufacturer Tirupati Graphite PLC’s groundbreaking efforts on combining aluminium with graphene to produce an alternative having 95pc of the conductivity of copper.
Given its lower cost, aluminium can outpace copper under any realistic long-term price scenario. “Cost push in aluminium could lead to price pull in copper such that copper prices could sustainably be maintained at $10,000/mt when aluminium is at $3,300/mt,” the analysis said.