May 27, 2002
FOR IMMEDIATE RELEASE
NEW YORK, NY— This article looks at some of the opportunities and threats facing the top six North American copper markets, which combined account for almost two-thirds of U.S. consumption. It is based on a presentation made to the International Copper Study Group in Santiago, Chile, in March 2002.
Over the past 11 years, annual North American copper consumption has increased by almost 1.1 million tons (one million tonnes), from 3,789,743 tons (3,438,000 tonnes) in 1990 to 4,868,903 tons (4,417,000 tonnes) in 2000. North America consumes 24 percent of the world's copper, with the United States accounting for 21½ percent of copper consumption and Mexico and Canada 1.4 and 1.2 percent respectively.
Building wire, the largest market, accounted for 16.8 percent of consumption in 2000. This translates into over 815,700 tons (740,000 tonnes) of copper. Copper is the material of choice, by far, in the building wiring market with a 92 percent share in 2000. Copper, by virtue of its inherent high conductivity, ductility and strength, has always been the ideal material for conducting electricity.
Copper building wire has benefited from the increase in residential energy consumption. In the 1950s, U.S. residences consumed 113 billion kWh in an average year. By the 1990s, consumption was nearly nine times as much. Even when factoring the growth in the number of homes over this period of time, consumption of electricity still quadrupled. But, homes built in the '50s didn't have all the electrical apparatus used in homes today.
This presents an opportunity for the copper industry. All rooms should be supplied with adequate capacity, in terms of number of circuits, number of outlets and wire size. It's a matter of wiring homes so they meet not only today's electrical needs, but also the electrical needs of tomorrow.
Another opportunity is power quality in commercial and industrial buildings, which encompasses problems such as harmonics and transients caused in large part by the proliferation of computers and other electronic equipment. Such problems can often be solved by using heavier gage wire in power legs and neutrals, proper grounding inside and outside the building, adequate lightning protection, and fewer outlets per circuit. A CDA market study determined these measures present an opportunity to use as much as 20-40 percent more copper wiring
Plumbing and Heating
Copper's second largest market, plumbing and heating, consumed over 628,315 tons (570,000 tonnes) in 2000, almost evenly divided between residential and nonresidential applications. In residential, the greatest usage of copper is for water distribution where, based upon a CDA market study in 2000, copper held an 81 percent share. In nonresidential applications, copper's greatest usage is in retail/restaurant buildings.
Despite copper's many strengths, plastic piping materials continue to be the main competition in water service, distribution and drainage. Steel and plastic are strong in fire sprinklers, fuel and fuel gas distribution systems and mechanical systems. But the copper industry, through the North American copper centers, is aggressively defending copper's position in this important market.
Five of the top ten automotive markets provide opportunities for copper in areas such as 42-volt systems, hybrid vehicles and myriad electrical and electronic applications.
Over the years, more and more electrical and electronic content has been added to the automobile, creating the need for growth in the power and signal distribution system, also known as the wiring harness. The current 14-volt power generation system is capped at 1,800 watts. According to a recent CDA study, energy demand could reach as high as 3,000 to 7,500 watts by 2005. This will drive the automotive industry to 42-volt systems. This transition is not expected to be an easy one for manufacturers. Many of the electrical components found on the vehicle will have to be redesigned to work effectively with higher voltage systems.
With the move toward higher voltage vehicles, some components will experience a decrease in copper content. But, as more power becomes available, new electrical components and systems will emerge, such as electronic valve actuation, electric HVAC, and electric braking, which could add several kilograms of copper per vehicle. While no one knows exactly, our analysis shows the increases per vehicle should outweigh the decreases over the next ten years.
One area already increasing in copper content is hybrid vehicles, which use batteries and an internal combustion engine for power. While there are a number of battery technologies competing for use on hybrid vehicles, nickel-metal-hydride batteries dominate the hybrid electric vehicle and electric vehicle markets due to performance, cost, safety and flexible packaging. Texaco Ovonic, the manufacturer of NiMH batteries, estimates 96 pounds of copper in each battery.
The power utilities market, which consumed over 396,830 tons (360,000 tonnes) of copper in 2000, is benefiting from the drive toward more energy-efficient motors and transformers. Industry and government associations are actively working to promote the utilization of more efficient motors and transformers. And copper's strength in conductivity is helping these products capture a larger and larger share. More energy-efficient motors and transformers means more copper used.
Air Conditioning & Refrigeration
Air conditioning and refrigeration consumed over 396,830 (360,000 tonnes) of copper in 2000. Copper, because of its superior thermal conductivity, has a strong position in this market. But, there is room for increases in unit usage due to the drive for increased energy efficiency in air-conditioning and refrigeration products. CDA is co-funding research with the Air Conditioning & Refrigeration Institute to find new ways to increase energy efficiency.
Telecommunications is a dynamic market undergoing a number of changes. Copper consumption peaked in this market in the late '70s, reached a low in the early '90s and has been climbing back since then. DSL (Digital Subscriber Line) is today's technology for copper in the telecommunications market. DSL is a dedicated circuit from your home to the telephone company's central office, using normal copper telephone lines. DSL gives users the ability to download files typically about 15 times faster than an analog dial-up connection.
Premises wiring, also referred to as structured wiring, while already established in the commercial sector, is a dynamic growing market in residential construction. Structured wiring is a system for phone, data and television wiring that interconnects rooms of the house according to accepted standards.
This year, it is estimated that almost 30 percent (some 450,000) of new homes will be built with structured wiring. Estimates indicate that a properly wired home contains approximately 20 pounds (9 kilograms) of copper structured wire
And, in the USA, there are around 106 million homes that potentially can be retrofitted with structured wiring. It is unlikely that this segment of the market will ever achieve the penetration rates we see in new construction. However, to equal the same number of homes as in new construction requires less than a one percent penetration.
The copper industry is facing threats that are real and not inconsequential in some areas. But, overall, CDA believes the outlook for the copper industry in North America is positive.
The Copper Development Association is the information, education, market and technical development arm of the copper, brass and bronze industry in the United States.
Reproduced with permission from American Metal Market © 2001 Cahners Business Information. All rights reserved.
By Emil Milker, Manager, Market Intelligence
Copper Development Association