Conditions of Copper Industry in 2004
Of all the materials used by man, copper has been the oldest and very important. What make copper a material of choice are the outstanding characteristics, such as its excellent conductivity (after silver) of heat and electricity, corrosion resistance, ductility and malleability, ability to be well-alloyed with other metals, and ability to recycle as well. Result from these characteristics, copper has played, and continues to play a vital role in contributing to the related industries including electrical and electronics industry constituting 50% of total copper consumption quantity nationwide. Examples of copper-material products are electric wire, electronics circuit board, electrical motor, communicating devices, and so on. Copper can be used in machinery industry such as valves used in factory and pipes for heater and cooling systems, casting industry, production of motor car parts, electric wires, coins, construction industry, etc.
Copper industry can be classified into 3 production types.
1.Primary production consists of several stages refining copper content from ore or bringing used copper scrap to re-melt. Once copper has been re-melted, it can be turned into pure copper cathode, which is the primary raw material that can be processed into needed figures of related industries.
2.Intermediated production is bringing copper cathodes to process into needed figures as follows.
Wire rod is a circle coil with ½ inch diameter and can be shorten into needed size.
Billet is a lump with 8 inches diameter and can be processed further into smaller size of tube, rod and bar.
Cake or slapis a piece with 8 inches wide and 28 inches long and can be further hot or cold rolled into plate, sheet, strip, foil at needed size.
Ingot is a copper chunk that is mostly used in alloy casting processes.
3.Final production is bringing semi-finished copper such as wire, sheet and tube to be produced into finished goods to consumers.
Production processes of full-cycledcopper industry are presented below:
1. World Conditions of Copper in World Market
1.1Production
Unit: Metric tons
Country / Mining / Smelting / RefiningChili / 4,900,000 / 1,542,400 / 2,900,000
U.S. / 1,120,000 / 539,000 / 1,310,000
Indonesia / 978,690 / 247,400 / 223,300
Peru / 831,223 / 314,228 / 517,046
Australia / 830,000 / 435,000 / 484,000
Russia / 675,000 / 840,000 / 840,000
China / 610,000 / 1,700,000 / 1,800,000
Canada / 557,565 / 456,905 / 456,905
Japan / 700 / 1,516,077 / 1,430,365
Germany / - / 494,100 / 597,000
Zambia / 330,000 / 250,000 / 349,800
Others / 3,096,822 / 3,964,890 / 4,291,584
Total / 13,600,000 / 12,300,000 / 15,200,000
Source: US geological survey minerals yearbook 2003
From the table presented above, Chili, China, Japan and U.S. are the world’s leading copper producers. They can produce 2.9 million tons, 1.8 million tons, 1.4 million tons and 1.3 million tons ofpure copper, respectively. In Thailand, most copper productions are for serving and supporting domestic ending industries such as copper and brass pipes, electric wire factories, and foundry,using imported unformed copper materials. Thailand has established one copper cathodes factory named Thai Copper Industry Public Company Limited. It has commercially operated with the capacity of 160,000 tons per annum.
Production Problems
In 2004, the copper price, especially price of copper cathode, in the world market has increased quite a lot. In January 2004, the price of copper cathode is US$ 2,400 per ton, while in December 2004, the price has increased to US$ 3,200 per ton. One of important factors affecting the increasing price is the continual increase in copper demand of China. As a result, the domestic production relying on import has faced the challenge of high production cost and dynamic change of pricing. Although at this time there is commercial cathode producer in Thailand, the production volume by such producer is not sufficient for domestic demand at all. To be acceptable and increase the competitiveness in the long run, the producers and users should cooperate with each other to continuously improve the qualityof product.
2. Marketing
2.1Domestic Market
The demand volume of copper products in 2004 is 287,065 tons increasing from 228,264 tons of 2003, or by 25.76%. The need of copper products in related industriescontinues to increase, as seen in many products that have copper as raw material in electrical appliance industry. Such products are air-conditioner, refrigerator, motor and electric wire, which have an increasing production index compared to 2003 by 40%, 17% and 30% respectively.
2.2Foreign Market
Import
Table 1: Comparison of import quantity of copper in 2003 and 2004
Quantity: Metric tons
Value: Million Baht
Products / 2002 / 2003 / 2004 / % Changing rate / Important import sourceQTY /
Value
/ QTY / Value / QTY / Value / QTY / ValueCopper Matte and Cement / 176 / 3 / 0.7 / 0.3 / 0.7 / 0.3 / 0.00 / 0.00 / Japan
Scrap / 4,245 / 208 / 4,756 / 360 / 6,559 / 608 / 37.91 / 68.89 / U.S,
Hong Kong
Unwrought, Cathode, Billet / 195,465 / 14,153 / 217,015 / 16,242 / 282,312 / 27,837 / 30.09 / 71.39 / Australia, Zambia, Indonesia, India
Powders & Flakes / 559 / 101 / 587 / 118 / 721 / 167 / 22.83 / 41.53 / Japan, U.S., Germany, UK
Bars, Rods, Profiles / 6,202 / 692 / 7,705 / 888 / 7,733 / 1,255 / 0.36 / 41.33 / Japan
Copper Wire / 36,362 / 2,837 / 45,420 / 4,170 / 52,435 / 6,837 / 15.44 / 63.96 / Indonesia, Korea
Plates, Sheets, Strip / 26,365 / 3,956 / 28,731 / 4,585 / 34,989 / 7,026 / 21.78 / 53.24 / Japan
Foil / 14,154 / 2,881 / 14,516 / 3,524 / 15,847 / 4,159 / 9.17 / 18.02 / Japan, Taiwan
Tubes, Pipes, Fittings / 9,619 / 1,649 / 11,578 / 1,953 / 13,777 / 2,698 / 18.99 / 38.15 / Malaysia
Total
/ 293,147 / 26,480 / 330,308 / 31,840 / 414,373 / 50,587 / 25.45 / 58.88 / Japan, Indonesia, AustraliaSource: 1.Bureau of Primary Industries, Department of Primary Industries and Mines
2.Customs Department
Remark: excluding finished products such as kitchen utensils, spring, etc.
From the table presented above, the import quantity of copper as a whole in 2004 comparing to 2003 has increased by 83,533 metric tons or 18,747 million baht. Most imported coppers are unwrought constituting 55% of total import value. The important import sources are Japan, Indonesia, Australia and Taiwan, respectively.
Export
Table 2: Comparison of export quantity of copper in 2003 and 2004
Quantity: Metric tons
Value: Million Baht
Products / 2002 / 2003 / 2004 / % Changing rate / Important export sourceQTY / Value / QTY / Value / QTY / Value / QTY / Value
Copper Matte and Cement / - / - / - / - / - / - / - / - / -
Scrap / 22,449 / 1,251 / 54,920 / 2,181 / 51,322 / 4,546 / -6.55 / 108.44 / China, Japan
Unwrought, Cathode, Billet / 181 / 20 / 659 / 52 / 5,169 / 603 / 684.37 / 1,059.62 / Japan, Vietnam
Powders & Flakes / 50 / 11 / 59 / 14 / 94 / 20 / 59.32 / 42.86 / Dominican Republic, Taiwan, Pakistan
Bars, Rods, Profiles / 9,812 / 907 / 7,886 / 751 / 10,185 / 1,359 / 29.15 / 80.96 / Taiwan,
Hong Kong
Copper Wire / 571 / 163 / 612 / 168 / 889 / 168 / 45.26 / 0.00 / Japan, U.S.
Plates, Sheets, Strip / 1,812 / 141 / 3,551 / 474 / 20,940 / 1,011 / 489.69 / 113.29 / Malaysia, China
Foil / 7,862 / 983 / 6,761 / 834 / 7,390 / 883 / 9.30 / 5.88 / China, Japan, Malaysia, Indonesia
Tubes, Pipes, Fittings / 25,189 / 3,678 / 27,596 / 3,865 / 31,319 / 5,551 / 13.49 / 43.62 / Malaysia, India, Saudi Arabia, U.S.
Total / 67,926 / 7,154 / 102,044 / 8,339 / 127,308 / 14,141 / 24.76 / 69.58 / Japan, China, U.S.
Source: 1.Bureau of Primary Industries, Department of Primary Industries and Mines
2.Customs Department
Remark: excluding finished products such as kitchen utensils, spring, etc.
From the table presented above, the export quantity of copper as a whole in 2004 comparing to 2003 has increased by 25,264 metric tons or 5,802 million baht. Export value of copper tubes & pipes and fittings, and copper scrap is good constituting 39% and 32% of total export value, respectively. The important export markets are Japan, China and U.S. consistent with the previous year.
3. Summary
In 2004 the production in copper industry has increased. The import quantity of unwrought copper used as basic raw material in the copper industry is 282,312 metric tons (of which is 26,258 metric tons of copper cathode) increasing by 30% compares to 217,015 metric tons of 2003. Such copper cathode has been processed further to use in related industries such as electrical appliance industry, motor vehicle parts industry, electric wire industry, etc. Also, these industries have expanded well.
At this time, Thailand has a potential to produce copper cathode domestically so the creation of linkage among upstream, midstream and downstream industries in order to develop quality of products together and set the acceptably reasonable prices would reduce the import quantity of copper cathode, and large amount of increasingly important imported material. The linkage also increases copper production potential as the whole system by decreasing the production cost and delivery time, and motivate foreign investors to increase more fund in Thailand. In addition, copper entrepreneurs should continuously improve their product quality and standard to add value in the products by applying management concepts and information technology to increase their productivity and decrease the costs along with continual improvement concepts. Examples of such concepts are Total Quality Management (TQM), Cleaner Production, Lean Manufacturing, etc. Adaptation such techniques might help to maintain their existing customers and penetrate into new markets concurrently, prepare strategies to cope with Free Trade Area (FTA) discussion with foreign countries, and increase opportunities to compete in foreign markets as well. Unless improving their productivity, domestic entrepreneurs could lose their market shares to the imported goods.
Another important thing that entrepreneurs should be concerned along with management techniques discussed above is the recycling process of copper scrap in order to efficiently use the material, which is the way to add value to the firms. In 2004, the export value of copper scrap is 51,322 metric tons and this amount is likely to increase every year, while the import quantity of copper material such as copper cathode is in huge amount and increasing every year as well. Therefore, copper recycling by smelting and refining methods can be the way to reduce imported copper.
4. Trend
In 2005, it is expected that copper industry would continue to grow favorably because of continuous growth in related industries such as electrical appliance industry, motor vehicle industry, etc. In addition, the expansion of infrastructure such as electrical system and telecommunication network would result in a greatly increasing demand for copper. However, the increased quantity of copper in world market and low level of copper inventory in LME market could be the factors that contribute to the increasing price of copper in 2005.
Mr. Danuruj Winmun
Industrial Sector 2, Sectoral Industry Policy Bureau 1
Office of Industrial Economics
June 2005