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Explained: Why aluminium is emerging as manufacturers’ preferred alternative to copper
The shift comes after copper prices surged to a record high in late January, touching nearly $15,000 per tonne, driven by supply shortages and surging demand from the green-energy transition and data centres. Aluminium, by comparison, trades at roughly a quarter of copper’s price, making it an increasingly attractive substitute where technical requirements allow.
The transition is no longer theoretical. Rising copper prices are prompting automakers and manufacturers to expand the use of aluminium wiring as a lower-cost and lighter alternative. Companies such as Ferrari and BMW are already increasing aluminium’s adoption across new vehicle models, underscoring how economics and engineering are converging to accelerate substitution.
Also read: Ferrari and BMW join Tesla, China in switch from copper to cheaper aluminium
The move has been driven by a widening price gap between the two metals. The copper-to-aluminium price ratio has climbed above 4.2, making aluminium a significantly more economical option for electrical wiring. Although aluminium offers around 61% of copper’s electrical conductivity, its cost allows manufacturers to reduce material pressures by using thicker aluminium cables wherever design requirements permit.
Weight has emerged as another decisive factor, particularly in electric vehicles. Copper is around 3.3 times heavier than aluminium, making the white metal an attractive option for improving vehicle efficiency and extending driving range without compromising functionality.
Ferrari introduced aluminium wiring in its 296 Hybrid sports car last year before extending its use to additional models, including the recently launched Luce electric vehicle. According to the company, the transition has reduced wiring weight by 15 to 20%. Ferrari’s Head of Research and Development, Dario Esposito, said the company selected aluminium primarily for its technical advantages and weight reduction rather than its lower cost.
Will the trend last?
Analysts at JPMorgan estimate the ongoing substitution will affect around 2% of global copper demand this year. Under one scenario, that figure could rise to as much as 6% by 2030 as forecasts for copper supply continue to fall short of demand projections for more than a decade.
According to an HDFC Securities report, the commodity bear market between 2011 and 2020 severely damaged the supply pipeline across the resource sector. Mining capex fell more than 40% from peak levels, oil and gas exploration spending stagnated, and ESG-related pressures further restricted new project development. Discoveries of new tier-1 copper, oil and gas deposits have effectively flatlined since 2015.
At the same time, demand has accelerated sharply. Electrification, artificial intelligence, defence spending and emerging market urbanisation are all deeply commodity-intensive trends. Structurally constrained supply, coupled with rigid long-term demand, typically pushes baseline market-clearing prices higher. According to the report, current conditions resemble the early stages of previous multi-year commodity cycles.
Read more: ‘Higher-for-longer’ aluminium cycle to lift producer stocks
Iran conflict troubles
The Iran conflict has added another layer of pressure to an already strained supply picture. One of the less-discussed drivers behind the recent rally is the growing shortage of sulfuric acid, a key input in copper extraction and refining, particularly in heap leaching operations. Nearly half of the world’s seaborne sulfur supply originates from the Middle East, and disruptions around the Strait of Hormuz have significantly tightened availability.
Chile’s changing copper production dynamics have further complicated global supply calculations. As the world’s largest copper producer, operational disruptions, water scarcity and the absence of major new high-grade discoveries have constrained output growth. This remains a critical variable as global supply chains struggle to keep pace with rising demand for energy transition metals.
Aluminium’s own rally
Even as aluminium benefits from copper substitution, the metal is increasingly showing signs of entering a powerful structural bull cycle of its own. According to a Bloomberg report in June, concerns among traders are rising that Chinese aluminium smelters may be asked to curb production as authorities intensify scrutiny of energy consumption and emissions across major industries.
Chinese smelters have been operating at full capacity amid a global supply shortage worsened by the Middle East conflict. Aluminium prices on the LME have climbed steadily since the war began in late February, with supplies from the region disrupted due to the effective blockade of the Strait of Hormuz.
Morgan Stanley said the medium-term demand-supply outlook for aluminium remains constructive, supported by strong sustainability-linked demand and constrained supply growth resulting from China’s smelter caps and slower capacity expansion elsewhere.
The brokerage added that near-term factors, including China’s supply discipline, disruptions in the Middle East and elevated energy costs, are likely to keep prices firm. It also pointed to favourable positioning on the global cost curve and low inventories outside the US as factors that could limit downside risks.
India push
Analysts also believe India is entering a multi-year growth cycle that is expected to drive robust demand for both aluminium and copper.
Morgan Stanley described aluminium as its preferred base metal, citing a tighter demand-supply balance. Supply growth remains constrained by China’s capacity caps, slower ramp-up in Indonesia due to power limitations and limited expansion elsewhere.
Recent disruptions in the Middle East have tightened markets further, with some supply losses likely to persist because of long restart timelines.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
Why gold prices corrected so much
The sharp correction in gold prices can largely be attributed to a combination of fundamental pressures and technical factors. A stronger US dollar has reduced the appeal of gold for global investors, while rising US bond yields have increased the opportunity cost of holding a non-yielding asset like gold. At the same time, expectations of further interest rate hikes by the US Federal Reserve have weighed heavily on sentiment. From a technical perspective, gold had rallied significantly over the past two years, leading to overbought conditions. This triggered profit booking and liquidation of long positions, amplifying the downward move.
Why the US dollar is so strong
The US dollar has remained firm due to relative economic resilience in the United States and expectations of tighter monetary policy. Strong labour market data, stable consumption trends, and persistent inflation have supported the dollar’s strength. Additionally, elevated US bond yields continue to attract global capital flows into dollar-denominated assets. Safe-haven demand has also played a role, as investors have preferred holding dollars amid global uncertainties. A stronger dollar typically moves inversely to gold, as it makes the yellow metal more expensive for holders of other currencies, thereby pressuring prices further.
Expectations of US Fed policy outlook
Markets are currently pricing in the possibility of multiple Fed rate hikes or at least a prolonged period of higher interest rates. Persistent inflation concerns have forced the Fed to maintain a cautious stance, delaying expectations of monetary easing. Higher interest rates support bond yields and strengthen the dollar, both of which are negative for gold. The lack of clarity on the timing of potential rate cuts has further contributed to volatility in bullion prices. Until there is a clear shift in the Fed’s policy stance toward easing, gold may continue to face intermittent pressure in the near term.
Impact of easing geopolitical tensions
The ceasefire developments between the US and Iran have reduced immediate geopolitical risks, leading to a decline in the safe-haven premium embedded in gold prices. Earlier, geopolitical tensions had driven strong inflows into bullion as investors sought protection against uncertainty. However, with oil prices returning to pre-war levels and tensions easing, this premium has largely evaporated. While geopolitical risks have not disappeared entirely, the immediate urgency has diminished, contributing to the recent correction. This highlights gold’s sensitivity to global risk sentiment and shifting macro narratives.
Role of central bank demand
Despite the correction, central bank demand for gold remains a strong supportive factor. Emerging market central banks have been steadily increasing their gold reserves as part of diversification strategies away from the US dollar. This structural demand provides a solid floor for prices during periods of volatility. Even during corrections, central bank buying tends to absorb some of the selling pressure, preventing deeper declines. Over the medium to long term, continued accumulation by central banks is likely to support gold prices and reinforce its role as a strategic reserve asset.
Outlook: Correction or bearish trend?
The current fall in gold appears to be more of a technical correction rather than the beginning of a structural bear market. The rally over the past two years was driven by strong macro fundamentals, and the recent decline is largely a result of profit booking and changing short-term liquidity conditions. While further corrections cannot be ruled out in the near term, the broader outlook remains constructive. Factors such as potential economic slowdown, geopolitical uncertainties, and eventual monetary policy easing are likely to support gold prices over the medium term.
What should investors do at higher levels?
Investors who have entered at higher levels should avoid panic selling and instead adopt a disciplined approach. Given that the correction appears technical, long-term investors can continue to hold their positions. Accumulating gold through a systematic investment approach (SIP) and adding on dips can help average down costs. However, caution is advised in aggressively deploying capital at current levels due to ongoing volatility. A staggered buying strategy remains the most prudent approach in the current environment.
Domestic outlook and role of INR
In the domestic market, gold prices are expected to remain relatively supported despite global weakness, largely due to currency movements. A weaker Indian Rupee against the US dollar tends to cushion declines in international prices, keeping domestic prices elevated. Additionally, demand is likely to pick up during the upcoming festive and wedding seasons in India, providing further support. Seasonal demand, combined with currency depreciation, could help stabilize domestic gold prices even if global markets remain volatile, making India a relatively stronger market for gold.
(Hareesh V is Head of Commodity Research, Geojit Investments Limited)
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
Morgan Stanley shifts to defensive European energy stocks, upgrades Galp
Eleven equity mutual funds generated over 25% returns in the past three months, led by small-cap schemes. JM Small Cap Fund topped the list with a 35.02% gain. Experts advise investors to prioritise risk profile and goals over past performance.
The Motilal Oswal Chairman during a 2022 podcast ‘Market Ki Baat’ by Groww, which was later compiled in a book named ‘The αlpha bets’, said that a book becomes a part of him. “I take it to my office, keep it at home, and carry it while travelling until I finish reading it,” he said, adding that if a book is particularly engrossing, he sometimes takes two days off work to finish reading it.
According to Agrawal, investors should focus on only two books but study them in depth. “Absorb their essence. Let them enhance your knowledge base,” he advised, adding that whether you agree with the author or not is irrelevant.
Here is Raamdeo Agrawal’s list of book recommendations for investors.
One Up On Wall Street by Peter Lynch
Legendary American investor Peter Lynch‘s 1989 classic, One Up on Wall Street, laid out a deceptively simple approach to investing. The book is a classic take on spotting investment opportunities from everyday life. In the book, Lynch explains that investment opportunities are everywhere – from the supermarket to the workplace. By paying attention to the best ones, investors can find companies to invest in before professional analysts discover them. When investors get in early, they can find the “tenbaggers,” the stocks that appreciate tenfold from the initial investment.
Also read: Why Rakesh Jhunjhunwala bought Titan shares when everyone else was selling? Raamdeo Agrawal explains
Warren Buffett’s annual reports
Raamdeo Agrawal also recommends investors to go through all of Warren Buffett’s writings in the annual reports of his company, Berkshire Hathaway. The legendary investor made it a point to communicate his thinking to his shareholders in a letter at the end of every year. These much-awaited letters were not only lessons in investing, but also in history.
The Snowball
For those not keen on reading such voluminous material, The Snowball, Buffett’s biography, is a good alternative, according to Raamdeo Agrawal. The book details Buffett’s life and his investing career, which began to take off in 1956. That’s when he gathered $105,000 from four relatives and three close friends to start the Buffett Partnership. Later, the partnership began buying the stock of Berkshire Hathaway, a New England textile firm, for $7 and $8 a share in 1962. After 1969, Berkshire became Buffett’s investment vehicle.
Also read: AI bubble or boom? Why Warren Buffett called Big Short fame Michael Burry ‘Cassandra’
Common Stocks and Uncommon Profits by Philip A. Fisher
The ‘Common Stocks and Uncommon Profits’ by Philip A. Fisher is also on Raamdeo Agrawal’s list of books for investors to read. He in fact called it an essential read for investors keen on the stock market. “It is a very good book — a must-read,” he said, as quoted by the book which added that the market expert read it four or five times, and believes it should be kept as a guide.
Expectations Investing by Michael Mauboussin
‘Expectations Investing’ by Michael Mauboussin and Alfred Rappaport provides a powerful and insightful alternative to identifying gaps between price and value. In this book, the authors advise that investors should start with a known quantity, the stock price, and ask what it implies for future financial results. The book then explains how to assess the likelihood of revisions to these expectations.
The Theory of Investment Value by John Burr Williams
Raamdeo Agrawal also highlights a classic from 1938, The Theory of Investment Value by John Burr Williams. “Everyone talks about how to assess value, but nobody explains how price is determined. This book discusses that. It is truly unique in that way,” Raamdeo Agrawal was quoted as saying in Groww’s podcast.
Mastering the Market Cycle by Howard Marks
The Motilal Oswal Chairman also named Mastering the Market Cycle by Howard Marks as another good read for promising investors. “Every book contains one or two powerful lessons. Internalise them. Apply what you learn. That’s how you elevate yourself beyond a CA into a CA+++,” he suggests.
Also read: Wealth lesson by Charlie Munger | ‘The big money is not in the buying or selling, but in the waiting’ The timeless wealth lesson from Warren Buffett’s legendary partner ‘Oracle of Pasadena’(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
Business
Markets may consolidate; micro, small and mid-caps could lead alpha generation, says Quant Mutual Fund
While large-cap oriented indices are expected to participate in the country’s long-term economic expansion, the fund house believes micro-, small- and mid-cap stocks could be better positioned to deliver excess returns during the next phase of the market cycle, the fund house said in its monthly factsheet.
Also Read | Why is Parag Parikh Flexi Cap Fund still a top recommendation despite underperformance? Expert explains
“The markets are expected to consolidate over a period of time, and the large-cap oriented indices will do well to grow along with the macro-economic expansion of the country. Thus, it will be the micro, small and mid-caps spaces, which will drive alpha generation,” the fund house said.
Sandeep Tandon led Quant Mutual Fund further said that in its portfolio capital remains nearly fully allocated to capitalize on appealing valuations across diverse market sectors. Further its portfolio construction strategy is to focus on under-owned, under-researched, under-valued and neglected territory stocks.
Over the last couple of years, the main concern of the fund house has been over-ownership by foreign institutions. Now, our concern is shifting towards over-ownership by domestic institutions.
As part of its sectoral positioning, Quant Mutual Fund remains underweight on manufacturing companies, citing uncertainty around input costs and supply-chain dynamics. The fund house continues to maintain a positive outlook on sectors such as energy, large-scale infrastructure, select non-banking financial companies (NBFCs), asset management companies (AMCs), select private sector banks, hotels, pharmaceuticals, telecom and data-centre-related businesses.
In its monthly report, the fund house said India will be a big beneficiary of improved trade terms with the US following the trade agreement, which is expected to be finalized soon, because India’s productivity is maximized (Export services) and financial costs are optimized (Forex reserves) better than with any other nation or region in the world.
However, the fund house cautioned that higher crude oil prices, rising input costs and logistics-related challenges could weigh on corporate earnings in the near term.
It further said that we believe that the era of easy money and seemingly perpetual operations of a nebulous ‘Plunge protection team’ is drawing to a close. The new Federal Reserve Chair is setting out to dismantle Wall Street’s expectation of this Fed Put on the markets.
On performance, Quant Mutual Fund said its investment framework has delivered consistent results across market cycles. As of May 31, 2026, the fund house said that nine of 10 equity and hybrid schemes with a 10-year track record outperformed their benchmarks, with all nine ranked in the first quartile.
Around 10 schemes of 12 schemes with a five-year track record outperformed their benchmarks, including eight ranked in first-quartile. Nearly 14 schemes of 16 schemes outperformed their benchmarks over three years, with 13 ranking in Quartile 1 and lastly, 15 schemes of 16 schemes with a one-year track record beat their benchmarks, while 12 ranked in Quartile 1.
It added that instead of relying on traditional buy-and-hold or quasi-passive strategies, investors should focus on adaptive asset allocation and active portfolio management to navigate changing market conditions.
The fund house also highlighted the growth of its proprietary VLRT (Valuation, Liquidity, Risk Appetite and Timing) framework, which recently completed six years. During this period, Quant Mutual Fund’s assets under management have grown from around Rs 135 crore to over Rs 1 lakh crore, while its investor base has crossed one crore folios. It currently offers 34 mutual fund schemes and specialised investment products.
According to the fund house, its investment philosophy centres on generating superior risk-adjusted returns by maintaining a high active share and avoiding benchmark-hugging portfolios. It said the objective is to actively manage risk rather than simply replicate benchmark indices, with returns viewed as an outcome of effective risk management.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
If you have any mutual fund queries, message on ET Mutual Funds on Facebook/Twitter. We will get it answered by our panel of experts. Do share your questions on ETMFqueries@timesinternet.in alongwith your age, risk profile, and twitter handle
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I have a masters degree in Analytics from Northwestern University and a bachelors degree in Accounting. I have worked in the investment arena for over 10 years starting as an analyst and working my way up to a management role. Dividend investing is a personal hobby and I look forward to sharing my thoughts with the Seeking Alpha community.
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Retail investors bet on these 10 small-cap stocks; they rally up to 185% in 3 months – Smallcap Rally
Retail investors placed their bets on small-cap stocks last March ’26 quarter—and the market rewarded many of them in a big way. Shareholding data shows that retail investors increased their stake in nearly 195 stocks in the Nifty Smallcap 500 Index compared with the previous December ’25 quarter. (Note: Retail investors refer to resident individuals holding nominal share capital of up to Rs 2 lakh.)
The move proved rewarding, with more than half of these companies delivering strong returns. Around 100 small-cap stocks rallied between 25% and 185% in just over three months, from the start of April to date. Among the biggest winners, 10 stocks skyrocketed 80% to 185%, while four emerged as multibaggers, more than doubling investors’ wealth in a little over three months. (Data Source: ACE Equity)
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