Copper end use trends

Italian fabricator, Eredi Gnutti Metalli, said in an interview with Reuters that it foresees a slight recovery in brass rod output and further decline in rolled products for the construction sector, which has remained weak. The company plans to produce 110,000 tonnes of brass rod in the current fiscal year (2010/11), compared to 100,000 tonnes a year ago. So far its orders have been driven by restocking activity and it expects industrial demand to return to pre-crisis levels in 3 to 4 years without major shocks in the economy. The company's copper cathode purchase has been cut by 25% from pre-crisis level to around 12,000 tonnes to 14,000 tonnes a year.

It was reported that Yazaki will start assembling wiring harnesses for Volvo trucks at its plant in Klaipeda, Lithuania. Yazaki Wiring Technologies Lietuva said the above means that the company will not close down and that it will continue to operate. Even though the size of the order remains unknown, it is expected that it will last at least two years. The Klaipeda-based company is currently making wiring sets for Renault cars.

Prysmian secured EU regulatory approval for the proposed acquisition of Draka. According to the statement released by the EU antitrust regulator, "The Commission's investigation has shown that the merged entity will continue to face effective competition in the production of optical fibre cables and general wiring despite becoming the European leader in the markets concerned." It was reported that the European Economic Area consists of a number of smaller suppliers, and therefore Prysmian will continue to have a sufficient number of competitors in its markets.

Chinese imports of refined copper and copper semis plunged by 35.4% m-o-m to 235,469t in February, the lowest level in 25 months. Imports were also down by 26.9% from the same period a year ago. Analysts were expecting that monthly imports would fall, given that buying activity was impacted by the Chinese New Year. However, the outcome was worse than anticipated, partly attributed to demand concerns generated by soaring oil prices and tighter credit control.

Chilean copper producer Codelco expects that new uses of copper, mainly related to its antimicrobial capacity, will boost world demand by 300,000t/y within the next eight years. Potential end use sectors include copper fiber clothes, copper mesh cages for fish farming, and copper surfaces in health care centres and public transport. Codelco participates in development programmes which aim to promote the benefits of using copper.

Industry sources expect China to invest RMB300B by 2011 for the construction of power grids. The project, which will consist of ultra high voltage, 200-750kV and 110kV or lower sections, is anticipated to require between 1.12 and 1.25Mt of copper.

A new copper wire and cable project in Jiangxi Province, China, with total investment of RMB210M (US$32M) has entered into a trial phase. The 10,000t/y project will engage in the production of copper clad aluminium and copper aluminium enamelled wire.

Mueller Industries Inc., the largest copper alloy rod, bar and section and copper tube producer in the US, expressed interest in expanding their production facilities as well as diversifying their product range. Mueller has placed a preliminary non-binding bid letter for the 100% purchase of unnamed copper producing assets based in Reading, Pennsylvania, owned by Industrias Unidas SA de CV and its subsidiary, United Copper Industries Inc. (UCI). Mueller has allocated US$35-50M in cash for the purchase. The company has also expressed interest in buying an electrical building wire manufacturing facility in Denton, Texas.

According to Antaike, China's consumption of copper cathode is anticipated to increase stably year-on-year beginning with 7.34Mt in 2011, 7.85Mt in 2012, 8.30Mt in 2013, 8.7Mt in 2014 and 9.1Mt in 2015 before reaching 10Mt in 2020. The Chinese research group principally attribute this rise to increasing demand from the power sector.

Delphi Automotive, the wiring harness and component maker, is opening a new manufacturing facility at Moldova Noua, in the southwest region of Romania. The site will enable the company to produce wiring harness modules to meet increasing demand from vehicle manufacturers across Europe and will work closely with other Delphi facilities in the country to ensure efficiency and flexibility for its customers. Plant operations are being deployed over two phases, the company initially opened the Moldova Noua facility for testing on the 4th April and intends to open the additional 2,400 square metres of the facility in September 2011.

The State Grid Energy Research Institute reported that during the 12th Five Year Period, copper consumption is expected to reach between 23 and 25.5Mt as part of the RMB2.5T investment into power transmission.

Paranapanema, a Brazilian metal semis producer, began developing its US$47M seamless copper tube plant in the state of Sao Paulo on 27th July. Construction of the plant is expected to be completed by June 2012. The new plant will increase the company's production capacity to 36,000t/y from the current 18,000t/y.

The Japan Copper and Brass Association reported that copper semis production amounted to 73,170t in June, a fall of 4.2% y-o-y. This was principally attributed to reduced copper and copper alloy strip production due to weaker demand from the leadframe, automotive component and connector pin segments. In addition, exports of brass strip fell by 38% y-o-y in June. The report comes one month after record import levels of copper and copper alloy fabricated products which expanded by 54% y-o-y to reach 6,251t. This figure consisted of 2,203t brass bar and 1,800t copper tube with 49% of the products received from South Korea and 30% from China.

The China Electronic Appliances Service and Maintenance Association reported that sales of air conditioners increased by 60.7% y-o-y to 40M units in H1 2011. Copper constitutes over 26% of the manufacturing cost of air conditioners.