September/October 1996
Copper has traditionally been the front-runner in wire and cable markets, and it continues to lead many of them. But in recent years its position has been seriously challenged by competing materials in some niches, presenting potential repercussions for scrap recyclers.
By Lynne M. Cohn
Lynne M. Cohn is a writer based in Germantown, Md.
There’s a competition going on in the wire and cable market, with copper, aluminum, and fiber optics all vying for a top spot among the various products that make up this huge market.
Between the two metals, while aluminum remains in control of electric utility power cable applications, copper has reigned supreme in most other wire and cable markets. In the building-wire market, for example, manufacturers have toyed with the idea of replacing the red metal with new technology or cheaper metals such as aluminum, but these substitutes generally haven’t measured up to copper’s qualities. Similarly, carmakers have explored the use of a variety of materials in automotive electrical systems to enhance the performance and reduce the weight of their vehicles, only to return to and rely on their old standby: copper wire.
Thanks in part to this dominance, U.S. shipments of copper electrical wire and cable have grown at an average rate of 1.4 percent a year since 1970, reaching 1.639 million mt in 1994, according to William T. Black, vice president of electrical and electronic markets for the Copper Development Association Inc. (New York City). What’s more, he notes, wire and cable products are by far the major end-market for copper in the United States as well as the world.
Changes in the use of cable and wire material in the telecommunications sector threaten to change these standings, however. Here, copper has been displaced in some applications by fiber optic cable, and it looks like tough times will continue to loom ahead for the red metal, as telecommunications companies look to fiber optics to ring in the 21st century.
Fiber Optics Gains Ground In Telecommunications
Copper’s decline in the telecommunications wire and cable market has actually been a long time coming. After recording a strong upward trend through the 1970s, shipments of copper telecommunications cable peaked in 1979, then dropped sharply between 1980 and 1985. And it hasn’t improved since. In fact, Black notes, despite the positive growth recorded in the 1970s, copper use in telecommunications wire and cable fell an average of 2.4 percent per year between 1969 and 1994 (the year for which the most recent data is available), to 210,000 mt at the end of that time span.
This has not simply been the result of competition from fiber optics. Rather, Black says, much of the falloff in the early to mid-1980s can be attributed to two technical developments: the adoption of smaller wire sizes by telecommunications companies and the use of multiplexing— putting several signals through the same carrier.
Then again, it was around this same time that fiber optic cable began to make a name for itself in the long-distance market and interoffice trunking, moving in on the red metal’s turf by capitalizing on its ability to carry more information than copper. To illustrate this advantage, Peter Wickman, vice president of operations at Belden Inc. (St. Louis), a specialty wire producer, compares copper and fiber optic wire to pipe. Fiber, like a large pipe, has a lot of capacity, he says, while copper is more like a small pipe and therefore can carry less data through it. Putting it in other terms, he notes that “200 copper cables can be replaced with a relatively small number of fiber cables.” Hence, he asserts, “fiber is certainly the product of choice for long-distance signal transmission.”
Not only can fiber optic cable carry more information, but it can transmit it more efficiently, Wickman reports. “On copper cable, if you try to send a signal over a long distance, you need amplifiers throughout the course of the wire,” he explains. “With fiber, you don’t need that.”
Fiber optics is also reportedly easier to maintain, less susceptible to corrosion, and affords greater security than copper. To wit, notes Wickman, “With copper, you get emissions from the cable.” While these advantages helped fiber optic cable gain favor for long-distance transmission early on, fiber optics initially had trouble penetrating the subscriber loop—the local transmission system that’s distributed to homes and where copper use is concentrated, Black notes.
That began to change in the mid-1980s, however, when fiber optics began to encroach into the feeder portion of the subscriber loop. As a result, Black says, copper has seen steady losses ever since (though overall growth in the telecommunications market has provided the metal some stability).
And fiber threatens to “penetrate even deeper toward the final customer,” Black states. According to a June 1996 report by CRU International Ltd., a London-based consulting firm, there is “strong evidence of a boom in fiber optic cables.” Robert Wilkes, a communications analyst with Brown Brothers Harriman (New York City), offers proof of this situation, noting that “most of the [telephone] equipment companies have been getting out of the [copper] business, and some of the major telecommunications carriers have been exiting copper” for fiber optics.
Copper Hangs in There, But for How Long?
But don’t count copper out yet. It has its own advantages that are helping it stave off the competition.
Cost is one of those issues. Copper offers “very significant cost savings” over fiber optics in terms of use and installation, Wickman says. “As long as fiber remains expensive and [industries] keep making advances in copper,” fiber optics will not steal the telecommunications market share that copper now claims, he says, asserting, “I don’t see fiber replacing copper in total for a long, long time.”
Copper is still considered a competitive transmitter in the so-called last mile, the span from the curbside into a home. That’s because most of fiber’s advantages are more significant over long distances than they are over shorter ones, Wickman says.
There are also some new technologies that are enhancing copper wire’s capabilities and offering hope for a copper rejuvenation in the telecommunications niche. For one, Wickman notes, “Now we can compress a signal and send that compressed data down wire, thereby pushing out the life of the copper.”
Another promising trend for copper is the growing interest in asymmetrical digital subscriber line (ADSL) technology, which uses the latest capabilities in electronics to continuously check the quality of a signal passing down a copper line and make the necessary adjustments to keep it “clean.” Though encouraging, Black cautions that “most telecommunications professionals view ADSL as an interim technology at best.”
And there are two other important factors that could work against fiber optics and for copper: First, fiber optic glass is reportedly in short supply. And second, fiber optics is still a relatively new technology, so there are “no definite answers” regarding its durability or longevity, Wilkes says. However, he conjectures that fiber will probably prove to be more durable than copper in the long run.
While these and other factors have given copper supporters heart that the red metal will hang tough in the telecommunications niche for a while, there’s little doubt that fiber optic cable will continue to experience rapid growth, outpacing and displacing copper as it grows. According to a joint survey by CRU and KMI Corp. (Newport, R.I.) on the global telecommunications cable market, world demand for outside plant copper and fiber optic cable is projected to grow at a compound annual rate of about 5 percent between 1995 and 2000. “This modest growth rate in a period of strong investment in telecom infrastructure is due both to weak demand for copper cable in many advanced markets and expected declines in average prices of both types of cables,” the report states.
In particular, the survey notes, the market for single-mode fiber optic cable is projected to grow 17 percent a year, to about 28 million miles of fiber annually by 2000. World demand for copper cable, meanwhile, will rise only 2 percent per year in the same period, with much of this growth coming from emerging telecommunications markets, the survey forecasts.
Clearly, the long-term trend is not in copper’s favor. As Black sums it up, copper’s use “in the outside plant of the telephone system is expected to decrease as fiber continues to move closer to the customer, one step at a time.”
Copper Takes the Lead In Building Wire
Copper has had no problem keeping ahead of fiber optics in the market for building wire—that is, wire used for electrical purposes in residential, commercial, and industrial structures. The reason is simple, Wickman explains: Fiber optic cable is only appropriate for sending low-voltage signals, giving it limited capability in this niche.
On the other hand, the red metal has had to deal with serious competition from aluminum in this market over the years. But aluminum has faced some stumbling blocks in recent times, Wickman notes. As an example, he points out that aluminum wire in construction has been linked to fire dangers. In addition, he says, aluminum connections may be subject to loosening, a situation that could lead to some premature failures. And “callbacks” to tighten such loose connections add costs over the life of the material, generally making up for aluminum’s per-pound cost advantage over copper, he asserts.
As Black puts it, “Copper is recognized as the quality product, while aluminum is mainly used because it’s cheaper.” In fact, he says, U.S. electrical contractors recently surveyed on their building wire preferences chose copper over aluminum by a margin of 20-to-1.
Thus, while aluminum is still being used in applications such as feeder cable for commercial buildings and service entrance cable in residential structures, copper has taken an increasingly larger lead in the past two decades, moving from a 69-percent share of the domestic building wire segment in 1974 to about 90 percent today. That brings U.S. shipments of copper building wire to more than 465,000 mt annually—making it the metal’s largest domestic consuming market.
In the future, these shipments will rise even higher, Black believes. As to why, he cites the need for more—as well as larger—building wire to meet the ever-increasing demand for electrical services throughout buildings to power computers, appliances, TVs, VCRs, lighting, and more. “This is a steady, undeviating trend, regardless of whether the economy is in boom or recession,” he says.
The Red Metal Blows Away tThe Automotive Wire Competition
As with the building wire market, copper is well ahead of the competition in the automotive wire and cable niche—the fastest growing of all the wire and cable sectors. From the front bumper to the rear bumper, and virtually every part in between, all systems that require power in an automobile require copper cable, says Jim Kobus, a spokesman for Delphi Packard Electric Systems (Warren, Ohio), a division of GM and supplier to the Big Three automakers. “Everything is transmitted through copper cable. It has been highly reliable, just perfect—not only in speed, but also in reliability.”
Bob Steele, senior staff research engineer for Delphi, agrees, noting that virtually all wiring in the electrical systems of today’s vehicles is copper. “There may be some very high temperature applications that might require something different,” he says, “but those are very, very, very few.”
Not that the auto industry hasn’t explored other options. “We’ve been working on fiber optics for probably 30 years to see what the impact would be on the electrical system,” Steele says. “We’re currently working on plastic fiber optics as a data communications medium and for sensors. We see that coming in the not-too-distant future, maybe not in a typical vehicle, but in a high-end vehicle with a lot of computer use.”
Even so, he asserts, the applications that could switch to fiber are few compared with the extensive electrical apparatus of a car that require copper. “Fiber doesn’t carry power,” he explains matter-of-factly.
Where fiber optics do have an edge over copper in auto applications is their lighter weight. A typical vehicle contains a mile or so of copper wire and, all told, a car’s wire harness can weigh as much as 90 pounds. Though fiber optic cable could help the auto industry in its ongoing quest to lightweight its vehicles so as to meet federal fuel efficiency standards, it is unlikely they will abandon copper for fiber optics, in part due to their higher cost compared with copper, Kobus asserts.
So how about aluminum? No chance, the experts say. While aluminum is lighter than copper, it has lower conductivity, which means that more aluminum wire would have to be used to get the same performance as copper wire, Steele notes. In the end, a car would gain mass and lose volume, he says, and more aluminum would be used for the same application, thus negating any cost savings. (Cost is also the reason why automakers haven’t turned to other metals such as silver and gold, though both offer higher conductivity than copper.)
As a result, copper remains king in automotive wiring and its use continues to expand thanks to the rapid increase in electrical and electronic loads in passenger cars, utility vehicles, vans, and pickup trucks. In recent years, Black says, “the bottom-line increase in copper content per car has been about 5 percent each year.”
Though Black expects this rate of increase to moderate in the years to come, from Steele’s perspective, no other materials could readily—or eventually, for that matter—replace copper wire in cars. “If you look at other places where copper is used to conduct electricity, it’s still there,” he points out. “There hasn’t been any material found that brings anything significant to the [automobile] market to balance it out.”
Scrap Recyclers Place Their Bets
For recyclers that handle wire and cable scrap, the wire and cable wars could have serious consequences, primarily tied to the fight between copper and fiber optic cable.
In the short term, copper’s displacement by fiber optics could be a boon to recyclers in that more scrap copper wire could flow into processing plants as it is replaced. Several recyclers, primarily wire choppers, have noticed this trend already happening. Mark Lewon, for one, a vice president of Utah Metal Works Inc. (Salt Lake City), says he has witnessed a “surge of telecommunications wire that’s being pulled out of buildings.”
The drawback comes later when the rush of telecommunications wire comes streaming out of buildings and into scrap plants, meaning that the volume of copper-based wire could decrease in the future and “make the pie smaller,” Lewon says. As a result, “you may see some people closing down wire chopping lines or bailing out because there isn’t the volume.”
And what could happen when the fiber optic cable itself enters the scrap stream? Already, some choppers—such as OmniSource Corp. (Fort Wayne, Ind.)—have noticed “small amounts of fiber optics coming in in scrap,” says Martin Rifkin, vice president.
Though not a problem now because quantities are so limited, the long term may be a different story, Rifkin believes. A decade or two down the line, he asserts, the presence of fiber optics in scrap “will become a major issue in that the value of copper will come down.”
While recyclers can’t control what happens in the telecommunications market, they can and do hope that copper’s losses in that niche will be balanced, if not exceeded, by its growth in other sectors. Notes Larry Fox, vice president of Mark-ovits & Fox (San Jose, Calif.): “We’re seeing a continual growth in building wire and other electronic wire applications, as more and more copper wire is being used in homes and automobiles and other convenience applications.”
So, though copper is facing greater competition than ever before in the telecommunications niche, it’s still the clear leader in its other principal markets.
You can bet then that copper producers, wire and cable manufacturers, and scrap recyclers alike will all be anxiously watching the trends to see how the cable race plays out. •
Copper has traditionally been the front-runner in wire and cable markets, and it continues to lead many of them. But in recent years its position has been seriously challenged by competing materials in some niches, presenting potential repercussions for scrap recyclers.