high spread between copper and aluminum prices continues to put
pressure on Chinese cable producers to substitute aluminum
alloy for copper, an issue that captured the spotlight during a
recent copper conference in Kunming, China, held by Beijing
Antaike Information Development Co.
"At present, 50
percent of the cables are made of aluminum alloy in North
America, and this number is about 60 percent in Europe and 70
percent in South Korea and Japan, while this number is less
than 10 percent in China," Antaike analyst You Zhenping said at
the conference. "Under the current high copper price and fierce
price competition among cable producers, many cable producers
are seeking technology to lower costs."
industry accounted for 64 percent of the countrys total
copper consumption in 2012, reaching 5.1 million tonnes,
according to the Shanghai Electric Cable Research
On the other hand, the
spread between copper and aluminum prices has grown since
October 2011, encouraging Chinas copper cable producers
to use aluminum alloy instead to reduce costs.
"By using aluminum
alloy, we can reduce costs by up to 50 percent compared with
using copper, while getting almost the same quality," a source
at one of northern Chinas largest copper cable producers
told AMM sister publication Metal Bulletin.
"Downstream consumers are willing to accept aluminum alloy
cables (because they are) 20 to 30 percent cheaper."
China ranks first
globally in its overall copper cable output, but its industry
concentration ratio is low: the top 10 cable producers only
account for 7 percent to 10 percent of total production.
Replacing copper with
aluminum alloy in cable may drive consolidation in the cable
sector, a source in Chinas copper industry said.
"There are thousands
of cable producers in China, (and) many of them are small ones.
Those companies do not have the capability to build up new
production lines for aluminum alloy, and then will lose price
advantage gradually, further being eliminated from the
producers also have an eye on Chinas cable market.
General Cable Corp., Highland Heights, Ky., entered the
aluminum alloy cable market in December 2012 by completing its
acquisition of Alcan Cable China, which represented
approximately 10 to 15 percent of Alcan Cables overall
amm.com, Dec. 4).
A version of this
article was first published in AMM sister publication Metal