Markets for copper products
Adequate statements about the development of the copper product business in the new fiscal year are only possible to a limited extent since the negotiation season for 2020 sales contracts has not yet ended.
One factor that is already clear is the copper premium Aurubis has established for European wire rod and shapes customers for the coming calendar year. Aurubis kept this premium stable at US$ 96/t for its European customers (2019: US$ 96/t). The stable copper premium reflects positive expectations regarding demand from our European customers in 2020.
Despite the stable economic situation in the relevant sectors and economic growth expectations at prior-year level in Europe in 2020, we expect to conclude the negotiation season for copper products with contracts that are positive for us. Good customer relationships in our key markets support this. We will also continue expanding our business with new customers.
Sales of free cathode volumes on the market are based on the planned processing of our cathode output in the Group.
Copper wire rod
Wire rod business is generally somewhat weaker in the first quarter of a new fiscal year due to seasonal factors. For 2020, we expect demand in Europe to be at a level similar to 2019. This will depend considerably on the ongoing economic trend, which, from today’s perspective, continues to be influenced by uncertainties in the key customer industries. Only from the construction and infrastructure sector do we still anticipate a good demand level in 2020.
From the current perspective, demand for oxygen-free materials should remain robust. Demand for our higher-alloyed materials is still strong as well. The latest company mergers in the semi-finished product sector in Europe provide market opportunities for higher sales, as do the changes in the trade flows in Asia and North America.
Like the other copper products, our specialties, which include bars and profiles, are dependent on further economic development. For 2020, we anticipate stable demand at prior-year level but continue to expect strong competitive pressure when it comes to standard products.
Flat rolled products
For flat rolled products, we see a few different trends. The US economy, whose development is crucial for our plant there, is expected to remain challenging in 2020.
In the European market for flat rolled products, we expect the tight demand situation of 2019 to continue. The production of connectors in particular is highly dependent on demand from the automotive sector, which has been weakening as of 2019. Although we expect further growth momentum from the increase in electric vehicles in the medium term, we don’t anticipate a significant market recovery in the short term.
Sulfuric acid sales are dependent on short-term developments, a fact that is reflected in the duration of the contracts. In addition, sales opportunities are very different from region to region, with varying conditions accordingly. Aurubis supplies the global sulfuric acid market, with a focus on Europe, North America, and North Africa. The relationship between local sales and exports fluctuates depending on market circumstances. Since fiscal year 2018/19, Aurubis has also had a sales office for sulfuric acid in Tampa, Florida.
Following a considerable tightening of the sulfuric acid market with correspondingly lower prices in fiscal year 2018/19, market observers such as ICIS and CRU expect a balanced market at the end of 2019. The current insights for Q1 2019/20 also signalize a stable situation for Europe, while demand on the international sulfuric acid markets is influenced by uncertainties.