Copper end use trends

Nexans reported that it saw strong improvement in performance in H1 2011. The cable maker said that sales at current metal prices amounted to €2.3B in H1 2011, up by 8.9% y-o-y. Despite this, the company announced a pre-tax loss of €133M compared with a €5M profit in H1 2010. This was mainly attributed to the inclusion of a €200M reserve relating to an ongoing E.U. proceeding for alleged anticompetitive behaviour in the submarine and underground power cable sector. The company realised an organic growth over the period of 8.2% y-o-y and said that all business units exhibited growth, especially the Industry and Building unit. Nexans is targeting sales growth of between 5 and 7% for full year 2011.

China Customs announced that exports of copper semis fell by 1.3% y-o-y to 259,470t in H1 2011. Exports of copper wirerod and profile were down by 14.8% y-o-y to 3,900t in the same period. The fall in exports is considered to be the result of weak demand from Europe and the US as well as Chinese producers' shift to higher added value copper semis.

Tianjin Chuangxinyuan Investment Co. Ltd. has announced plans to invest RMB613M in the development of a high-precision copper strip and foil project in Tianjin. Upon completion, the project will have a production capacity of 10,000t/y of high precision copper foil and strip. The project is expected to generate a turnover of RMB600M/y. Trial production will take place in October of this year, following the installation of two production lines with a combined capacity of 2400t/y. Tianjin Chuangxinyuan Investment will become China's biggest producer of copper strip and foil upon the project's completion.

"EV infrastructure roll-out is continuing at pace, but efforts at establishing universal standards for the industry is still playing catch-up"

Olin Brass Corporation, the US based manufacturer of copper and copper-alloy flat rolled products and fabricated components, said that the top challenges facing brass mills are weak end-use demand, volatile copper prices and overcapacity. The company estimates that the average capacity utilisation rate is just 55-60% in the US. In addition, it expects consumption of copper strip products in the US to total 829Mlbs in 2011, down from 1600Mlbs in 2000.

A new era for commodities Cheap resources underpinned economic growth for much of the 20th century. The 21st will be different. NOVEMBER 2011 * Richard Dobbs, Jeremy Oppenheim, and Fraser Thompson Source: McKinsey Global Institute, Sustainability & Resource Productivity Practice In This Article Exhibit: In little more than a decade, soaring commodity prices have erased a century of steady declines. About the authors Comments (2) Has the global economy entered an era of persistently high, volatile commodity prices? Our research shows that during the past eight years alone, they have undone the decline of the previous century, rising to levels not seen since the early 1900s (exhibit). In addition, volatility is now greater than at any time since the oil-shocked 1970s because commodity prices increasingly move in lockstep. Our analysis suggests that they will remain high and volatile for at least the next 20 years if current trends hold-barring a major macroeconomic shock-as global resource markets oscillate in response to surging global demand and inelastic supplies. Back to top Demand for energy, food, metals, and water should rise inexorably as three billion new middle-class consumers emerge in the next two decades.1 The global car fleet, for example, is expected almost to double, to 1.7 billion, by 2030. In India, we expect calorie intake per person to rise by 20 percent during that period, while per capita meat consumption in China could increase by 60 percent, to 80 kilograms (176 pounds) a year. Demand for urban infrastructure also will soar. China, for example, could annually add floor space totaling 2.5 times the entire residential and commercial square footage of the city of Chicago, while India could add floor space equal to another Chicago every year. Such dramatic growth in demand for commodities actually isn't unusual. Similar factors were at play throughout the 20th century as the planet's population tripled and demand for various resource

The European Commission has invited interested third parties to send comments on Glencore's proposed acquisition of an Italian copper rod and semis producer. Earlier in November, Glencore submitted a prior notification of its intention to assume sole control of Carlo Colombo via share purchase.

Data released by the China Nonferrous Metals Industry Association (CNIA) indicates that in the first three quarters of this year China's production of copper semis reached 7.57Mt and apparent consumption reached 7.79Mt. This denotes a growth rate of 4.4% and 3.0% respectively.

Furukawa Electric Co., Ltd. said that it had recently started mass production of aluminium wire harnesses, which it promised can reduce weight by 40-50% from traditional copper harnesses aiding weight reduction in automobiles. It will supply wire rods from a factory in Indonesia to manufacture and assemble the electric wires in a subsidiary in Vietnam and it will manufacture harnesses used in the door section. The news follows Furukawa's early December announcement of an agreement to acquire the automotive connector business of Mitsubishi Cable Industries, Ltd. Furukawa said that it expected the acquisition to aid the development of new aluminium wire harness technologies and high voltage cables for electric and hybrid vehicles.

According to Chinese customs figures, imports of copper reached 508,942t in December, up 18% m-o-m. This is the seventh consecutive month which saw a m-o-m increase in the level of copper imports. The growth has been accredited to the arbitrage between the LME and the SHFE. Nevertheless, China's total imports of copper in 2011 were down 5.1% y-o-y, reaching 4.07Mt.