1. Macroeconomic Background

According to SHINDEV’s analysis, the U.S. Federal Reserve, after multiple rate hikes, announced in December that it would pause rate increases and discussed the timing of potential rate cuts during its press conference. This marks the third consecutive pause since September this year. Following the news, U.S. stock markets surged across the board, with the Dow Jones rising 512.3 points to a record close, while the Nasdaq and S&P 500 both reached their highest levels since early last year.

This suggests that the Fed may adopt rate-cutting measures in the near future, leading the U.S. dollar into a downward trend. As the world’s reserve currency, movements of the dollar directly affect other countries’ foreign exchange reserves, as well as the prices of gold and copper. Since they are typically inversely correlated, gold and copper prices are expected to rise as the dollar weakens with rate cuts.

2. Impact of Rising Copper Prices

Copper, with its excellent electrical conductivity, thermal conductivity, and ductility, is widely used in electricity, electronics, mechanical metallurgy, transportation, and light industry.

However, rising copper prices significantly increase upstream and downstream costs outside of mining, squeezing profit margins for smelting and processing companies. These cost pressures also cascade into downstream industries. The power sector, as the largest consumer of copper, is most affected, followed by new energy power generation, energy storage, electric vehicles, and aerospace.

Although the Fed has raised rates continuously this year, copper prices remain high. If rate cuts occur, copper prices are likely to rise even further. Under this backdrop, reducing copper consumption costs has become increasingly critical for downstream enterprises.

3. Alternative Demand: Copper-Aluminum Composite Materials

With copper prices remaining high, demand for “copper-aluminum composite materials” as an alternative has been steadily increasing. These composites, typically in the form of copper-clad aluminum, combine the strengths of both metals:

Retain copper’s high conductivity and low contact resistance;

Maintain aluminum’s lightweight and corrosion resistance.

Compared with pure copper conductive materials, copper-clad aluminum significantly reduces copper usage in both volume and weight, offering clear advantages in lightweight design and cost control.

4. Resource Background and Industrial Status

China has abundant aluminum resources with relatively stable pricing, but its copper resources are largely dependent on imports. In 2022, China’s copper reserves accounted for only 3% of the global total, with an external dependency rate exceeding 92%, leaving it without pricing power.

As a result, copper-clad aluminum composites have been designated as one of China’s “strategic emerging industries.”

5. Product Types and Application Areas

Major product types of copper-aluminum composites include:

Copper-aluminum composite busbars

Copper-aluminum composite rods

Copper-aluminum composite flat wires

Copper-aluminum composite round wires

Proportions can be adjusted as needed, with larger cross-sectional areas offering lower resistance and higher conductivity. Leveraging both lightweight and conductive properties, these composites are widely applied in:

New energy vehicles (wire harnesses, motor windings)

New energy power generation and transmission (cables)

Energy storage (conductive busbars)

Aerospace (wires, cable networks, busbars)

These materials not only improve safety and energy efficiency but also reduce copper-related costs, playing an important role in “saving copper with aluminum.”

6. Manufacturing Processes and Industry Barriers

Manufacturing copper-aluminum composites requires overcoming bonding challenges between the two metals. Adequate compressive strength must be ensured while controlling the thickness of the metallurgical layer, making process technology critical for stability and safety.

Earlier attempts using copper plating proved costly and inefficient, with poor yields that hindered mass production. Currently, two main scalable production processes are available:

Hydrostatic extrusion (representative: Bruker, UK)

Horizontal continuous casting (representative: Yantai Fuxinda, China)

At present, only these two companies have achieved stable mass production.

7. Conclusion and Outlook

In summary, the Fed’s pause in rate hikes and potential rate cuts may push copper prices even higher, with cost pressures spreading into downstream industries. Copper-aluminum composites, with their lightweight and cost advantages, are emerging as an important substitute for downstream enterprises. They not only mitigate profit squeezes but also reduce China’s heavy reliance on copper resources.