Copper vs. Aluminum

Freeport McMoran and Southern Copper have seen a sharp rise in revenues thanks to the steady increase in the price of copper now at all-time highs (copper has risen nearly 250% since 2008). One would suspect that these copper mining stocks will continue to rise with the price of copper, however as copper becomes more expensive manufactures may choose to substitute it with a cheaper alternative; aluminum.



Aluminum is seen as a more cost effective substitute as copper crosses the $3.50/pound mark. In the last 5 years aluminum has substituted about 3% of the copper market and this trend is likely to continue. Alcoa, the world’s leading aluminum producer, predicts aluminum will potentially substitute 20% of the global annual refined copper market if copper prices continue to increase at its current pace.

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