The copper industry, as the main upstream industry of the wire and cable industry, has also coexisted with “internal troubles and foreign troubles” in recent years. On the one hand, the peer competition is becoming more and more fierce, and on the other hand, it is also threatened by substitutes.
As we all know, copper is an important strategic reserve resource of the country, according to the current consumption level of copper resources, China’s proven copper mines can only meet the national consumption of 5 years. At present, the domestic cable industry consumes more than 5 million tons of copper, more than 60%. In order to meet the continuous demand, the country now needs to spend a lot of foreign exchange every year to import copper, accounting for about 3/5 of copper consumption.
In the lower demand structure of the non-ferrous industry, electricity, real estate, transportation (mainly automotive), machinery and electrical appliances are the main sectors. Among the subdivided metals, about 30% of aluminum is used in real estate construction, and about 23% is used in transportation (but mainly automobiles); About 45% of copper is used in power and cable fields; About 6% of lead is used in cable sheathing; Zinc is also used in houses, Bridges, pipelines, and highway and railway guardrails.
Secondly, in recent years, from the perspective of the domestic wire and cable industry, due to the high price of copper, coupled with aluminum resources are more abundant than copper resources – China’s bauxite resources are at a medium level, with 310 production areas, distributed in 19 provinces (regions). Total retained ore reserves of 2.27 billion tons, ranking seventh in the world – therefore, the copper industry has also had a certain impact.
Domestic copper industry competition analysis
The main potential entrants in the copper smelting industry are private capital and foreign capital, but private capital generally pursues short-term benefits, and copper smelting requires high initial investment and technical requirements, coupled with the state’s strict regulations on industry access conditions, the threshold is raised, the prohibition of low-level repeated construction and long construction period and other restrictions, private capital is unlikely to enter the copper smelting industry on a large scale. Copper is a national strategic resource, is of great significance to national security, the state has strict restrictions on the entry of foreign capital, foreign capital is mainly concentrated in the copper processing industry. Therefore, on the whole, the potential entrants to the current major copper companies are not a threat.
At present, China’s copper smelting and processing industry is currently facing a large number of enterprises and small scale, in 2012, large enterprises in the industry accounted for 5.48%, medium-sized enterprises accounted for 13.87%, small enterprises accounted for 80.65%. The overall R&D strength of the enterprise is not enough, the low-cost advantage is gradually fading, copper mining smelting enterprises into the copper processing industry on a large scale, the high degree of marketization of enterprises and the production capacity of low-end products and a series of development status quo. In the long-term development of China’s copper processing industry, a number of large enterprise groups such as Jinlong, Jintian and Hailiang have been formed, and a number of listed companies such as Jiangxi Copper, Tongling Nonferrous Metal and Jingcheng Copper have also emerged. Large enterprise groups have successfully realized the merger and reorganization of small and medium-sized enterprises, and domestic smelting enterprises have entered copper processing enterprises in a large scale.
Many threats to the copper industry
The development of the copper industry is also faced with alternative risks. Due to the rapid growth of copper demand and the shortage of copper resources, the price of copper products has been at a high level and fluctuated for a long period of time, and the cost of the downstream copper industry has remained high, so that the downstream industry has the motivation to find alternatives. Once the substitution of copper products is formed, it often has irreversibility. Such as the substitution of optical fiber for copper wire in the communications industry, the substitution of aluminum for copper in the power industry, and the partial substitution of aluminum for copper in the refrigeration field. As alternative materials continue to emerge, the market will reduce the consumer demand for copper. Although in the short term, alternatives will not change the scarcity of copper resources, and the application of copper products will continue to expand, but in the long term, the total demand for copper industry poses a threat. For example, in the copper consumption industry, the promotion of “aluminum copper” and “aluminum copper substitute” technology, and the promotion of the pattern of “light into copper retreat” will have a great impact on the demand for copper.
In fact, due to the high price of copper, the profits of the cable industry continue to be overstocked, the domestic cable industry “copper with aluminum”, “aluminum instead of copper” has been very high. And some cable companies take Western countries as an example – the United States Electrical Installation Code 2008 (NEC) Article 310 “General wire requirements” specifies that the conductor material of the conductor is copper, copper-clad aluminum or aluminum (alloy) wire. At the same time, the chapter specifies the minimum size of copper clad aluminum and copper, aluminum (alloy) wires, the structure of the wires, application conditions and the carrying capacity under various conditions – proving that aluminum cable products can not only ensure stable performance, but also the installation, transportation and other costs are very low, which has a certain impact on the copper industry.
Although, at present, the domestic cable industry has not been able to develop in line with market demand or widely favored by users of the “aluminum instead of copper” cable products, but the main reason is that on the one hand product technology research and development is not yet mature, the other is that domestic cable users are still in the wait-and-see stage. With the continuous maturity of “aluminum-substituted copper” technology and the continuous optimization of products, it will have a great impact on the copper industry.
In addition, the state has also developed multiple standards to promote the development of the aluminum industry. For example, China’s copper-clad aluminum cable from the beginning of the 21st century began to develop, at present China has developed copper-clad aluminum wire industry standards and copper-clad aluminum cable local standards have been many. For example, China’s electronics industry standard SJ/T 11223-2000 “Copper clad aluminum wire” standard for non-equivalent use of ASTM B566-1993 “copper clad aluminum wire” standard, which specifies the structural performance requirements for copper clad aluminum conductors for electrical equipment with wire and cable. In addition, Liaoning Province issued a local standard as early as 2008: DB21/T 1622-2008 J11218-2008 “Copper clad aluminum wire and cable technical specifications” (written by the Design and Research Institute of Northeastern University). Finally, in 2009, Xinjiang Autonomous Region issued local standards: DB65/T 3032-2009 “Rated voltage 450/750V Copper-clad aluminum composite core PVC insulated cable” and DB65/T 3033-2009 “Rated voltage 0.6/1kV and below copper-clad aluminum composite core extruded insulated power cable”.
In summary, the cable industry’s largest raw material supplier – the copper industry continues to accept challenges from inside and outside. On the one hand, the lack of domestic copper resources, on the other hand, the cable industry “aluminum saving copper” technology is constantly accelerating research and development, therefore, where will the copper processing industry go in the future, but also need to jointly test the upstream and downstream markets.
Post time: Feb-28-2024