Copper Pricing

Walt Risler

We are a large Midwestern contractor, we have seen the pricing for copper rise 50% from last year. Is this a regional problem or is it nation-wide? This problem is very bad for us, because we have received a large multi-million dollar contract that was bid last fall and when we went to buy out the copper tubing we are over $20,000 in the hole from what we had in the bid. We cannot use galvanized except 5" and above, we have a lot of 3/4" and 3". We don't know whether to hold out a few months and see if the pricing goes down or to buy it now and take the loss. All indications is that copper tubing will be going up this spring and into the summer because of the shortages of steel piping. Any suggestions?

George_10

When do you need to take delivery

You could hedge the purchase in the copper futures market and lock a price or maybe even reduce the price if the market falls later this year. You would need a pro broker if you get involved in this as it is a sophisticated process, but you could protect your self.

Give me a call if I can be of any help. I know several very good people in the futures market. 800-543-5975

George Hunt

Shelby

copper

We have the same problem with soaring prices on steel and copper up here in Canada. Hope it isnt long term. This problem is hurting everyone.

singh

Pex looks good

We noticed prices for Copper going up in NE also. were using pex for most of installations now ( 3/4 & 1/2" ) Its about half the price of copper and I can cut out the 90 degree turns.

George_10

You guys should

form a co-op and hedge your copper prices. It would not be that difficult to do and it would take the market risk out of price rises like you are seeing. All types of businesses do just that and lock in the raw material cost.

Earthfire

materials cost

the manufacturers or the broker traders are making a bundle or are they? Wafer board in my area was $5.00 a sheet last year this time now it's almost $17.00. Cooper is up, steel is up, fuel is way up. The materials industry says there is a shortage because of the bad weather, fires,the war sucking up the resources. So how come people are out of jobs and plants are being shut down due to "lack of demand". Used to be that product moved from plant, to distributor, to wholesaler, to end user. Today it moves from plant, to Paper export broker,to another paper shipping broker, to another paper import broker, several commodity trader,broker types, sometimes to a distributor, to a wholesaler, to an end user. All the paper traders take a cut and add to the cost of product without adding any value, But the end user is expected to cost control the project by lowering labor price.

Robert O'Connor_7

It's all in the contract.

Many addendem can be made, but only in the initial contract. For example: If the contract spells out a time frame (start 1-1-04 must be completed by 12- 30-04 ), You now know your true time, and materials must be purchased within that time, or obviously the customer incurr damage as a result of you not finishing in time. You would be responsible for REAL damages that were realized. On the other hand if you bid a job and had to provide WIDGITS, and only one company that made them, burned down, what would you do?? Contract administration is the most important aspect of this biz (at least comm. & indust. work). You may want to speak with an administrator & lawyer about this. It may be spelled out in the contract and you might be able to seek reasonable compensation. It may also be the case were they want the job done by this date, but THEY delayed it. Is relief a integral part of YOUR contract, if not I affraid your beat...... BOC

Lee_2

Hi Gentlemen (and Ladies)
I was given notice from my pipe supplier that by summer time, supplies of pipe and fixtures will be extremely limited. I have stocked my supply with pipe and nipples over the last two months, with the possibility of production into the fall. Because I have a great working relationship with my pipe supplier, I will have a few months to pay for this. Thats if I get the pipe I ordered!
The following articles might clarify some of the problem. I don't see this getting any better this year, in fact, it could become quite messy.

Lee_2

I messed up, sorry!! I thought the print would be ok to read. Just go to www.globalinsight.com. Its very interesting!

Ken_8

George is

correct. With the kind of paper you have invested in this, a "futures contract" would at least stop the blood. If the prices continue upward, you might just make a killing!

To Learn More About This Professional, Click Here to Visit Their Ad in "Find A Professional"

scrook_2

perhaps due to...

the falling US$ relative to the currencies in the countries of origin of the copper ore & copper (e.g Chile), though I believe the US and Canada are also significant producers of copper ore & copper and/or increased demand (e.g. China) or reduced production and/or disruptions to production worldwide pushing up the price independent of currency exchange effects.

Copper is at a 7-8 year high right now, up about 50% from a year ago

As others have pointed out you might still look into copper futures contracts as a hedge against continuing increases.

A Google news search http://news.google.com for "copper prices" will get you a lot of recent info.

Shelby

We are locked in

On our copper . We lucked out and locked before the prices started to soar. But what if this trend continues all year? We use 30000 to 35000 pounds of copper tubing per month. Contracts end and let's hope that prices come back to earth before too long. This has to be hard for the smaller companies out there that are just making ends meet as it is in such a competitive market.

Walt Risler

Thanks for the input

I appreciate the comments. We decided to pull the trigger yesterday and we bought about 80% of the tubing. I had pricing locked until March 1. The salesman showed me how much the pricing was going to increase, 16%, so we decided that we could not afford to wait. We have two other large jobs ending and we will be able to transfer most of the copper fittings from those jobs to this one.