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Red Metal Report

Riding High

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MCN Editor Beth Gainer Copper is in high demand, thanks to its conductivity, durability and other properties, but such demand comes at a price.

Those who offer copper alloys are encouraged by their worldwide surging demand. “The growth in the red metals industry has gone from zero to sixty miles per hour after the pandemic. From a distribution standpoint, it’s the busiest we’ve been in multiple years,” says Lance Shelton, vice president of Christy Metals, Inc., Northbrook, Ill., and president of the Copper & Brass Servicenter Association. 

Martin Little agrees copper is in great demand. He is the executive vice president of sales and marketing at Concast Metal Products Co., in Wakeman, Ohio, and Mars, Pa. The company is the largest continuous caster of copper alloys in North America. “Some segments of the market that use copper are extremely busy,” he says. “I just got off the phone with somebody at a flat-rolled service center, and they are busier than they’ve ever been, so that’s good news.”

Shelton has never witnessed a ramp-up of this magnitude. In fact, some of the mills Christy Metals uses are booked all the way into July, with several already booked until the end of 2021. However, Shelton quickly points out that this high demand for copper and copper products is not just due to pent-up demand. “Pent-up demand would have lasted a month or two because the pandemic had just a few slow months,” he says. “When these [mills] are booking out for eight or nine months, that’s not just pent-up demand. That’s truly a recovery.”

Dan Kendall, president of ABC Metals Inc., Logansport, Ind., agrees lead times are extending worldwide. The business has two locations in Texas, and an additional location in Indiana. “Whether it be in Europe, Asia or in the U.S., we are seeing lead times for producers jump out four weeks in one day,” he says. 

Meanwhile, customers are telling ABC Metals, “‘We will commit to four weeks firm and four weeks forecast.’” However, customers are disappointed to find the company needs to order their metals an additional 20 weeks beyond the four requested weeks. “It’s a strain on the supply chain,” says Kendall. “It’s difficult when we’re told we can get metal today in 20 weeks, and tomorrow we are told it’s now 24 weeks.”

Roseville, Mich.-based National Bronze Manufacturing Co. is witnessing a significant uptick of their bronze products, as purchases and requests for quotes from customers are up. “We’re a manufacturer, but we’re seeing a lot of customers that are manufacturers themselves that come to us for material, looking for quotes on the actual finished product itself,” says Vice President of Business Development Michael Russo. He adds that this is unusual, but may be due to a lack of labor force and machine capacity. “For us, this is good because we can service them in raw materials and finished parts.”

Now that automotive has ramped up, the red metals supply chain finds itself in a robust position. North of Detroit, National Bronze Manufacturing services machine repairs for many automotive plants. “When the plants were idle, we didn’t see any of that work because there was nothing going on,” Russo says. “Since they’ve been back up, that’s the work we are seeing, and that seems to be growing as well.” Little agrees the automotive industry has come back strong. “Automotive being shut down obviously was not good for the business and not good for the industry,” he says, “but the car companies are back, and automotive is absolutely booming.”

As electric vehicles gain in popularity, copper consumption will increase. Electric cars will be up over the next five, 10 or 15 years, according to Norman Lazarus, senior vice president of Aviva Metals, Houston. “California is talking about the year 2035 being the drop-dead date for only electric cars to be sold in the state, so there will be a big migration toward electric vehicles,” he says. “That will mean the consumption for copper alloys in the vehicles will start to increase.”

“California takes a leadership role in many aspects of industry, just as they led the lead-free brass requirements,” he adds. “It’s just a matter of time before the other states will copy them and move forward on that type of requirement.”

Kendall agrees that, as electric cars are becoming more prevalent, copper use will increase. “The new electric cars contain anywhere from two to three times the copper content that a standard internal combustion engine would,” he says.

Revere Copper Products, Rome, N.Y., serves the automotive market and, although the idling of auto production initially dropped, the company has seen a strong resurgence. “For us copper coils are probably mostly connected with the end use of automotive,” says Amy O’Shaughnessy, vice president of sales and marketing. During summer and fall, the company saw automotive business turn around, and she sees it continuing, especially in the electric vehicle market.  “And that’s been a positive thing for the copper industry in general,” she says.

Automotive was idled because of the coronavirus and has now ramped up partly because of the coronavirus as well. Pent-up demand, combined with people’s reluctance to travel via air and stay in hotels, has given consumers a huge appetite for SUVs and RVs, as they allow people to travel without being quarantined and without pandemic-related concerns. “People view SUVs as something they need. People are taking to the road more,” Kendall says, adding that the RV industry is booming because people want to travel in comfort.

And copper-based products are finding their home in the robust residential housing market – thanks to people’s mass exodus into the suburbs and low interest rates. This bodes well for copper. “Housing applications for copper are very busy right now. And it’s happening during a time when it’s become significantly more expensive for people to hold inventory,” says Kendall.

In addition, the pandemic has greatly affected the way education and business is done, according to Kendall, causing copper use to increase in the construction sector. “The way we go to work, the way we learn educationally, and how we come together for business is forever changed,” he says, adding that, with families at home, an average three-bedroom house is now insufficient to meet their technological needs.
 
The result is a demand for multipurpose rooms with greater electrical access than ever before. “So, now there is this need to electrify the home, and a need for separate spaces, unlike what we have seen before. So, there is a lot of pressure on contractors to enhance that,” he says. “There’s a lot of copper that goes into those things, such as additional wiring, connections and data.” 

And people’s housing and automotive needs are coming together, according to Kendall. “When people drive their electric car home and plug that in, will that be adequate at that point for them?” he asks.

And the demand for new housing and additions to housing has led to a construction boom. A large part of Concast Metal Products involves producing bushings and bearings for the construction equipment end market. “We sell to machining companies, who would then machine bushings for companies that make construction equipment, such as excavators and diggers. That’s a large segment for us,” says Little.

Concast also produces bushings for the aerospace industry. “Our bushings are used in the landing gear, and that business has been severely limited and down simply because people are not flying, and planes are just being parked. So there’s been no need to retrofit landing gear,” he says.

“There has been no uptick in aerospace yet, but we can just see it starting to pick back up, but it’s certainly not back to where it was,” he adds.

The Price to Pay
With the ever-increasing demand for red metals, the pricing for these products has also increased dramatically. 
“When the coronavirus hit hard initially, the copper price dropped substantially,” says O’Shaughnessy. However, by summer, copper prices started to come back. “There was a drop, and then there was a rebound, and we continue to see some strength in the price of that commodity,” says O’Shaughnessy. Shelton has remarked that, thanks to such high demand, copper pricing is at about an eight-year high.

Lazarus says, “If you look at the whole metal complex, they’re trading at very high prices right now, and it looks like they are going to continue doing so for the foreseeable near future.” He points out Aviva Metals offers significant amounts of brass, as well as some of the top alloys that contain about 40 percent of zinc. He emphasizes that one cannot appraise the value of the copper component alone, but must consider the other components that make up a red metal. For example, zinc prices are also strong, as are those for nickel and tin. 

Lazarus adds that red metals pricing is so high partly because of the strong resurgence in China. Today the country is responsible for more than half the world’s consumption of copper. 

O’Shaughnessy says copper pricing being so high is partly due to speculators’ confidence in the commodity. “There are two sides to the copper value. Part of it is linked to global supply and demand, and the other part is linked to speculation. Speculators come in and out of this market. If they think there’s going to be some growth, they might feel this is a safe place to put their money,” she says. “So that had an impact on the commodity market.”

Kendall says copper as a commodity gained incredible value. “We’ve seen the commodity side of the copper market take off. At the beginning of the fourth quarter of last year, our copper exchange at the COMEX was about $2.75, and now we’ve hit numbers at almost $3.70,” he says. “Copper pricing has gone up, not just the commodity itself, but also the producers have seen this as an opportunity to raise their prices.”

So agrees Little. “The raw material has gone up in pricing, and the expectations are for it to continue to rise,” he says. 

Threats from Other Materials
Those in the red metals industry find the rising copper prices sometimes give way to people finding alternative materials. “When the price of copper reaches a certain price threshold, people will start to look for substitution of materials, be it aluminum or something else,” says Lazarus, adding this is not a new issue. 

In fact, although copper has outstanding electrical conductivity properties, aluminum is a threat because of its lower price. “Because of the price difference, and because of the weight difference, there will always be pressures there to use a different material,” says O’Shaughnessy. “In the electrical-related and power-distribution applications, aluminum is sometimes substituted for copper. Over the last several decades, HVAC applications went from copper to aluminum.” 

Russo concurs. “You always have to be cautious that if copper prices rise too high, an engineer will substitute your product with something else. That’s always a worry,” he says. “There’s the potential for people to engineer the bronze out of their products.” In the past, Russo has seen bronze bushing prices go through the roof, resulting in a competitor engineering a steel bushing with a Teflon interior.

According to Little, a huge threat to the copper pipe market has been going on for years is PVC. But he is unfazed by the PVC market. “Whenever copper goes up in price, we hear customers talking about alternate materials like nickel-based [metals], for example,” he says. “But the time it takes to get new materials tested and approved seems to be prohibitive, and it never seems to migrate over to another product.”

However, for Revere Copper Products, architectural copper, a big market for the business, stands on its own. “We supply copper that goes into roofs, wall panels, gutters and downspouts. Somebody who is choosing to use a product like copper is doing so for longevity and because of a certain look they’re going after,” says O’Shaughnessy. For example, architects and contractors often use copper to preserve the aesthetics of a historical building. 

“Copper will last 100 years, so there is a sustainability effort behind it that is really supportive for copper,” she adds. “We’re going to compete with other high-end products, but I think there’s a market for copper.”

Despite the threats of other potential materials, copper is still irreplaceable and has a strong future. “Copper is more expensive than some materials, but it outperforms the less costly materials,” says Little. 


[Sidebar:]
EPA Registers Copper Surfaces for Residual Use Against Coronavirus

The demand for copper-based products might increase nationwide, thanks to the U.S. Environmental Protection Agency’s recent approval of certain copper alloys for long-term effectiveness against viruses, including SARS-CoV-2, the virus that causes COVID-19. 

Resulting from the EPA’s approval, products containing these copper alloys can now be sold and distributed with claims that they kill certain viruses that come into contact with these alloys. 

“Providing Americans with new tools and information to fight the virus that causes COVID-19 is one of EPA’s top priorities,” said Acting Assistant Administrator for EPA’s Office of Chemical Safety and Pollution Prevention Michal Freedhoff. “Today’s action marks another step forward in EPA’s efforts to listen to the science and provide effective tools to help protect human health.”

New efficacy testing supported by the Copper Development Association and conducted according to EPA’s protocols demonstrated certain high-percentage copper alloy products can continuously kill viruses that come into contact with them. Based on testing against harder-to-kill viruses, EPA expects these products to eliminate 99.9 percent of SARS-CoV-2 within two hours.

Antimicrobial copper alloys can be manufactured into a wide range of surfaces, such as doorknobs and handrails. These high-percentage copper alloy products will be added to the agency’s list of residual antiviral products that can be used to supplement routine cleaning and disinfection to combat SARS-CoV-2. For more information, see https://www.epa.gov/pesticide-registration/list-n-disinfectants-coronavirus-covid-19.

According to the CDC, while antimicrobial copper alloy products are useful, they do not replace standard infection control practices. Individuals should continue to follow CDC, state and local public health guidelines, including critical precautions like mask wearing, social distancing and proper ventilation.

Photo Caption: Copper Bar is used in electrical applications. (Photo courtesy Revere Copper Products Inc.)