Of course, there is an intermediate “semi-finished” product between aluminium and copper raw materials and wires for making cable: wire-rods. The world’s wire-rod capacity generally has not been a limiting factor in cable production, and it has not made a substantial contribution to changes in wire prices. The suppliers of wire-rod include many of the world’s large wire-and-cable companies, copper suppliers, and other metal-supply companies. The manufacturers have invested in wire-rod production lines as demand has progressed, especially in higher-growth markets such as China, the GCC countries, and some countries in Eastern Europe.
According to CRU’s tally, the world had 180 copper wire-rod mills operating in 2015. This figure is up slightly from 175 in 2012. Capacity at these operations ranges from six tonnes per year to more than 400 tonnes per year. The total capacity of the world’s copper wire-rod mills was more than 25 million tonnes, putting the world average utilization rate at about 60% for 2015. Thus, there is ample wire-rod capacity in most geographic regions to have robust competition among the suppliers and to keep pressure on prices.
China’s copper wire-rod capacity increased from 6.5 million tonnes in 2012 to 9.3 million tonnes in 2015. During that time, the number of copper wire-rod mills operating in China increased from 36 to 42. China’s total wire and cable output was 6.6 million conductor tonnes in 2015 and 6.8 million in 2016. Some of that total would have included aluminium conductor. Thus, the copper wire-rod mills in China on average have had a utilization rate of about 60% in the past two years. In other words, the investments in new wire-rod capacity for China have matched or exceeded the pace of growth in the Chinese wire and cable industry’s consumption of copper wire.
For both North America and Western Europe, the region’s copper wire-rod capacity did not change from 2012 to 2015. In North America, the average utilization rate has been about 60%. In Western Europe, the utilization rate has increased from 62% in 2013 to 67% in 2015. The capacity in other regions has been flat or up slightly. In most cases, new capacity has been added to achieve a local supply in order to minimize transportation costs, trade imbalances, or manufacturing costs. In all regions, the utilization rate is under 70%, and in some regions, it is under 50%. This means that copper wire-rod capacity will not cause any significant problems in the supply of cable raw materials for the foreseeable future.