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 2019 sales contracts hasn’t ended yet.
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 set this premium at US$ 96/t for its European customers (2018: US$ 86/t). The higher copper premium reflects the significantly higher demand, and the expected demand, of our European customers.
In light of the good economic situation in the relevant sectors, we expect to conclude the negotiation season for copper products with contracts that are positive for us, supported by good customer relationships in our key markets. We will also continue expanding our business with new customers.
Sales of free cathode volumes on the market are based on the processing plans for 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. However, we expect stable to slightly improved demand in Europe for the rest of the fiscal year. The economic situation in the key customer industries should remain at a good level. We expect cable producers’ good demand to continue. Our acquisition of the remaining shares in Deutsche Giessdraht GmbH in fiscal year 2017/18 will positively impact our output volumes.
With regard to the market development for copper shapes, we expect slightly higher product demand than in the previous year. This is partly driven by higher demand from our customers in the industrial tube and flat rolled product sectors. From the current perspective, the positive demand trend for lower-oxygen and higher-alloyed materials will continue.
The situation is stable in the specialty product division, which includes bars and profiles. We expect stronger competitive pressure for standard products in 2019, but sales of specialty applications and alloys will continue to be good.
Flat rolled products
For flat rolled products, we see the following trends: The US economy, whose development is crucial for our plant there, is expected to remain robust in 2019. This could support the copper business there. In the European market for flat rolled products, we expect stable demand at a high level, with further opportunities for growth in important sub-markets. In fall 2018, demand fell slightly, in the European automotive sector in particular. We view this as a temporary development and expect a good demand and sales situation for the entire fiscal year 2018/19. We continue to expect additional growth momentum from the connector market, as well as from an increase in electric vehicles.
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 conditions varying 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.
Following a tightening of the sulfuric acid market with higher prices in fiscal year 2017/18, market observers such as ICIS and CRU expect that this tightened market could continue in 2019. The current insights for the first quarter of 2018/19 also signalize a stable situation with very good prices.