Copper Shortage Drives Faster Aluminium Adoption, Says Norsk Hydro

Copper Shortage Accelerates Aluminium Adoption in Industrial Applications

Norsk Hydro, a leading European aluminium producer, confirms that copper shortages are pushing faster aluminium substitution. Despite US tariffs on aluminium, demand from the US HVAC sector remains strong. The heating, ventilation, and air conditioning OEMs prioritize cost savings and quality, favoring aluminium over copper. Aluminium costs remain significantly lower, even with a 50% tariff, prompting US companies to accelerate the shift.

This trend stems from a persistent high copper-to-aluminium price ratio. Copper currently trades around 3.7 times higher than aluminium, encouraging industries to adopt aluminium solutions. For HVAC and refrigeration, aluminium offers similar performance at nearly half the cost of copper. Mining giant BHP supports this, noting that substitution occurs once the price ratio hits about 3.5 to 4 times.

Norsk Hydro Highlights Aluminium’s Growing Role Amid Copper Constraints

Norsk Hydro reports aluminium’s share in HVAC and refrigeration doubled in five years, now reaching 40%. Daikin Industries aims to halve copper use in air conditioners by 2025, highlighting industry-wide shifts. In automotive and EV sectors, aluminium increasingly replaces copper in radiators and cables. Although copper remains dominant in electricity grids, EV copper usage declines due to design improvements and substitution.

However, technical challenges persist. Aluminium requires system redesigns for effective substitution, such as using micro-channel extrusions instead of copper tubes. Additionally, aluminium conductors need to be thicker than copper for the same conductivity, increasing weight and installation complexity. Corrosion resistance is another factor where copper outperforms aluminium, especially in harsh environments.

SuperMetalPrice Commentary:

The copper shortage underscores a strategic pivot toward aluminium in cost-sensitive sectors like HVAC and EVs. Norsk Hydro’s insights reveal how price dynamics and supply constraints accelerate material innovation. While copper remains essential, aluminium adoption grows as companies optimize costs and meet sustainability goals. This substitution trend will influence metals markets, pushing investors and producers to adapt to evolving demand and supply scenarios.