Record Copper Prices Encourage Substitutions

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"Aluminum gains some sparkle for manufacturing and construction."

Copper's price surge this year is sparking a switch among manufacturers to another electricity-conducting metal: aluminum.

Makers of automobiles, air conditioners and industrial components are increasingly turning to the much cheaper metal to help offset rising cost pressures as the global economic recovery gains steam.

The difference between the prices of copper and aluminum is now enough to cover the costs of retooling some manufacturing processes and pay for the extra aluminum it takes to conduct the same amount of electricity as copper.

Markets ripe for the switch include wiring for automobiles and buildings and evaporator and condensing coils used in commercial refrigerators.

Such substitution has been on the rise over the past decade as demand from China and constrained mine supply have boosted copper prices. From February 2001 through last month, the metal had risen more than fivefold while aluminum gained 66%.

On average, automobiles destined for developed markets contain about 20 to 23 pounds of copper, while more-basic models built in emerging markets have about 5 to 6 pounds. Within five years, if copper rises to the $5–$6 range, Burns predicts aluminum will replace 30%–40% of the copper in automobiles.

For the construction industry, sales patterns at Graybar, a St. Louis-based distributor of electrical products, suggest that builders are likely to use more aluminum wiring during this summer's construction season than they have in recent years.

Condenser coils and heat exchangers in commercial refrigeration applications could also be ripe for substitution.

The head of the world's largest private-sector copper producer, Freeport-McMoRan Copper & Gold Inc., cited the potential copper demand from hybrid and electric cars, as well as increasing uses of electronics, where aluminum isn't as easily substituted because of space limitations.

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