Daikin to halve copper in air conditioners as prices skyrocket
OSAKA – Daikin Industries, Japan’s largest air conditioner manufacturer, will halve the amount of copper used in air conditioners from the current 90,000 tonnes per year by fiscal year 2024, Nikkei has learned.
The international price of copper has risen 40% to 50% over the past year amid the expectation of an economic recovery after the COVID-19 pandemic. Decarbonization trends, meanwhile, have spurred the shift to electric vehicles, which require copper for their components. In response to the increased pressure on profits, Daikin plans to use more materials like aluminum, ahead of other companies.
Soaring copper prices may stimulate competition for technological development in the search for alternative materials.
Copper is widely used in electronic parts, auto parts, and wiring because it conducts heat and electricity efficiently and is easy to process. The three-month London Metal Exchange futures contract, a key benchmark, hit a record $ 10,700 per tonne in May for the first time in around 10 years, more than double the price set in spring 2020 It is currently trading. about $ 9,000 per tonne.
Daikin used copper for the heat exchangers of the outdoor air conditioning units. In fiscal 2021, higher prices are expected to increase costs by 30 billion yen ($ 273 million) year on year, which is about 10% of the company’s expected total operating profit.
The use of copper will be reviewed on the assumption that prices will remain high. “Even if the market is settled, it will be around $ 8,000,” said an executive.
Daikin will halve the amount of copper used in Japan by FY2023 and also reduce its use abroad. Copper in heat exchangers will be replaced by aluminum, which accounts for one third to one fifth of the price of copper.
Daikin focused on the functional benefits of aluminum, such as weight reduction and refrigerant reduction. The company has been engaged in the research and development of processing technology for about 20 years. In 2012, he started using aluminum in commercial air conditioners. This will speed up the switch to aluminum for home air conditioners to reap cost benefits.
Japan’s domestic demand for copper is estimated at around 900,000 tonnes per year at present, and many other manufacturers are facing the same problem.
“A rise in the price of copper has a great influence on profits and losses. We will make efforts to reduce the amount of copper used, ”said Hiroshi Niwayama, vice president of Fujitsu General.