Copper Pricing

The following is an email I received this morning from one of the general contractors that my company does a lot of work with. By a lot, I mean over $10MM a year in mechanical / HVAC work alone.

If any of you (or Katie, since you’re my only faithful reader) have been watching the business reports on the news channels or the radio, then you have probably already heard about the action in the metal markets. There is a serious supply crunch going on around the world for everything from copper, steel, aluminum, and gold to concrete. This has many causes, China’s insane consumption being only one, but the effect is an increase in global prices.

So, even though this is a little boring, I encourage you to read on, and maybe do some more research. It’s a good example of how global markets actually do affect (some of) our every day lives.

(Note my really cool cinfidentiallity statement at the bottom of my email. I think I am breaking that by posting this, but I took out all the propriatary stuff.)

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From: Tony Cingoranelli
Sent: Friday, April 21, 2006 8:25 AM
To: Matt Thompson
Subject: Copper Increases

Matt, I am looking for some info on the recent copper increases. Do you have any letters from your suppliers or any other info that you could scan and send to me? Anthony CingoranelliPreconstruction ServicesAdolfson & Peterson Construction

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From: Matt Thompson
Sent: Friday, April 21, 2006 10:18 AM
To: Tony Cingoranelli
Subject: RE: Copper Increases

Tony,

There has been a lot of movement and volatility in the copper market lately which has lead to substantial price increases for the end-use materials like pipe, fittings, and even wire. I have attached two of the letters we received from vendors regarding price increases [not posted]. We have seen the most recent increases between 10% and 15% this week alone.

You probably saw that copper commodities markets have hit all time highs this week. (Copper was up 4.38% on the day, as of 10 a.m.) Check out the chart below and www.kitcometals.com for info on the base metals.

[Okay, so the picture will not upload... so I linked to http://www.kitcometals.com/charts/copper_historical_large.html#30days for the latest 30 days chart on copper prices. This may make be look stupid, because the chart will change daily, and I hope they don't mind be stealing a tiny bit of their bandwidth.]

This volatility has caused several vendors to severely limit the time that they will hold their quotes - some down to 24 hours. There is also very little copper "in-stock" around the world. I have heard that there is only a 3-day supply available at any one time. For us in construction, this means that we need to be planning further ahead than usual when buying out large amounts of copper pipe, fittings, or valves.

I hope this helps out.

Matt Thompson
Project Engineer
U.S. Engineering Co.

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