When the cost of a material rises, basic economics suggest that end-users will look for alternative materials that can deliver equivalent performance at a lower total cost. In practice the pressure for substitution of a material like copper due to its higher price may be inhibited by several factors. For example, determining if an alternative material, such as aluminium for cable conductors, really can offer “equivalent performance” may not be straightforward. Established custom and practice also carries a lot of weight, as specifiers are likely to be reluctant to switch from a tried-and-tested solution to an alternative whose performance may be less well understood.
For cable applications it is the ratio of the price of copper and the price of aluminium (“Cu/Al price ratio”) that is the most important parameter in considering potential for substitution of copper by aluminium. In order to get a fairer comparison between the metals in terms of conductance per buck, the aluminium price per tonne should be divided by 2.0: aluminium has lower conductivity than copper, but much lower density. Hence the cost advantage in favour of aluminium is even larger than the simple price comparison (per tonne) implies, though in practice some of this cost advantage would be lost in the greater volume of insulation and sheathing needed for aluminium cables. The Cu/Al ratio reached a peak above 3.0 in 2006, and has come close to this level once again in late 2007.
Despite the continuing high level of copper prices, there has not been a major shift away from copper to aluminium for conductors in wires and cables, though there has been a continuing slow drift away from copper in some applications. This general reluctance to switch away from copper to alternative materials contrasts with some other, non-cable applications for copper, where substitution has been quite rapid. For example, in many markets where copper tube has traditionally been used for plumbing in water supply and heating systems, cross-linked polyethylene (known in this application as PEX, not XLPE) tube has grabbed market share from copper. Installation methods are simpler for PEX tube than for copper, so, once the initial reluctance to switch was overcome, substitution has been rapid, given a major difference in the costs of the alternatives. In some cable markets, for example utility power cables, where aluminium conductors have long been accepted in some markets, the high copper price has encouraged a greater usage of aluminium. In other cable applications where copper very much dominates usage, there has been no rapid switch to aluminium, despite the high copper price, though the alternatives to copper are being considered more seriously. We will look in more detail at two of these cable applications, building wire and auto cable.