From 1970 to 2004, the LME price of copper ranged from US$1,044 to US$2,800 per tonne. For most of these years, aluminium was less expensive per tonne, but often by only a few percentage points. The ratio of copper to aluminium prices per tonne was less than 1.5 until 2004, when copper prices began increasing more rapidly than aluminium prices. The ratio of copper to aluminium prices, in terms of US dollars per tonne, increased to 2.0 in October of 2005, then 3.0 in August of 2006, and 4.0 in August of 2012. Since then, the price ratio has fluctuated between 3.0 and 4.0, and it has been near 3.0 in Q1 of 2017.
The outlook is for both aluminium and copper prices to increase in the next few years. Copper prices are expected to increase at a faster rate than aluminium prices. This means that there could be more applications for which it may make sense to substitute aluminium for copper conductors. The business case for switching from copper to aluminium for cable conductors varies among applications and cable types. In some cases, copper remains preferable due to its advantages in size, corrosion properties, and termination or connector characteristics. In other cases, weight and cost are more critical, and aluminium may be preferred.
Finally, experience shows that some companies – cable customers such as power companies – have proven more willing to switch, and other companies seem inclined to stay with copper. Sometimes the preferences are nationwide. In some cases, these national preferences may be due to local or national standards, specifications, government policies, or building codes. Or there can be concerns about compatibility with existing infrastructure, maintenance procedures, and other issues of user preferences, not just cable prices.
In 1996, the insulated wire and cable market was 9.7 million conductor tonnes, of which 0.9 million tonnes, or 9%, were aluminium. In 2016, the total market was 17.5 million tonnes, and aluminium’s share had increased to 15%, or 2.6 million tonnes. The CAGR for all conductor tonnes was 3.0% from 1996 to 2016. The CAGR for aluminium conductor tonnes was 5.7%, and the CAGR for copper tonnes was 2.7%.
As the cable industry adjusts to the end of the historically low-price environment, margins will remain under significant pressure and some increased substitution opportunities are forecast. For example, subsea power cables for offshore wind cables have been identified as a strong possibility for conductor material changeover, and some evidence of this has been observed already, even without the hike in differential pricing.
The percentage of aluminium in winding wire production has increased from 2.8% in 1996 to 9.1% in 2016. These percentages are based on conductor tonnes. Aluminium has achieved a greater penetration in power cables, rising from 10.4% in 1996 to 16.2% in 2016. Promising cable applications for aluminium include electric power networks and automotive wiring. In power networks, there are fewer concerns with corrosion, which has proven to be an issue for termination, connections, and splicing. These issues, along with concerns about fire safety, are obstacles preventing greater use of aluminium in building wiring and appliances.
In automotive applications, lower weight is a big issue for car makers. As a result, the auto companies are working to address the problems that oxidation can cause in cable terminations. So far, aluminium is still a small percentage of total vehicular wiring – less than 20%. But experience in the last 10 years indicates that aluminium will penetrate the various applications and wiring harnesses within a car over time, and it will gradually increase its overall vehicular market penetration model by model.
The first main application in cars and light trucks was battery cables, which have a comparatively large diameter for automotive wiring, plus a short length, and a large welded-on lug-type connector. In the 1970s, some car companies used copper-clad aluminium for battery cables, but by the 1990s, all-aluminium cables were in widespread use. For other vehicular applications, the car makers are developing approaches to overcome issues with aluminium’s strength, flexibility, oxidation, and thermal creep. These approaches include techniques for cable sealing, new connector interfaces, crimp-on terminations, and welding strands together.
The first car model with aluminium used in a wiring harness was the Toyota Yaris, introduced in 2009. Since then, other models have incorporated aluminium wiring. Japanese car makers initially led this trend, but US and European car makers are following. In 2016, aluminium accounted for less than 5% of wiring harnesses, by weight, but the trend will accelerate as US and European car makers also roll out models with aluminium harnesses.