I'm LongbridgeAI, I can summarize articles.Gree Electric Appliances announced it will not increase air conditioner prices or switch from copper to aluminum despite rising copper prices. The company emphasized its commitment to maintaining a high-end brand image. While some manufacturers have raised prices due to copper costs, Gree's decision is seen as a marketing strategy. The Ministry of Industry and Information Technology has proposed aluminum as an alternative, but concerns about reliability persist. The cost-saving potential of aluminum is significant, but the industry is balancing performance and cost in its materials choices.
(Yicai) Jan. 6 -- Gree Electric Appliances said the Chinese white goods giant will not raise prices of its air conditioners nor replace copper with aluminum now, despite the surge in copper futures prices.
Gree said so in a statement yesterday, after its Chairwoman Dong Mingzhu mentioned last month that the company had been researching aluminum technologies for years, adding that aluminum will be used in air conditioners only when it reaches the same technical assurance level as copper.
Copper future prices exceeded USD10,000 per ton at the end of last year, prompting home appliance makers to hike prices of air conditioners. For example, Meibo Air Conditioning announced a 5 percent price increase in December. Other large manufacturers have raised prices 2 percent to 4 percent since the start of the year.
“Recent price increases of some air conditioners are due to the rise in copper prices, especially as the raw material has risen to CNY100,000 (USD14,330) per ton,” the head of an air conditioner firm told Yicai. “The cost of a unit has increased by CNY80 to CNY90 (USD11.50 to USD12.90) compared to three months ago.”
Gree has a significant brand premium and high selling prices, they added, noting that, given its wide profit margins, announcing that it will not raise prices is likely a marketing strategy.
“Gree has been building a high-price and a high-quality brand image, so stating that it has no plans to replace copper with aluminum right now just strengthens its high-end image,” Xiao Youyuan, chairman of Samyou Environmental Technology, told Yicai.
Aluminum as Alternative
China is poor in copper and rich in aluminum, so it relies mostly on imports. Copper accounts for about 40 percent of the cost of an air conditioner.
The Ministry of Industry and Information Technology last year proposed replacing copper with aluminum, identifying the application of aluminum tubes in heat exchangers for refrigerators and air conditioners as one of the key directions.
Last month, Wanbao joined hands with JD.Com to launch China’s first aluminum air conditioner, with presale prices of CNY999 to CNY1,199 (USD143 to USD172), about 20 percent cheaper than similar copper air conditioners on the market.
“Replacing copper with aluminum poses the issue of reduced reliability, even though copper is not entirely unacceptable,” Xiao said.
Once copper is replaced with aluminum, the retail price of air conditioners will drop, according to an industry insider. But for some brands that are unable to grow their sales volume, a significant decline in sales revenue would be unsustainable.
From a technical perspective, the industry has found solutions for the heat transfer performance in aluminum air conditioners, making the heat exchange efficiency of aluminum alloy tubes comparable to that of copper tubes, Huang Ruiyin, a researcher at the aluminum application research institute of Aluminum Corporation of China, told Yicai.
With copper at CNY100,000 per ton and aluminum at CNY22,000 (USD3,150) per ton, and considering that the required weight of aluminum is only about 60 percent that of copper, replacing copper with aluminum can significantly save costs, Huang noted.
Japanese conglomerate Daikin Industries announced it aims to use aluminum alloy tubes for 50 percent of its air conditioners. Many window air conditioners exported to North America from China also use aluminum alloy tubes.
The lifespan of copper air conditioners will be 50 percent or even 100 percent longer, as modern technology optimizes performance and lifespan through alloy improvement, surface coatings, and process controls, Xiao noted.
Copper’s advantage in long-term reliability remains clear, and the application of aluminum would increase manufacturing costs, so enterprises need to find a balance between performance and cost.
The technology for applying aluminum in air conditioners is relatively mature, according to the head of an air conditioner company. Due to market competition factors, although aluminum will not completely replace copper, the combination of the two will develop rapidly.
Editor: Futura Costaglione