Why Are Prices Skyrocketing in Wire & Cable Products?

Why Are Prices Skyrocketing in Wire & Cable Products?

Why Are Prices Skyrocketing in Wire & Cable Products?

Author: Kassie Teagarden, Senior Content Marketing Specialist, LAPP Tannehill

If you’re paying attention to the wire and cable industry, then you’ve probably already noticed price increases in copper, silver, and other raw materials.

We make a diligent effort at LAPP Tannehill to make sure our customers know about all the economic impacts, environmental factors, and industry trends that can potentially affect the way you do business.

Read more recent copper updates in 'How Copper Plays a Role in Future Sustainability' and 'Relentless Copper Prices Continue to Rise'. If you have any further questions about copper products or prices, feel free to contact us.

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Why Cost Increases for Copper, Silver, and Raw Materials are Leading to Higher Prices

Whether these price fluctuations are affecting the wire, cable, and connectivity products and materials you’re currently purchasing or they’re affecting your outlook on budget projections in procurement, finance, supply chain management, or product development – we’ve got you covered.

Let’s take a look at some of the world-wide cost pressures that are affecting manufacturers, distributors, and suppliers who are in need of wire and cable products.

Copper

After a 22% price increase in 2020, Goldman Sachs analysts say that 2021 could soon see a record high for copper prices. These price increases are due to factors such as China’s economic recovery from the pandemic, sustainable green energy stimuluses, and supply disruptions.

China’s rising industrial production along with aggressive sustainable energy initiatives accredits the country to being the highest consumer of copper in the world.

Europe, the U.S., and China all have strenuous renewable energy initiatives to sustain greener economies and a need for copper’s highly thermal and electric conductivity to help them get there.

The biggest copper producing countries such as Chile, Peru, China, and the U.S. struggle to meet the high demand for countries to meet their green economy initiatives, therefore playing a role in sky-rocketing the price of copper.

 What's the difference between COMEX vs Omega-Camden Copper Prices?

There is also speculation that as the U.S. dollar is increasingly becoming weaker against other global currencies, there are more opportunities for users of other currencies to have more buying power with copper and other commodities.

Chile, the world’s leading exporter of copper, has had a hard time keeping up with demand due to surge in miners falling ill to the coronavirus and their companies facing labor union strikes.

The following graph shows a trend in the last 6 months (August 2020 through February 2021) of copper prices steadily, yet rapidly, rising. Check out the interactive COMEX Copper Prices Chart for more historical trends.

COMEX Copper Price Increase Chart

Graph indicating upwards tick in copper pricing from August 2020 – February 2021

Stifel Financial analysts say, "Of all the metals used in the generation, transmission, storage, and consumption, copper remains the common denominator. Electricity generation, transmission infrastructure, energy storage, and consumption all require copper."

According to the European Copper Institute, world-wide copper consumption is predicted to rise more than 40% by 2035.

Silver

While the majority of industrial wire and cable is comprised of copper conductors, silver is commonly used to plate copper conductors in higher temperature applications.

Although silver has better conductivity compared to copper and aluminum, the metal has always been more expensive.

Goldman Sachs analysts are reiterating their predictions and forecasts of silver prices increasing (up to $33 an ounce) due to recent U.S. plans to move forward with increasing alternative renewable energy production in solar power and 5G technology.

Top silver producing countries such as Mexico and Peru are still recovering from pandemic lockdowns being implemented at major mining companies which cause temporary halts in production.

Read more about how silver prices have impacted PTFE wire products.

Non-Metal Raw Materials & Other Costs

Additional important non-metal raw materials for wire and cable production such as critical resins and polymer chemical compounds (found in insulation and jacketing of wire and cable) are also increasing in price.

Recently, one of the largest North American based wire and cable manufacturers indicated that their insulating and jacketing materials have recently increased in cost by between 10-25% depending on the compound and will be implementing broad-based price increases in the Spring of 2021.

Many manufacturers have announced an increase in costs for packaging material commonly found in wire and cable packaging, primarily those based on wood, with increases of between 5-10% on materials such as plywood, wooden reels, and cardboard packaging materials.

Freight, logistics, and transportation costs have also increased throughout the market as the global economy recovers from the pandemic.

How LAPP Tannehill is Committed to Helping You Save Money

We are diligently working with all of our manufacturers to offset these increases through optimizing our internal processes and manufacturing productivity.

From a long-term perspective, no manufacturers or distributors can accurately predict the movements commodity prices or other costs factors but rest assured LAPP Tannehill is in continuous contact with the industry's leading manufacturers to mitigate the impacts of this and all supply chain and raw material events in the market.

 Check out these 4 Steps to Save on Wire and Cable Material Costs.

Brian Arickx, LAPP Tannehill’s Supply Chain Manager, states, "As always, the purchasing team at LAPP Tannehill is doing everything in their power to buy all products at the best possible cost for our customers. We are actively analyzing quantity breaks, copper trends and multiple manufacture options. One luxury of distribution is we have the oversight of 250 manufacturing partners, allowing us to see trends and easily compare cost options across the industry."

Our wire and cable alternatives are both cost efficient and reliable, and may save you money in the long run. Your sales rep will be able to recommend the most appropriate equal for you.

We recommend that all of our customers include the expected cost volatility and increases into their short and long-term materials planning and procurement activities.

Contact your sales representative to help identify product alternatives and options which may help offset these industry-wide price increases.

Contact us with questions or inquiries.



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