Substitution for copper has been limited so far: Phelps Dodge

Substitution for copper has been limited so far: Phelps Dodge

Washington (Platts)--26Jul2006

High copper prices have led some manufacturers to begin substituting
other materials for copper, but only in limited applications, US copper major
Phelps Dodge said Wednesday. Alternatives to copper include aluminum, which
manufacturers have already begun using in limited cable and wire applications.

"We do believe there has been some substitution," Arthur Miele, senior
vice president of marketing and sales, said during a second-quarter conference
call with investors and analysts. "Most of that has occurred in sectors where
viable alternatives have already existed, and the trend was established."

"Specifically, we've seen some [substitution] in plumbing tube and in
some applications where copper and aluminum compete, and can often go back and
forth depending on what those [price] differentials are," he said.
Three-months copper on the London Metal Exchange closed Wednesday at
$7,450/mt, while LME three-months aluminum closed at $2,465/mt.

Miele added that the substitution has been limited thus far, since
suitable alternatives often do not exist for most applications. "The lead time
to make significant changes takes quite a bit of time, and in many cases,
copper's superior characteristics offset losses due to substitution," he said.

Phelps Dodge chairman and CEO J. Steven Whisler added that substitution
for copper has accelerated in applications where substitution was already
occurring. "That's particularly true in plastic tube for plumbing purposes,"
he said.

"We are not necessarily seeing any new major substitution
activities...but it is something we're very sensitive to and are watching very
closely," he said.

--Nick Jonson, nick_jonson@platts.com

For more news, request a free trial to Platts Metals Week at
http://plattsmetals.platts.com or subscribe now at
http://www.platts.com/infostore/product_info.php?cPath=28_37&products_id=68

Please visit: www.platts.com

Their coverage of energy matters is extensive!!.