Material Insights · Understanding the Material World

Copper and Heat pumps, air conditioning and refrigeration

Air conditioners, heat pumps and fridges move heat through copper tubes and coils and run on copper-wound compressor motors, so copper was put at about 20 to 30% of the cost of making an air conditioner (Chinese estimate, 2021); when copper is dear, makers shift heat exchangers to aluminium.

Copper (commodity) and Heat pumps, air conditioning and refrigeration (energy): 4 relationships.

How they are linked

1. Coils, tubing and compressor motors

Physical flow · Strong · Copper → Heat pumps, air conditioning and refrigeration

Copper conducts heat well, is easy to bend, braze and repair, and resists corrosion, which suits the refrigerant tubes and heat exchanger coils that every vapour compression machine needs; the compressor motor adds copper windings.

  • about 20 to 30% copper share of the cost of making an air conditioner (China estimate, 2021)
  • 15% share of China's copper demand going to home appliances (2021), of which air conditioners are a large part

Copper content per unit varies with capacity and design, so cost share is a more stable guide than a single weight figure. Daikin, the largest air conditioner maker, used about 90,000 tonnes of copper a year in 2021, which shows the scale of a single maker.

Sources: Bloomberg via Mining.com

2. Aluminium heat exchangers

Substitution · Rising · Aluminium can replace copper

Aluminium tubes and microchannel coils can do the heat exchange job at lower metal cost, though they are harder to join and repair, so makers switch when copper is expensive.

  • half share of the copper in its units that Daikin planned in 2021 to replace with aluminium by 2025
  • above $10,000 a tonne copper price that Morgan Stanley said in 2021 would speed substitution

In 2021 aluminium was still used only in small parts and some exported units in China, but by February 2026 Blue Star's chairman said the Indian air conditioning and refrigeration industry was shifting towards aluminium as copper rose. Repairability and corrosion in coastal climates limit how far the switch can go.

Sources: Bloomberg via Mining.com; AlCircle

3. Copper lifts AC prices in India

Cost and price · Medium · Copper → AC retail prices

When copper stays high for months, makers revise annual price lists before the summer season, so the cost reaches buyers in steps rather than month by month.

  • 5 to 15% expected rise in Indian AC prices before summer 2026
  • about 13.5 million room air conditioners sold in India each year

Costlier copper, a weaker rupee and new star rating norms from January 2026, under which new 5-star units are about 10% more efficient, together pushed prices up. This is a stepwise pass-through that monthly price correlations miss.

Sources: Free Press Journal

4. Price link: coils and tubing

Cost and price · Weak · Both ways

Equipment makers price on annual lists and use contracts and aluminium substitution to smooth copper swings, so the monthly link barely shows in the data.

  • -0.02 monthly change correlation
  • -0.06 12-month change correlation
  • 0.52 fitted elasticity

Near-zero correlations do not mean copper is unimportant to cost; they show that pass-through is lagged and lumpy, as in the 2026 Indian price rises, and partly offset by design changes.

Sources: Material Insights (World Bank, FRED, IMF data)

For investors

Key learnings

  1. Copper was put at about 20 to 30% of the cost of an air conditioner (2021), so a sustained copper rally squeezes cooling equipment margins before list prices adjust.
  2. High copper prices speed the move to aluminium coils, which caps copper demand growth from cooling even as unit sales rise.
  3. Pass-through comes in seasonal steps, such as the 5 to 15% Indian AC price rises expected before summer 2026, not in monthly price moves.

What to track

  • Copper price against aluminium: A wide gap encourages aluminium coils and lowers copper per unit (Daily · LME, MCX)
  • Room AC sales in India: Volume growth in the fastest growing large cooling market (Quarterly · company results (Voltas, Blue Star) and industry data)
  • Share of aluminium heat exchangers in new models: Shows how far substitution is spreading (Annual · company disclosures)

For policymakers

Key learnings

  1. India sells about 13.5 million room air conditioners a year, so cooling is a fast growing copper and electricity demand at once.
  2. Tighter star ratings from January 2026, under which new 5-star units are about 10% more efficient, cut power demand but can raise coil and metal cost per unit.
  3. Standards and servicing skills for aluminium coils decide whether substitution can ease copper imports without shortening equipment life.

What to track

  • BEE star rating levels for room ACs: Efficiency gains and their effect on equipment design (As revised · Bureau of Energy Efficiency)
  • Copper tube imports: Exposure of domestic cooling manufacturing to imported copper (Monthly · Ministry of Commerce trade data)

India

India's room air conditioner market is about 13.5 million units a year; in 2026 makers expected 5 to 15% price rises, partly from copper, and the industry was moving towards aluminium coils.

Sources

  1. Copper is so pricey now that AC manufacturers are switching to aluminum, Bloomberg via Mining.com (2021)
  2. AC prices likely to rise 5 to 15% before summer: costlier copper, weak rupee and new energy norms push up costs, Free Press Journal (2026)
  3. AC makers pivot to aluminium as copper surge bites: Vir Advani, AlCircle (2026)
  4. Price correlation, Material Insights, Material Insights (World Bank, FRED, IMF data)