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China’s Order Grid Corp., the region’s biggest buyer of copper, has slowed purchases of copper wire at the same time as it has ramped up purchases of aluminum cord, a cheaper alternative. Sometimes a natural reaction to rising copper prices, the exchange has sparked debate over whether something bigger is afoot – if the metals industry’s most influential but obscure buyers may be undergoing a policy change that could shake the world. Will create a stir throughout. market.
The possibility of large-scale replacement of copper in China’s energy networks will have a significant impact on global demand, and some buyers present this as a reason to count on the heavy consensus for increased shortages and rising copper prices going forward. are doing. Year. China is the region’s largest consumer of copper, with more than a quarter of the world’s supply destined for Chinese electric cables.
Still, buyers and trade officials said such a mainstream effort is still underway – small-scale replacement free of high-priced copper has been a long-running theme in the market, and is tending to attract more every Consider bar costs. Others suggested that the change at this time was merely a brief reaction to rising prices.
“This is not a new topic in China, but it has been going on for years without significant progress from the state grid,” said Chenfei Wang, head of cord and cable at CRU Workforce in Shanghai. “Whenever copper prices rise the topic becomes ‘hot’.”
Copper has been the metal of choice for use in electrical energy since the days of Thomas Edison, but aluminum – less conductive but also lighter and cheaper – has long been outdated as a surplus. Since aluminum is less conductive, aluminum cable must be larger than copper cable to transmit the same amount of electrical energy.
For uses where weight is dominant but there are no constraints on length, such as overhead power transmission lines, aluminum is frequently used. The length of space is top class, copper beats the equivalent of underground cabling in city facilities. Aluminum is also known to be less safe, this was cemented in the 1970s as high copper prices increased the importance of aluminum in household wiring and electrical fires increased.
Globally, substitution has reduced copper consumption by about 1 and 1.5% per day over the past decade, according to a recent report by the Global Copper Association.
While the global copper market is certainly on the edge for now – largely due to weak buying in China – there is a widespread view that the industry is headed for widespread losses in the coming years, causing prices to rise dramatically. Can.
In China, copper is legally required for use in certain types of wiring or in a power incident, so buyers are on high alert for any sign of a policy change.
The largest feature of the region, the order grid provides electric power to more than 80% of China. Alternatively, it only uses public tenders for certain purchases, or even the closest does not always highlight whether it is purchasing aluminum or copper wire, making tracking purchasing choices difficult. gets tough.
However, many analysts and industry executives said the order grid has slowed copper and cord cable purchases in recent months, as copper prices hit a fresh record on the back of bullish buying.
A major grid provider said his company’s copper cable sales were down about 20% in the second quarter.
CRU’s Wang said tenders for insulated steel energy cables surrounding the grid slowed from April due to the cost of Grand Copper, although some work has restarted and costs have come down.
Meanwhile, sales of aluminum cables were growing rapidly. Order grid tenders for aluminum cables rose 40% in the first four months to 718,000 lots today, according to the Shanghai Metals Marketplace.
And there was increasing discussion about using aluminum in place of copper.
Already in China, as in most regions, aluminum is obsolete in high-voltage overhead power cables, where its light weight is an advantage. However, according to data given at a business conference organized by the China Nonferrous Metals Business Association in Shanghai, China still uses about 7.5 million lots of copper in electrical cables per moment, which is equivalent to 3 million lots in aluminum. 3 July.
suitable day
Regarding the country’s ample aluminum sources, reliance on copper imports and aluminum’s financial competitiveness over copper, association president Ge Honglin said at the conference earlier this week, “It is an opportune time to promote aluminum replacement for copper. Is”. Aluminum has achieved “industrialized” importance in the low-voltage grid, GE said.
One cable provider to Order Grid has increased its aluminum purchases by nearly 50% within a few months, according to a person familiar with the matter. Yet he cautioned that the growth in demand for aluminum cables looks to be for importance on construction sites – and therefore compact installations – rather than importance within the energy grid.
Order Grid did not respond to a request for comment.
The region’s leading cable maker, Italy’s Prysmian SpA, may also be skeptical about the prospects for a widespread, global shift toward aluminum unless the business faces a real steel shortage.
Consumers of Prysmian in fast-growing areas of use – such as ultra-high-voltage cables for connecting new renewable functions to regional grids, or cables for applications in artificial intelligence knowledge centers – choose copper because it is more environmentally friendly. And civilized, said Maria Cristina Bifulco, chief sustainability officer
“To be honest, we haven’t seen any changes due to concerns about potential shortages or the price of copper,” he said.
Nonetheless, it is clear that rising copper prices are having an impact on some segments of the market. “Thrifting,” some of which involves aluminum substitution, has already reduced copper demand by 400,000 lots, Citigroup Inc. analyst Max Layton said in a recent interview.
“The likelihood of a policy change is increasing in our view,” Citigroup analysts wrote in a contemporaneous statement. “If large-scale replacement of aluminum is realized, there is a risk that copper price upside will be limited.”
–With help from Dan Murtaugh.
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