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Antitrust Guidelines for Copper Industry
Trade Association Meetings
The following guidelines with respect to compliance with antitrust laws of the United States, Japan and European Community1
are intended to govern the conduct of participants in copper industry trade association meetings, both at the meeting itself and
in informal discussions before or after the formal meeting.
Price: Competitors should not discuss future prices (including terms of sale) of their products. There is no blanket prohibition
against the mention of or reference to current or past prices but limits must be observed. Such references or mentions should
occur only when necessary in connection with the development of association programs. For example, reference to a particular
price level in comparing the cost of a copper product to a competing product is permitted. Whenever possible, such references
should be discussed in advance with legal counsel.
Competitive Information: Competitors should not discuss the market share of a particular copper producer or copper
fabricator’s products. Furthermore, nothing should be said at a meeting which could be interpreted as suggesting prearranged
market shares for such products or producer production levels. The overall market share of copper products may be discussed
with regard to competition with non-copper products and general market acceptance.
New Products: Competitors should not encourage or discourage the introduction of a new product by another competitor or
reveal a particular copper company’s plans to change the production rate of an existing product or to introduce a new product.
No company should disclose to another company whether it is in a position to make or market a new product. New products
may be discussed in a technical manner or from the standpoints of competition with non-copper products and general market
acceptance. In addition, proposed methods for and results of field and laboratory testing can be considered.
The Role of Legal Counsel: Legal counsel attends association meetings to advise association staff and other meeting
attendees regarding the antitrust laws and to see that none of the matters discussed or materials distributed raise even the
appearance of antitrust improprieties. During the course of a meeting, if counsel believes that the discussion is turning to a
sensitive or inappropriate subject, counsel will express that belief and request that the attendees return the discussion to a less
sensitive area.
A paper entitled ‘Copper Industry Trade Associations and Antritrust Laws’ is available upon request.
10/92, 5/93, 10/10
1. Other foreign competition laws apply to International Copper Association, Ltd. (ICA)’s activities worldwide.
• ThepurposeoftheinformationinthispresentationistoguideICAprogramsandprovidememberswithinformationtomake
independentbusinessdecisions.
• TheinformationcontainedinthispresentationhasbeenpreparedusinginformationavailabletoDMMAdvisoryLtd.atthe
timeofpreparationandthroughcarefullyselectedexternalinformationsources,butmakesnowarrantyastotheaccuracyof
theinformationfromthesesources.
• Anyforward-lookingstatementsinthispresentationhavebeenpreparedonthebasisofanumberofassumptions,whichmay
provetobeincorrectinthefuture.Forwardlookingstatements,bynature,involveriskanduncertainty,andDMMAdvisory
Ltd.specificallywarnsagainstbusinessdecisionssolelyrelieduponrecommendationorforecastsDMMAdvisoryLtd.presents
inthisdocument.
• Thepurposeofthispresentationistoprovideaneducatedviewonlikelyfuturescenarios,whichneedtobefurtherexplored
bytheusersoftheinformationprovided.
Disclaimer
2
SubstitutionSurvey2020
KrisztinaKalman-Schueler
Summary
4
• In2019,substitutionremainedstablewithnetsubstitutionat0.83%ofthecopperuse.
• Newtrendssupportingcopperasopposedtoalternativematerialsbecameimportantinthematerialselectionincluding:
• Energyefficiencyregulationsasforthemajorityofapplicationsitisdifficulttoreduceelectricallossbyusingaluminium,
• Aluminiumheatexchangersfacedtechnicalissuesinmanycountries,and
• Criticalapplicationsarerelyingoncopperandcopperalloysforperformance.
• Miniaturisationhasincreasedslightlyin2019asnewtechnologiesofferedopportunitiesforcostreductionwithoutsubstituting copper.The
copperproductswiththelargestcontributiontominiaturisationwere:
• IndustrialTubesassmallerdiametercoppertubesenabledcostreductionwhilekeepingthemanyadvantagesofcopper,and
• WindingWiresinElectricalMotorsasnewmotordesignssuchasthebrushlessmotors,hairpinmotorsetc.usecopperbutachieve a
reductionofthecoppervolume.
• Keyfactorsimpactingsubstitutionarerelativematerialcosts,regulations/standards,newtechnologiesandpressurefromcompetitorsto
reducecostsespeciallyinmarketswithstagnatingordecliningdemand.
• China,thelargestcopperuseregion,continuespreferringcopperasthereliablematerialandduetoregionalmaterialspecifications.
5
Examplesofcompaniesincludedinthe100+interviewsandsurveys
Netsubstitutionstabilizedat0.83%ofcopperuse,includingminiaturization1.23%
6
• The relative cost of copper and aluminum have not significantly
changed over 2019 with a stable impact on substitution.
• While substitution is ongoing, in some copper applications
developments favoring copper such as energy efficiency regulations,
and advanced technologies in electric motors supported substitution
gains.
• Many copper applications have limited exposure to substitution as
copper and alloys still provide the best cost-performance
combinations, especially where conductivity, heat and corrosion
resistance is required.
• Miniaturization is technology driven and 2019 further implemented
new technologies for electric motors, and heat exchanger.
InterviewQuote:“Substitutionhasnotchangedin2019but
wearepreparingforhighcopperprices.”LosstoMiniaturization
Substitution
SubstitutionGain
NetSubstitutionas
%ofCopperUse
TotalLossas
%ofCopperUse
-3.00%
-2.50%
-2.00%
-1.50%
-1.00%
-0.50%
0.00%
-700
-600
-500
-400
-300
-200
-100
0
100
200
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
CopperSubstitutionandMiniaturization
- inktand%ofCopperUsein2010-2019
Net Substitution as % of Copper :Use 0.83%
Total Loss as % of Copper Use : 1.23%
-1.23%
-0.83%
-3.0%
-2.5%
-2.0%
-1.5%
-1.0%
-0.5%
0.0%
-700
-600
-500
-400
-300
-200
-100
0
100
200
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Stabilityin2019
7
LowVoltage
EnergyCables
RBS,BareWire
Cu/AlloyPSSFs
CopperTubes
WindingWire
PowerCables
Alloyand
OtherProducts
TelecomData
Cables
NetMaterialSubstitutionbyproducts
2018-2019- inkt
Netsubstitutionin2019wasdrivenby
Alloys,PowerCablesandWindingWires
2018:242kt 2019:244kt
Miniaturizationbyproducts
2018-2019- inkt
2018:114kt 2019:116kt
Miniaturizationin2019wasdrivenby
Tubes,PSSF,AlloysandWindingWire
LowVoltage
EnergyCables
RBS,BareWire
Cu/AlloyPSSFs
CopperTubes
WindingWire
PowerCables
Alloyand
OtherProducts
TelecomData
Cables
0
2000
4000
6000
8000
10000
12000
Jan-05
Jun-05
Nov-05
Apr-06
Sep-06
Feb-07
Jul-07
Dec-07
May-08
Oct-08
Mar-09
Aug-09
Jan-10
Jun-10
Nov-10
Apr-11
Sep-11
Feb-12
Jul-12
Dec-12
May-13
Oct-13
Mar-14
Aug-14
Jan-15
Jun-15
Nov-15
Apr-16
Sep-16
Feb-17
Jul-17
Dec-17
May-18
Oct-18
Mar-19
Aug-19
CopperLMEcashsettlementpricemonthlyaverage
AluminiumLMEcashsettlementpricemonthlyaverage
Volatilitywasraisedasakeyissueinthesurvey
8
CopperandaluminummonthlyaverageLMEcashsettlementpricein$
InterviewQuote:“Relativematerialcostsarealwaysimportant,butcurrentcopperpricedoesnot
promptsubstitution.”
• Manufacturersoftenneedtokeepconstant
pricesforyearsafterlaunchinganew
product.Thismeansforecastingmaterial
prices2-3yearsaheadatthetimeofthe
productdesignandmaterialselection.
• Volatilepricescouldlockinmanufacturersin
potentiallyunprofitablepricecommitments
overalongtime.
• Materialpricescanbehedgedontheopen
markettoacertaindegree,butthisaddsto
thematerialcosts.
• Insteadusingmaterialswithvolatileprices,if
thereisanalternativematerial,many
manufacturersselectthealternative
materialwithamorestableprice.
StandardDeviation
Mean
=23.04%
StandardDeviation
Mean
=18.66%
Pricesused:MonthlyaverageLMECopperandAluminiumCash-SettlementPrice,
StainlessSteel3042BSheetUSaveragepriceaccordingtoMetalMiner
Forecast:Verylowimpact
9
*Forecast
LosstoMiniaturization
Substitution
SubstitutionGain
NetSubstitutionas%ofCopperUse
TotalLossas%ofCopperUse
-1.30%
-1.10%
-0.90%
-0.70%
-0.50%
-0.30%
-0.10%
0.10%
-500
-400
-300
-200
-100
0
100
2019 2020* 2021* 2022* 2023* 2024*
CopperSubstitutionandMiniaturization
- inktand%ofCopperUsein2019-2024-1.30%
-1.10%
-0.90%
-0.70%
-0.50%
-0.30%
-0.10%
0.10%
-500
-400
-300
-200
-100
0
100
• Overthenextfiveyearsaverylowimpact:
o Thesubstitutiongaindrivenbystricterregulationsand
energyefficiency,and
o Miniaturizationdrivenbytechnologyadvancementsto
reducematerialcostsandframesize.
• Atthesametime,copperusewillincreaseduetoelectrification,
theuseofmoreelectricdevicesandtheelectricmobility
revolution.Therefore,the%shareofthenetsubstitutiononthe
copperusewilllikelydecline.
• Moresubstantialchangeinsubstitutionisexpectedfrom2024
onwardsascopperusepattern(especiallyinChina)mightchange
andtechnologymightbringmoreinnovationswithimpact.
• Caveat:Thisforecastisbasedontheinformationcollectedbefore
theoutbreakofthecoronavirus.Weexpectthatthe2020
copperuseneedstobedownwardcorrectedandsubstitution
mightbeupwardcorrectedasmanufacturers,OEMsandend
userswillbefacingproductioninterruptionsandlowerdemand.
Theextendofthiscorrectioniscurrentlyuncertain.
• Furthermore,theforecastassumesnosignificantbarriersto
tradeandnounforeseeablepolitical,economicalandregulatory
challengesoverthenextfiveyears.
InterviewQuote:“TheChineseeconomy
ismovingfromaninvestmentto
consumer-orientedeconomy.Thiswill
likelyleadtostrongercostpressurefor
utilitieswithapotentialimpactontheir
materialprocurementpolicy.”
10
RegionalOverview:Chinaisstillmostloyaltocopper,otherregions’substitutionismainly
influencedbythecompetitivecostpressurelocalcompaniesface
SubstitutionandMiniaturizationbyGeographic
Regions2019– inktand%ofCopperUse
LosstoMiniaturization
SubstitutionLoss
SubstitutionGain
NetSubstitutionas
%ofCopperUse
TotalLossas
%ofCopperUse
-2.5%
-2.0%
-1.5%
-1.0%
-0.5%
0.0%
-145
-125
-105
-85
-65
-45
-25
-5
15
• Chinaisstilltheregionwiththelargestabsolute
substitutionandminiaturizationbutthelowestnet
substitutionas%ofcopperuse,askeycopperproducts
generallyexposedtosubstitutionunderlyprocurement
policiesofstate-controlledcompanies,andthesestayed
loyaltocopper.
• OtherAsia/AustraliadrivenbyIndiaexperiencedstrong
economicgrowthandmaterialsubstitutionisdelayeddue
tostrongdemandintheutilitiessector(powercablesand
transformers)andthestilltobeacquiredsubstitutionskills.
• Europe,North-EastAsiaandNorthAmericaexperienced
ongoingsubstitution,whereitwaspossibletobe
implemented,drivenbystrongcompetitivecostpressure
anddecliningoveralldemand.
• LatinAmericahasthehighest%substitutionandtotalloss
oncopperuse.Herepoliticalandeconomicalissuesofthe
region,togetherwiththeentryofverycompetitiveFar-East
producerscreatedastrongneedtoreducecosts.
Politicalandeconomical
issuestogetherwithlow-
costimportsincreasedthe
pressuretosubstitute.
China’sNetSubstitution
as%ofCopperUseis
at0.5%,thelowestacross
allregions
Largestate-driven
electrificationprojects,
economicgrowthdelayed
substitution.
0.5%
-2.5%
-2.0%
-1.5%
-1.0%
-0.5%
0.0%
-145
-125
-105
-85
-65
-45
-25
-5
15
11
Substitutiondrivers
InterviewQuotes:“Cablesareacommodityand1-2%pricedifferencecanwinthe
contract,buttheChineseimportswere20%cheaperthantheUSproducedcables.”
Very important Important Relevant Applicable Not relevantColorcode:
Relative
material
costs
Relative
weight
Relative
Footprint
Relative
Material
Flexibility
and Strengh
Relative
Material
Strenght
Relative
Conductivity
Technology/
Connectivity
with other
Systems
Regulatory
pressure
Cost
pressure
from other
manufacture
rs in the
market
Pressure
from
OEMs/end
users
Low Voltage Energy Cable
Building Wire
Automotive Wire
Equipment Wire
Power Cable
Industrial Power Cable
Utility Power Cable
Telecom / Data Cable
External Telecom Cable
Internal Telecom/Data Cable
Winding Wire
Electric Motors
Transformers
Other Winding Wire
Factors influencing material decisisons
12
Substitutionisdrivenbyarangeoffactors
Maindriversorinhibitorsof
substitutionandminiaturization
• RBS/BareWire:Relativecosts,
standards,functionality.
• Electrical/ElectronicPSSF:Relative
conductivity,flexibilityandworkability.
• OtherPSSF:Costs,application-specific
requirementsonthematerial,design.
• PlumbingTube:Technologychange,relativecostsandinstallation
knowledgeofendusers.
• IndustrialCopperTube:Relativecosts,
weight,repairability,andtechnology.
• AlloysandOtherProducts:Relativecosts,regulationsandtemperature
andcorrosionresistancerequirements
oftheapplication.
InterviewQuote:“CopperalloyapplicationsinOil&Gas,Aerospace,ElectricalandBearingsarenotchallengedbysubstitution.”
Very important Important Relevant Applicable Not relevantColorcode:
Relative
material
costs
Relative
weight
Relative
Footprint
Relative
Material
Flexibility
and Strengh
Relative
Material
Strenght
Relative
Conductivity
Technology/
Connectivity
with other
Systems
Regulatory
pressure
Cost
pressure
from other
manufacture
rs in the
market
Pressure
from
OEMs/end
users
Bare Cu Wire & RBS
Copper Rods Bars and Sections
Bare Wire
Cu / Alloy Plate, Sheet, Strips and Foil
Electrical / Electronic PSSF
Other PSSF
Copper Tube
Plumbing Tube
Industrial Tube
Other Products
Alloy RBS
Alloy Tube
Alloy Wire
Foundry Products
Other Non Mill Products
Factors influencing material decisisons
-4.00%
-3.50%
-3.00%
-2.50%
-2.00%
-1.50%
-1.00%
-0.50%
0.00%
-8% -6% -4% -2% 0% 2% 4% 6% 8%
Netsubs- Cuusegrowthrate
13
Themajorityofcopperproductsexperiencedlownetsubstitutionin2019,andexpecta
growingcopperuseoverthenextfiveyears
Sizeofthebubble:
CopperUsein2019
Expectedfutureannualgrowthofthecopperuse(CAGR2019-24)in%
NetSubstitutionlossasa%of
CopperUsein2019
Telecom&
DataCables
PlumbingTubeWindingW.in
Transformers
Building
Wire
E&E
PSSF
Foundry
Ind.
Tube
Expectedfuturegrowth
ofcopperusewithlow
netsubstitutionin2019
Adversegrowth Stronggrowth
Power
Cables
Lower
substitution
in2019
Higher
substitution
in2019
BareW.
RBS
EPSSF WWfor
E.MotorsAut.
Wire
Other
PSSF
Alloy
Wire
Alloy
RBS
Stagnatingmarketsand
withhighsubstitution
Shrinkingmarketswith
highsubstitution
Substitutionhasdeclinedforthemajorityofcopperproducts2009to2019
14
Strong stable substitution
Recentlyslightly
increasingsubstitution
Decliningnetsubstitution
Netsubstitutionbycopperproducts2009-2019– inkt
LowVoltage
EnergyCables
CuAlloyPSSF
RBS,BareWires
CopperTube
WindingWires
PowerCables
Alloysand
OtherProducts
TelecomDataCables
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Challengesinthecompetitivemarketofrefrigeration- FrigusBohn
• FrigusBohn’smaterialstrategyisbasedoncopper.Thecompanyjustinvestedinaproductionlineusing5mmcoppertubes
forheatexchangers.
• Refrigerationandairconditioningareverycompetitivemarketswherecostreductionis
obligatoryinordertoremaincompetitive:
– Reducingthetubediameterto5mmleadingtomaterialcostreductionandlessgascharge
– Minichannelcopperaluminumvs.aluminummicrochannel
• Repairable
• Highefficiency
• Lowergascharge
– A/Cindustryusingmicrochannelinresidentialproducts
• Non-repairable
• Lowestgascharge
• Goodefficiency
Challengesinrefrigeration– FrigusBohn
• Furtherwaystolowercost:
– Fromthecopper-aluminumcoiltoaluminum–aluminumcoil
o Costreduction
o Lessefficient
o Morelabor
– Fromaluminum–aluminumcoil(withreturnbends)tothezero
weldscoilaluminum–aluminum
o Lowercostandpropanegasasrefrigerantleakreduction
– Shadedpolemotorsvs.ECM(brushless)motors
o Efficiencyandmorevalueadded
17
BuildingWire– lowsubstitutioncontinuesdrivenbybuildingregulationsandphysical
characteristicsofcopperSubstitutionimpact- lowandstable• Substitutioninthemainfeederuptothemeterinresidentialandinsome
non-criticalcommercialapplicationsespeciallyifthemainfeederisowned
bytheutility.
Substitutiongain– low• Stricterbuildingregulationsinruralareasleadtooldaluminiumwiring
substitutedbycopper.
Miniaturisation– minimal• Theoretically,miniaturisationpossibleasmoreenergyefficientdevicesin
buildings,andsmarttechnologyisused,buttechnicallydifficulttoimplement.
• PowerovertheInternetdidnotgainrealtraction.
Substitutionfactors• Buildingstandardsrestrictsubstitutioninbuildingwiresespeciallyin
residential,urbanareas,butevenifnorestrictioninplace,oftencopperused.
• Flexibility: Aluminumwireistoobrittletobeusedforsmalldiameterwires.
• CAPEX:nosignificantcostsavingsthroughsubstitutionofcopperwires.• Firesafety:Althoughnewevidencedoesnotclearlysupporthigherfiresafety
forcopper,constructioncompaniesdonotriskusingalternativematerials.
• Connectionswithothersystems:Connectingcopperandaluminiumis
problematic.
• Buildingcodechanges:Initiativesalwaysexittomoreincludealuminiumin
buildingcodes,butthesehavenotractionyet.
-0.20%
-0.15%
-0.10%
-0.05%
0.00%
0.05%
0.10%
-10
-8
-6
-4
-2
0
2
4
6
2015 2016 2017 2018 2019
SubstitutionandMiniaturization
inBuildingWire
- inktand%ofCopperUsein2015-2019
InterviewQuote:“Aluminiumis
brittleandisonlygoodifthe
cablehasthethicknessofa
wrist.”
LosstoMiniaturization
Substitution
SubstitutionGain
NetSubstitutionas%of
CopperUse
18
WindingWireinElectricMotors:substitutiondeclinedduetoincreasedenergyefficiency
requirementsofmotorsSubstitutionimpact– declining
• Aluminiumisonlyusedinsmallermotorswhereefficiencyisnotrelevant,andinthe
automotivesectorwherelowweightisparamount.
Substitutiongain–ongoing
• Increasedenergyefficiencygenerallydrivesusingmorecopperwindingwiresand/or
usingcopperasopposedtoaluminiumbars(40-60%ofnewdesigns).
• Moreefficientpermanentmagnetandhairpinmotorsuseonlycopperwindingwires.
Miniaturisation– increasing• Highpowerdensity,controllablebrushlessandpermanentmagnetmotorsuse20-30%
lesscopper– wideutilisationisslowedbythehighpriceofneodymiummagnets.
• Flatconductorcanreducethevolumeofconductorrequiredforthesameperformance
Substitutionfactors
• Combinationofcostpressure,load,footprintandenergyefficiency:Eachmotor
designandmaterialselectionisassessedbasedonthecombinationofrequiredload,
spaceavailable,costpressureandenergyefficiencystatusrequired.Thematerial
choiceismadeinvestigatingtheperformancerequirementsandthecostsofdifferent
materialsrequiredforspecifictypesofmotors.
• EnergyEfficiency:Increasingefficiencyandperformanceofmotorsinthesamesize
frameisatrend.tisnotpossibletoincreaseefficiencywithusingaluminiumwinding
wires.
Futureoutlook:
• Reluctancemotorsefficientandcheaper,expectedtogainmarketshare.
• Oxygen-freehigh-gradecoppercouldsupportcopper-basedmaterialstrategies.
• Innovations,e.g.highefficiencycopper,diecastrotororaxialfluxmotors.
LosstoMiniaturization
Substitution
SubstitutionGain
NetSubstitutionas%of
CopperUse
-1.0%
-0.9%
-0.8%
-0.7%
-0.6%
-0.5%
-0.4%
-0.3%
-0.2%
-0.1%
0.0%
-50
-40
-30
-20
-10
0
10
20
2015 2016 2017 2018 2019
SubstitutionandMiniaturization
inWindingWiresforElectricMotors
- inktand%ofCopperUsein2015-2019
InterviewQuote:“Itispractically
impossibletoincreaseenergy
efficiencywithaluminum
windingwire.”
19
Currentandfuturecopper-basedinnovations
• Theindustryawaitsthenewhighefficiency,oxygen-freecoppertolowerelectricallosses
• Smalldiametercoppertubes1-4mmarebecomingfeasible
• Copperinkfor3DPrintedCircuitBoard(PCB)printingisindevelopment
• FlexiblePCB
• Newhigh-efficiencymotordesignse.g.
• withmorecopperinstatorandrotor,
• ZeroPorosityRotor.
Copperinkbased
3DPCBprintingZeroPorosityRotorby
breuckmanneMobility
FlexiblePCB
Verysmalldiameter
coppertubes
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