Copper end use trends

Aurubis AG, a leading producer of unwrought copper and copper semis, announced its third quarter results. It reported pre-tax profits to have risen by 41% y-o-y to €111M and total net revenues of €3.294B, up by 32% y-o-y. The company produced 198,000t of copper wirerod, down by 6% y-o-y, whereas production of copper shapes was up by 10% y-o-y, amounting to 55,000t. Within this area, Aurubis' product mix is characterised by an increasing proportion of speciality products. The company noted cooling demand for its copper products during April to June 2011, attributed to seasonal factors.

Industry insiders have revealed that the first stage of Tianjin North China Cable Company's 220,000t/y copper rod project is currently undergoing trial production. The second stage of the project will entail the installation of an Italian CCR production line which will add a further 100,000t/y of production capacity. In addition, the second stage will also involve the installation of a new wiredrawing production line and a production line of electrolytic copper. The total investment required for the realisation of the project is estimated at around US$156M.

PKC Group Oyj, the Finnish wiring, cable and electronic manufacturer, signed an agreement to buy AEES, the North American wire harness manufacturer, for €109M in cash and €1.25M in newly-issued PKC shares. PKC principally produces wiring harnesses for the automotive industries in Europe and South America. The company cited the rebounding market environment and AEES' strong North American regional market share as a leading supplier to the heavy and medium truck production sectors as reasons for the takeover.

Hellenic Cables S.A. announced the acquisition of Fulgor S.A. through a 100% share purchase. Fulgor S.A. is a producer of cables, conductors and bare copper and aluminium wire rod, with significant experience in producing value added products such as high voltage and submarine cables. Fulgor S.A.'s Soussaki Corinth plant has a production capacity of 50,000t/y of cables and conductors and 45,000t/y of copper and aluminium wire rod. Hellenic Cables believes that the acquisition will strengthen its export orientation and enrich its product portfolio.

Some Chinese air conditioner manufacturers, including GREE, Hisense and Haier have recently increased their selling prices by RMB100 - RMB200 nationwide in response to rising costs, mainly attributed to higher copper prices. Chinese air conditioners are now, on average, RMB463 more expensive than last year, representing a price increase of 16.3%. It was reported that sales over the past year increased and production rose by 41.8% y-o-y in H1 2011. Demand is expected to weaken as autumn approaches but prices may climb further depending on copper price movements and the degree to which manufacturers' margins are squeezed by the recent removal of the energy-efficient air conditioner subsidy.

Jingcheng Copper, a Chinese brass mill, expects to increase capacity of copper sheet and strip from 90,000t/y to 120,000t/y through a new plant, which began construction in December 2009 and is expected to be operational in December 2011. Investment amounted to RMB495.0M. It was reported that the company produced 81,899t of copper products in 2010, up by 5.0% y-o-y and is targeting production of 82,500t in 2011, up by 0.8% y-o-y.

According to data released by the Japanese Electric Wire and Cable Makers' Association, copper wire and cable shipments totalled 55,100t in July 2011, down by 7.5% y-o-y and representing the lowest level on record for July. The figure is down from the revised June figure of 56,723t, attributed to exports halving and domestic demand contracting by 5.4%.

The first stage of Tianjin Huaruide Copper Semis Company's environmentally friendly copper rod production project has come on stream. A highly efficient continuous casting line has been installed as means of minimising pollution generated by the plant. The 20,000m2 facility is located in Wuging, Tianjin City, and required an investment of RMB50M. Stage two of the project is currently under construction.

Figures released by the General Administration of Customs indicate that Chinese imports of refined copper rose by 8.8% m-o-m in July to reach this year's monthly peak level of 192kt. However, July's imports still represent a decline of 13.5% y-o-y and a year-to-date contraction of 30%. The month on month rise is attributed to the favourable SHFE/LME arbitrage during May and June. However, it remains to be seen whether the import figure indicates stronger Chinese copper consumer demand. Imports of copper scrap rose to 432kt in July, up by 14.2% y-o-y, which brought the total year-to-date figure up to 2.63Mt, up by 9.1% y-o-y.

Anhui Jingcheng Copper Share Co. Ltd. announced on 23rd August that the commissioning of its 30,000t/y high precision copper strip project will be suspended until 31st December 2011. The project was originally intended as a high precision copper alloy operation with a production capacity of 20,000t/y, but in May 2009 plans were revised to develop a 30,000t/y high precision copper strip project at an investment cost of RMB495M.

SWCC Showa Holdings Co., Ltd, the Japan-based cable and systems manufacturer, announced plans to construct a copper wirerod plant in China during fiscal year 2012. The new factory, which will have an annual capacity of 60,000t, will be located in Tianjin. Investment is expected to reach RMB1.0B - RMB1.5B. In China, high-quality copper wire is in demand because it is used in winding wire assembling, primarily for automobiles. The company said it also plans to invest RMB1.5B in adding equipment to its factory in Zhejiang to double annual capacity there to 60,000t.

To improve streamlining and strengthen businesses in China, SWCC Showa Holdings is to increase capital investment by US$83.5M - an increase of around 60%y-o-y, the company said. Broken down, this will be an increase of around 75-80% for domestic investment and around 20-25% for overseas investment. Domestically the company said it will focus on streamlining to strengthen profitability; improving the productivity of electric wires for construction and electric power fields and replacing production lines for fibre optic cables. The overseas investment will be to increase the capacity for growth markets such as copper wire rods and industrial electric wires, the company said.

The Japan Copper and Brass Association reported that output of rolled copper fell by 4.1% y-o-y in July to 71,978t. This signifies a second consecutive y-o-y decline in output. The drop has been attributed to lagging demand from the automotive and chip sectors. Nonetheless, rolled copper output increased by 2.8% m-o-m.

The General Administration of Customs reported that imports of copper scrap to China increased by 14% y-o-y and 3% m-o-m to 432,320t in July 2011, the highest level recorded in 2011. The increase has been attributed to importers' expectations of increasing copper prices in the future as well as lower price fluctuations in copper scrap compared to refined copper observed in June and July.

Furukawa Electric Co., Ltd. announced plans to integrate three subsidiaries related to electrical power parts by April 2013. The subsidiaries it is considering are the Asahi Electric Works Co., Ltd. engaging in power transmission, Inoue Manufacturing Co., Ltd. producing underground power lines and Furukawa Power Components Inc. which produces overhead distribution lines. The merger will form a comprehensive parts manufacturer encompassing the entire electrical supply network ranging from power plants to consumers. In the future, it plans to mobilize technology and management resources to strengthen overseas deployment as well as research and development for new energies. Following the integration, it aims to increase sales from about ¥17 billion in total in 2010 to ¥30 billion by 2016.

Luvata, a major copper semis fabricator, announced that it expects a 10% rise in sales in 2011 on the back of strong Asian demand. The company expects sales of around 335,500t of copper semis this year, in comparison to 305,000t in 2010. In 2010, Luvata achieved sales growth of 19.6% y-o-y. The company believes that copper demand is recovering well, with robust growth in China and South East Asia, where the residential construction, manufacturing and electrical engineering sectors are performing strongly.

Steel Dynamics Inc. (SDI) is facing community opposition to a planned copper rod facility in New Haven, Ind., that could delay the start of full construction at the greenfield site. The Indiana Department of Environmental Management's Office of Air Quality will hold a public meeting on 15th September about the plant, a joint venture with La Farga Group, after receiving almost 80 public comments from residents with environmental concerns.