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Aluminum alloy will continue to replace copper in Chinese cable

The use of copper in cable will remain under threat of subsitution from aluminum alloy in China as a result of the continuing high spread between copper and aluminium prices.

Aluminum alloy usage in cables captured the spotlight during a recent copper conference in Kunming, held by Antaike.

“At present, 50% of the cables are made of aluminum alloy in North America, and this number is about 60% in Europe and 70% in South Korea and Japan, while this number is less than 10% in China.

"Under the current high copper price and fierce price competition among cable producers, many cable producers are seeking for technology to lower costs,” Zhenping You, an analyst from Antaike, stated in the conference.

China’s cable industry accounted for 64% of China's total copper consumption in 2012, reaching 5.1 million tonnes, according to the Shanghai Electric Cable Research Institute.

On the other hand, the ratio between copper and aluminum prices has grown since Oct 2011 encouraging China’s copper cable producers to use aluminum alloy as a substitute to reduce costs.

“By using aluminum alloy, we can reduce costs by up to 50% compared with using copper, while getting almost the same quality,” a source from one of China’s largest copper cable producer in the north of China told MB.

“Downstream consumers are willing to accept aluminum alloy cables due to 20-30% cheaper price.”

China’s current overall copper cable output ranks first in the worldwide, but industry concentration ratio is low: the top ten cable producers only accounts for 7%-10% of total production.

The replacement of copper with aluminium alloy in cable may drive consolidation in the cable sector, a source in China's copper industry said.

“There are thousands of cable producers in China, 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 market.”

International cable producers also have an eye on China's cable market.

General Cable Corp entered the aluminum alloy cable market by completing its acquisition of Alcan Cable China on December 3, 2012, which represented approximately 10% to 15% of the overall revenues of Alcan Cable.


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