Peregrine Financial: Little Room For Further Shift To Aluminum From Copper

 There is little capacity for further substitution to aluminum from more-expensive copper, says Bob Tebbutt, vice president, risk management, with Peregrine Financial Group Canada. Copper is trading 3.685 times the price of aluminum, well above the 1.65 by which aluminum would be the cheaper metal in applications where copper is commonly used, he says. “However, since early in 2004, copper was trading above the magic 1.65 times aluminum’s price and has increased that premium to its present 3,685 level. This has taken about 400,000 tons per year out of copper’s demand for electrical wiring despite aluminum’s 65% deficiency in electrical conductivity, thermal conductivity and ductility,” Tebutt says. Therefore, he says, there is little extra capacity that aluminum can take from copper. “Certainly, aluminum has gained sharply lately but the cause may be more the fact that 30 to 40 percent of the world’s aluminum smelters are running at a loss at present price levels and may cut production to mitigate the losses.”