AI Computing Power Competes for Copper, Home Appliance Industry Forced to "Give Way": Copper-to-Aluminum Ratio Approaching Historic Highs, Will Aluminum Become the Profit Engine for the Next Decade?

1. What happened? Industry-wide shift at extreme copper-aluminum ratio

The global commodities market is undergoing profound structural changes. Driven by liquidity spillover from Federal Reserve rate cuts, expectations of economic resonance between China and the U.S., ongoing disruptions in global copper mine supply (South American resource risks and declining smelting and processing fees), and emerging demands such as AI data centers, new energy vehicles, and grid upgrades, copper prices have continued to hit record highs.

Against this backdrop, the price ratio of copper to aluminum has shown significant deviation. Historically, when the copper-aluminum price ratio is around 3.5 times, downstream industries tend to seek material substitution. Recently, the LME spot copper-aluminum price ratio has remained above 4 times, reaching a historical peak of 4.2 times. This extreme ratio exerts deadly cost pressure on industries heavily reliant on copper materials, such as air conditioning.

Air conditioning is the category with the largest copper usage in the home appliance industry, often called the “last fortress” of copper material usage—refrigerators, washing machines, etc., have largely completed substitution. A 1.5-horsepower household air conditioner uses about 6-7 kg of copper, with copper components accounting for 20%-30% of total production costs. Facing copper prices approaching 100,000 yuan per ton, companies’ room for product structure optimization has reached its limit.

In December 2025, a landmark event occurred in the industry. Led by the China Household Electrical Appliances Research Institute, major air conditioning companies such as Midea, Haier, Hisense, TCL, Aux, and Xiaomi jointly signed the “Air Conditioner Aluminum Reinforcement Application Research Working Group Self-Discipline Convention.” The core aim of this convention is to establish an industry “ceasefire agreement,” prohibiting malicious attacks, disparaging comparisons, and false advertising related to “aluminum replacing copper” technology among companies, with the goal of uniting the industry, educating the market collectively, and clearing obstacles for the large-scale commercialization of aluminum-replaced copper products.