Italy was Europe’s second largest consumer of refined copper in 2009, after Germany. Within the European continent, Italy was also the second largest producer of copper and copper alloy semis products (wirerod, brass mill products and foundry products), again after Germany. Italian demand fell by 37% since 2006 (the peak year) from 1.55 million tonnes to 1.01 million tonnes, although it staged an encouraging recovery in 1H 2010.

The Italian copper semis industry is unusual in that it is dominated by its brass mill segment. The usual pattern of national semis production sees wirerod as the largest component, followed by the brass mill segment, with the foundry sector being the smallest. The main reasons for the pattern are that Italy relied on significant imports rather than domestic output to meet its needs and it had an exceptional tradition, history and competitive advantage in manufacturing goods and downstream products from brass. China only overtook Italy as the world’s leading manufacturer of copper alloy rods, bars and sections in 2007. Italy’s competitive advantage in this product line explains why the brass mill industry remains the pre-eminent consumer of copper and copper alloys today.

With the depressed economic climate, weak construction activity, high and rising copper prices, substitution, consumer migration, economisation pressures, the closure of Italian semis capacity, and increased competition from overseas, Italian copper semis production is unlikely to return to previous levels and CRU believes consumption will be in general long term decline.