Copper end use trends

Luvata has completed the sale of its rolled products division to Aurubis. Luvata will now focus its growth strategy on emerging markets and highly engineered products.

Leoni AG, a leading automotive wiring harness provider, reached an agreement to acquire the outstanding 50% of its joint venture partner, Daekyeung T&G, effective on 1st January 2012. Leoni acquired 50% of Daekyeung in June 2008 after an agreement one year earlier to cooperate on wiring harness development. Daekyeung produces wiring harnesses for the automotive industry in three facilities located in China. The South Korean company is expected to generate sales between €130M - €140M in 2012 and will help Leoni's objective to double sales revenue in South Korea by 2015.

Aurubis AG, the Germany head-quartered refined copper and copper products fabricator, expressed its interest in pursuing additional acquisitions overseas after recently completing its takeover of Luvata's Rolled Products Division. Aurubis has been interested in companies which operate overseas, primarily in South America, but has so far failed to identify any likely candidates.

The stock of Cobra Wire and Cable Inc. has been acquired by Electrical Group, EIS, Inc., a subsidiary of the Genuine Parts Company. Pennsylvania-based Cobra is a wire and cable distributor to the telecom, battery and uninterruptable power supply, and marine sectors. The company is expected to generate a turnover of around US$43M/y.

Local news sources reported that Codelco, a leading copper producer based in Chile, received requests from some U.S. and European clients to cancel an undisclosed quantity of orders for copper cathode. A spokesperson from Codelco attributed these moves to increased global economic uncertainty. Amongst the company's 150+ clients, major customers include Nexans, Southwire, its German subsidiary Codelco Kupferhandel and the American Copper Partners. However, Codelco is not anticipated to struggle selling any stock originating from the cancelled orders due to demand from China.

SWCC Showa Holdings Co., Ltd. announced it has established Hangzhou Fortis Showa Wire Materials Research & Development Co., Ltd., a fifty-fifty joint venture subsidiary for analyzing materials with Fortis Group Co., Ltd., a leading manufacturer of communication cables in China. The subsidiary will be employed to locally procure raw materials for copper wirerod and cable for use in photovoltaic systems they will manufacture in China. It aims to strengthen cost competitiveness whilst also securing quality.

Sindicel, the Brazilian electric conductors and non-ferrous metals association, expects sales of copper and copper alloy wire, cable and semis to rise by 10% y-o-y in 2011. Domestic production is also predicted to increase by 10% y-o-y in the same period. The sector's output and sales has been boosted by demand from the automotive, construction and telecommunications industries. In addition, a poll of Brazilian copper products producers revealed that half were operating above 80% capacity utilisation. Ibram, the national mining association, also reported that wire and cable production will grow by 39% by 2016. This will be primarily driven by the construction industry due to events such as the 2014 World Cup, the 2016 Olympics and also government programs. According to Ibram, Brazilian output of copper products was 230,000t in 2010 and is anticipated to grow to 475,000t by 2014.

Nexans is taking copper deliveries as agreed in contracts with Codelco and has not cancelled any reservations with the Chilean miner, a Nexans spokeswoman said. Codelco, the world's top copper producer, had told a newspaper that some of its European and U.S. clients asked to cancel orders due to fears there will be less demand amid uncertainty about the global economy.

A fire broke out at Mueller Industries' Wynne factory, severely damaging a building which houses the facility's casting operations for copper tube production, as well as the manufacturing of PVC fittings and fabrication of line sets for air conditioning applications. No one was injured in the fire, however it was reported that 170 of the plant's 465 employees have been laid off. The company hopes to spread lost production amongst its 16 other US-based facilities, secure third-party sourcing and provide ongoing supply to customers.

China's Customs General Administration reported that import of refined copper declined by 11.9% y-o-y in August 2011 to 235,509t. August imports of copper concentrate, on the other hand, increased by 42.1% y-o-y to 675,928t. Copper scrap saw a y-o-y decline of 4.0% in August.

The Japan Copper and Brass Association reported that production of rolled copper products fell by 5.3% y-o-y to 70,670t in August, the biggest fall this year. The decline is linked to weak demand for chips, connectors and automobiles.

Hussey Copper Ltd, the Philadelphia-based copper semis fabricator, is rumoured to be up for sale and industry sources said that a deal is likely to be struck imminently. The company has recently been struggling to finance elevated input costs, attributed to high copper prices. In a bid to alleviate cash-flow issues stemming from the higher cost of financing, Hussey firstly reduced its payment terms in January from a 45-day to a 30-day basis. Two months later, the company asked customers to pay for freight charges on orders, which mills' traditionally absorbed into their own costs. Hussey manufactures copper and copper alloy rolled products, rods and electrical bar at two operations located in Leetsdale, PA and Eminence, KY.

China headquartered, Golden Dragon Precise Copper Tube Group Inc. has not yet broken ground at its proposed USD$100M copper pipe and tube plant in Thomasville, Alabama. The company was expected to begin construction of its first U.S. semis fabricating operation between July and August. The facility is planned to supply 100Mlbs/y of products to the heating, ventilation and air conditioning sector.