China opts for aluminium over copper

China's demand for copper, the biggest in the world, might have been reduced by about 20,000 tonnes a year in the communications sector alone as some consumers turned to cheaper aluminium, a copper company executive said.

Copper's use in construction had also fallen as users favoured aluminium and other metals and alloys, said Cai Minzheng, head of marketing at Chinalco Luoyang Copper Co, at a conference in Hong Kong today. Aluminium wires and cable with copper coating were being used increasingly for communications, he said.

Copper prices have risen 14 per cent so far this year, compared with a 1 per cent drop in aluminium prices, on the London Metal Exchange. Substitution may reduce copper imports by China, which more than doubled in the first four months of this year, and help to prevent the price from rising further.

Substitution with alternative materials such as aluminium, stainless steel and plastics may be encouraged by "the need to make more with less'' through improved design techniques and optimisation of materials usage, Cai said.

The trend had been limited in the power cable sector, which accounts for 60 per cent of China's copper usage, he said.

Cash prices for nickel on the London Metal Exchange will average $39,700 a ton this year, up 63 per cent from 2006, Barkas said. The prices will fall to $34,172 in 2008, $22,046 in 2009 and $16,535 in 2010. It closed at $51,650 yesterday.

The rising nickel and stainless steel prices may force users including construction and packaging companies to switch to aluminium products, the land ministry's Zhang said.

Cash prices of aluminium ingots on the Shanghai Changjiang market have fallen 5.4 per cent in the past year to 20,540 yuan a tonne.

"If aluminum prices fall further, there will be wide substitution for stainless steel in buildings and packaging industries,'' Zhang said, "Nickel prices are likely to hold up at the high levels before next year.''

China's production capacity for nickel may rise to 124,000 tonnes by 2010, from 72,700 tonnes in 2005, the land ministry's Zhang said. Stainless steel production is expected to rise 70 per cent to 9 million tonnes from 5.3 million tons in 2006, said Zhang. "The growth in China's demand for nickel will peak in 2010 and slow down afterwards.''

Global stainless steel output is forecast to rise 5.1 per cent to 29.8 million tonnes in 2007, after rising 17 per cent last year, the International Stainless Steel Forum said. China's stainless steel production may rise as much as 50 percent this year, after gaining 68 per cent in 2006 to 5.3 million tonnes, Chai Zhiyong, president of Shanxi Taigang Stainless Steel Co, said May 21.