According to new research by the DMM Advisory Group, substitution of copper remained very low and stable during 2019. With net material substitution standing at 244KT, the impact is significantly less than 1% across the whole of the global copper demand market.
Commissioned by the International Copper Association (ICA), the key factors impacting substitution last year were relative material costs, regulations and standards, new technologies and pressure from competitors to reduce costs.
Over the next five years copper use is expected to increase, driven by increased electrification, use of electric devices and electric mobility.
China, the largest market for copper, has the lowest relative net substitution across the world at 0.5 percent of total copper use. The country’s reliance on copper is due to cautious procurement policies and regional product specifications.
Conversely, in Latin America, where net substitution is the highest, manufacturers have experienced increased pressure to reduce costs. The pressure is due to political and economic instability and strong competition from the Far East.
The research demonstrated that new trends, such as the drive for increased energy efficiency and advanced technologies in electric motors, are advantageous for copper, especially where conductivity, heat and corrosion resistance is required. This trend was observed on many copper applications, as copper and alloys still provide the best cost-performance combinations.
Miniaturization of select copper products increased slightly in 2019. This change was due to the increased use of new technologies and product designs offering opportunities for cost reduction without the need for substitution of copper. The increase in miniaturization is led by new motor designs, smaller diameter copper tubes and material reduction in copper-rolled products (plate, sheet, strip and foil) and alloy products.