In recent years, the high and violent shake of copper prices has brought considerable risks to enterprises. High copper prices lead to serious corporate activity funds and high debt-to-asset ratios, and large-scale fluctuations in copper prices in the short term will also lead to lower corporate activity assets. In the context of the state ’s contraction of capital control in 2011, the severe cash flow situation of the company is even clearer, and many small copper processing companies are struggling.

After experiencing a three-year period of high application rates from 2008 to 2010, the increase in output of copper processed materials in 2011 has slowed down. According to the data of China Nonferrous Metals Industry Association, the utilization rate of copper production capacity in 2011 is estimated to be 81.84%, a decrease of 3.4 percentage points from 2010.

With the continued expansion of copper processing capacity planning, the gradual decline in the utilization rate of production capacity, product homogeneity, overcapacity and other structural structural contradictions have begun to appear. However, since the previous year, following the economic downturn in booming countries such as Europe and the United States and the deceleration of domestic economic trends Slow, the demand for inferior copper processing materials also showed a slowdown.

In recent years, China's copper pipes have been subject to anti-selling sanctions from the United States, Canada, Brazil and other countries, and exports have continued to decline. In addition, due to the decline in demand in the European and American markets due to the European debt crisis and poor economic data in the United States, China's copper processing materials exports and processing of materials have shown a "negative increase" trend. In addition, the political turmoil in the Middle East and the further serious situation in Iran have also affected the normal business of the country and the Middle East countries. The further shrinking of the international copper market has caused China's copper producers to turn to the primary development of the domestic market, and the domestic market is becoming more competitive. On the domestic front, with the completion of domestic demand policies such as “home appliances going to the countryside”, “replacement of old with new”, “automobiles going to the countryside”, and halving of purchase tax, the growth rate of copper processing material consumption is also slowing.

In addition, the prolonged high price of copper has also caused the price of copper processed products to increase, and inferior manufacturers and consumers have turned to alternatives for copper products at relatively low prices.

According to Qiu Hong, an expert from the International Copper Association, the total copper replacement rate in the Chinese market for the three years before 2010 was about 1.8 to 2.4%. The main reason for the substitution is the relative cost of copper. According to research, when copper is operating above 70,000 yuan / ton, the demand for copper substitutes is booming, and when the price of copper falls to 65,000 yuan / ton, the competitiveness of copper substitutes is greatly reduced, and the demand for copper is Will add.

In addition to cost factors, some excellent non-ferrous metal materials have been developed rapidly in terms of mining, smelting, processing, and use skills. The substitution of copper products in some inferior industries has become unstoppable.