Copper substitution: Rising incentives, limited disruption

The copper-to-aluminium price ratio has returned to more than 4.2x, a level that historically triggers intense discussion around substitution and raises questions about how much copper demand is genuinely at risk. Our assessment is that substitution risk is increasing at the margin, but the market continues to overestimate both its speed and ultimate scale. While the market often focuses on the copper-to-aluminium price ratio, manufacturers do not. Their decisions are driven by absolute dollar savings after accounting for conductivity requirements, fabrication costs, redesign expenses, and regional factors such as tariffs, physical premia, and carbon policies. Our conclusion is unchanged: higher copper prices will continue to drive incremental reductions in copper intensity over the coming decade. However, the evidence points to gradual erosion at the margin rather than the rapid, large-scale demand destruction required to materially alter the long-term copper market outlook.