CHICAGO A major consumer
of both copper and aluminum says a battle for dominance presses
on between the two markets for certain applications,
particularly as pricing differentials make the economics of
substitution increasingly attractive.
For example, as a conductor of
electricity, "we do see aluminum in some applications nibble
into copper," General Cable Corp. president and chief executive
officer Gregory B. Kenny said during the companys
investor day presentations March 26.
"Right now, aluminum is
two-thirds as electrically efficient and one-third the cost of
copper," he said. "Were not seeing a big move from copper
to aluminum, but there is some nibbling on the edges, and
aluminum is actually used in a lot of the developing
Economics plays a key role as
companies choose between the two materials, he said.
"Aluminum trades at $1 a pound;
copper is $3.44 (a pound) today. So (with) copper, (multiply)
700 million pounds of cost of goods sold times $3.44. Its
still the biggest piece of the company in those terms," Kenny
said. "But in terms of just weight, were now at
About half of the Highland
Heights, Ky.-based copper, aluminum and fiber-optic wire and
cable products companys business faces a short price
cycle, "meaning weekly or daily," he continued. "Long-cycle,
youre paid in the value-added (products). If you took the
metal out, our margins on the work we do in the cable
(business) are actually double-digit."
However, because copper has been
so volatilein 2009 alone, pricing fluctuated by more than
$2 a pound, according to chief financial officer Brian J.
Robinson"its hard to explain it quarter to
quarter," Kenny said.
"If we have inventory at $3.60
(a pound), and today copper is $3.43 or $3.44 (a pound),
thats a headwind, short-cycle," he added. But long-cycle,
the company sells through that inventory, then buys at the
lower price, he said.
Regarding material choices,
General Cable studied the ratio of aluminum to copper in feeder
cable, a heavy cable used in commercial buildings. "Because
thats a place where the specifying engineer can make a
trade and still meet code, aluminum is growing (vs. copper),"
In motor vehicles, "the number
of multiplexers inside a car and then the amount of work
thats going on in terms of signaling is huge, so (there
are) lots of places to play in terms of either copper vs.
aluminum, and then in data bus cables and (anti-lock braking
system) cables and on and on and on," said Kenny. "It rolls
right into the hybrids and electric cars, all of which are
heavy cable users. (The auto industry) is going to aluminum for
weight. Theyre also getting tremendous temperature
ratings that they want (by using aluminum)."
General Cable purchased Alcan
Cable North America and Alcan Cable China last year for a total
of $185 million. It has owned Phelps Dodge International Corp.,
a copper wire and cable producer, since 2007.
"We (now) know aluminum as well
as we know copper," said Kenny, adding that General Cable has
incorporated ideas from "people at Alcan and Phelps Dodge that
have made the whole company better."