Copper and Copper Semis Market Intelligence

Industry Outlook & Drivers

Global Market Outlook on Copper and Copper Semis

• Though there is a decline in the demand in some of the key ore producing regions like South America and Australia, there has been an overall increase in demand, of 1 percent, in the copper semis market for 2016
• The Chinese market for production of semis was close to 45 percent in 2015 and covers a broad range of industries. Countries like India and Indonesia have shown a demand increase of 7.3 percent owing to the demand from the electrical industry's growth

Market Overview Copper Cathodes

Cathode Demand and Supply (MMT) - Global

• The demand is expected to increase at a CAGR of 2.4 percent in the upcoming years, to reach 33.12 MMT by 2018, due to the increasing requirement from the growing end-use industries
• However, the constant pressure on the mines to increase output to meet the demand has shown a deficit of 8 percent in 2016. The increase in supply is however expected to have a CAGR of 2.4 percent during 2015-2018
• Major cathode suppliers like Codelco, Freeport McMoRan, UMMC are mining companies that are vertically integrated to produce copper cathodes. Copper cathodes are generally Grade A copper, with purity levels of more than 99.99 percent

Cathode End Use Demand Share (23.3 MMT: 2016)

• Globally, the end-use demand for copper cathodes is primarily from the wire rods market. This constituted to nearly 61 percent, followed by the flat rolled products that contributed to 14 percent
• The unclassified items includes cathode rods, bars and ingots, which may be further re-casted and be used for preparation of new variety of alloys
• On the positive side, infrastructure projects across the globe are projecting exponential growth in building and construction, electronics, electrical and automotive industries and this is expected to increse the demand for copper semis.
• However, the demand may be met using copper based alloys or aluminum substitutes when it comes to end use like wires

Market Overview Copper Wires Rods

Wire Rods Demand and Supply (MMT) - Global

• The demand is expected to increase at a CAGR of 4 percent in the upcoming years, to reach 25.5 MMT by 2018, due to the increase in end-use consumption
• Supply is also expected to have CAGR of 4 percent and the demand shortage gap is expected to be filled by recycled copper
• The nature of the market is highly fragmented and the ability of suppliers vary based on the size of the wire, quality of copper and the facilities available for production
• Some of the major suppliers of wires rods include Aurubis, Jiangxi Copper, Jiangru, Nexans, LS group, Free port McMoRan etc

Wires Rods Demand Share (18.2 MMT: 2016)

• Copper wire rods are primarily used in the electrical industry for further being drawn into wires
• Wires may include cables for power transmission, building wiring, communication wiring etc.
• An average copper content in a car is 22 kg, and the length of wires used in a car is nearly close to 1.8 km
• Due to lower thermal expansion and corrosion resistance, several applications like industrial wiring, marine wiring, underground wiring and wiring used in salty environments are copper wires
• Electronics also uses wiring to a minor extent, however the conduction in electronics is mostly using other forms of copper semis

Global Copper Semis Drivers and Constraints

Drivers:

End Use Market

Major end-use industries such as construction, consumer electronics, automotive, medical and powder metallurgy are showing a positive growth rate (2017-2020) and these industries are expected to drive the demand for copper PSS, tubes, wires, rods and bars, foils and powder respectively.

Technical Advantage Over Substitutes

End-use products such as industrial power cables, automotive radiators and high temperature applications depend on copper due to their high corrosion resistance and low expansion coefficient. This technical advantage is expected to result in driving the market for copper semis like wires, PSS and tubes.

Environment Concerns

Copper is a green earth metal, having a 100 percent recyclability. With growing environmental concerns of depletion of mineral sources, copper semis such as PSS are preferred in the construction industry and this is a very important driver for the copper semis market.

Constraints:

Cost Reduction Pressure

With a growing demand for the end-use industries of copper, a constant pressure has been there to reduce the cost of production of semis. Although prices have shown a decline in 2016, copper proves to be four times more expensive than aluminum, which proves to be a substitute for many applications.

Inefficient Recycling

Though the potential for recycling copper is 100 percent, the global, net effective recycling rate is less than 40 percent as per the Bureau of International Recycling. This essentially creates a supply deficit for copper semis production by almost 5-8 percent annually and globally identified sources of mines are expected to start production only by 2018 to meet this demand. This scenario drives the end-use markets to look into aluminum substitutes and there by proves to be a market constraint for copper semis