Having lost significant market share in
recent years to lighter-weight and lower-cost aluminum, copper
is ready for a rebound. But while proponents of the
antimicrobial metal hope that someday every hospital wing,
locker room and air conditioner interior will glow red, some
metals analysts aren't so sure.
"I think there's a component of wishful
thinking there," said Jorge Vazquez, an aluminum analyst at
Harbor Intelligence. Although copper has been shown to exhibit
germ-killing properties that could make it a tempting
substitute for other materials, with such a high price tag the
metal will be hard-pressed to make a mark on aluminum's turf,
he said. "Aluminum-vs.-copper price competitiveness has
increased considerably in the past five years. Aluminum is
becoming cheaper and cheaper compared to copper."
Copper averaged $ 6,164 a tonne in August on
the London Metal Exchange, more than three times its
Max Layton, a commodities analyst at
Macquarie Securities, said fundamentals were largely behind
copper's higher pricing point relative to that of aluminum.
"Both prices have increased, but copper has increased far more
over the past six months, and the main reason is that copper
has a much lesser ability to respond to changes (in demand),"
he said. "The copper price collapsed and you saw 600,000 tonnes
of price-related cuts, and I think maybe only half of that will
come back given the recent price rally, whereas in aluminum,
it's in massive oversupply and that's reflected in the
David Wilson, director of metals research at
Société Générale, agreed that
stockpiles are the key difference between the two metals in
today's environment. "The copper market is fairly tight right
now, and even though there's been somewhat of a demand
correction, the mining industry is still struggling to make its
current production targets," he said.
High prices or not, even if copper does make
headway into traditionally aluminum-dominated applications like
heating, ventilation and air conditioning (HVAC) systems-where
its antimicrobial nature could arguably increase copper's bang
for the buck-the overall aluminum market is still unlikely to
feel the pinch, Vazquez said.
According to Harbor Intelligence data, only 4
percent-or 745 million pounds-of total U.S. aluminum demand
goes into refrigeration and air-conditioning applications each
year, so a loss of that size could easily be made up in other
market areas where aluminum is still making strides.
"Aluminum is gaining market share in the
construction sector, in the electric sector and in the
transportation sector compared to copper, so if indeed there is
some real temptation to move away from aluminum towards copper
(in HVAC systems) we don't see any meaningful market share
being lost, given how strongly aluminum is penetrating other
sectors. On the contrary, we believe aluminum will continue to
gain market share over copper as a whole," Vazquez said.
Stainless steel also is unlikely to lose much
sleep if copper gains a foothold in the medical metals
industry, sources said. Although the hospital sector could mean
a 380,000-tonne opportunity for antimicrobial copper, according
to a presentation by Andrew Kireta Sr., president and chief
executive officer of the New York-based Copper Development
Association (CDA), that's just a drop in the bucket for
But even if aluminum and stainless won't take
much notice if copper inches into their massive market shares,
the possible change could still mean big things for copper
itself. A far smaller market than either aluminum or stainless
steel, copper could have a lot to gain from even a modest
increase in demand due to its current and future supply
constraints, sources said.
"Supply's ability to respond is very limited
for copper," Layton said, noting that the copper mines of
tomorrow likely will be smaller than the giants of today.
Wilson agreed. "Most of the relatively easy,
accessible copper deposits are already being exploited. Big
deposits are still out there, such as ones in southern Siberia
and Mongolia and other difficult operating regions, not only
geographically but politically," he said, noting that even if
new mineralizations are discovered, it still takes 10 to 15
years to bring a copper mine on-stream. "This has been one of
the major issues in mining over the past decade."
But a delay in new supply might not be such a
bad thing, as even players in copper's corner admit it could
take years for the new application for copper to really take
"We could say at this point the market is in
it's early development stage," said Ed Rottmann, vice president
of sales, marketing and product development at the ACR Tubes
Americas division of Luvata Oy. "(Customers) are aware of the
testing we're doing and more aware of this property of copper,
but demand is currently at, well, the insignificant stage."