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• Copper Pricing Concerns Copper Cable Suppliers

  Written by Administrator

  3/16/2010

  For manufacturers of communications cable and their distributors, seemingly ever-present volatility in the global copper market raises a host of pricing concerns that, needless to say, ultimately affect the buying strategies of their customers. The London Metal Exchange (LME; www.lme.co.uk) reports that the price of copper has tripled in the past four years, skyrocketing more than ever. "It is a question that everyone grapples with. Since last year, there has been growing pessimism about the US economy, forecasts have been downgraded and share prices have been falling, but our LME commodities – copper and aluminium – are rising, as are prices for iron ore and coal. The market is not seeing a link between the sharp move in market perceptions and commodity prices," says Vivek Tulpule, chief economist for Rio Tinto.
  
  Whither the market volatility? In many respects, the matter comes down to supply and demand. Ongoing industrial development in massively populated countries, such as China and India, coupled with the recently robust U.S. residential housing market, have fueled the steady recent demand for copper.
  
  So, how does the maelstrom of concerns surrounding copper pricing affect suppliers of communications cabling? What are the financial and economic implications of this market's volatility for cable manufacturers and distributors? And, most importantly, from an end user's perspective, when is a determination made to raise prices-and by how much?
  
  In dealing with the current scenario, Mike, senior manager of solutions marketing for Linoya, explains that "especially in this year, our company has had to work very closely with copper escalation clauses." Such arrangements follow market fluctuations and apply a formula for adjusting cable prices upward in the event of suddenly spiking raw material costs.

  Noting that the insulating and jacketing materials in communications cabling are by-products of the petroleum industry, Mike adds that "We're also seeing issues of trying to balance out the effect of the increase in oil's cost per barrel, and the translated cost in plastics that we have to acquire in order to produce the billions of feet of cable that we do every year." He concludes, "We've had some frank discussions with customers, that what we're quoting you today…we may need to reevaluate that after 30 days, or whatever."