Saturday, August 25, 2012

Copper to Aluminium Price Ratio

First the data in graphical format for 12 months (source: Bloomberg), 20 years (source: Bloomberg terminal) and 110 years (source: USGS Copper and Aluminium).

As of 23 August 2012 the ratio stands at 4.08, which is the maximum which has been achieved since the beginning of the time series in 1900. Since 1950 the Cu/Al price ratio has peaked three times (at 1.75 in 1956, at 2.25 in 1973 and at 1.84 in 1991) and then strongly reversed to a price ratio of almost 1.

Typically the reason for the reversion of Cu/Al price ratio is substitution (of Copper usage by Aluminium). Normally this takes time, but there is no fundamental reason, why this will not happen again over the next few years.

In one of our next posts we will look at substitution.

Friday, August 10, 2012

Relative Conductivity for Ag, Al, Au and Cu

The basic conductivity properties (thermal and elctrical) together with its inverse (resistivity) and respective prices and density have been obtained for Silver, Aluminium, Gold and Copper as follows. Note that prices are shown in USD per kg which results in somewhat unfamiliar values.

This results in the following relative conductivity values (Copper=100%). While on a volume adjusted basis, aluminium has about 60% of the conductivity (value may vary slightly as conductivity measurements are experimental and depend on the alloy type) on a weight adjusted basis, Aluminium has about double the conductivity of Copper. Finally on a price adjusted basis Aluminium's conductivity is more than eight times higher.

The situation for electrical conductivity looks very similar.

May be we read to much into the above but given the significant differential it is somewhat surprising that we are not seeing more substitution of copper by aluminium.