Copperweld explores the challenges and offers
potential solutions
BRENTWOOD, Tenn., May 21, 2024
/PRNewswire/ --
Copper crosses the $5-per-pound
threshold
Copper is currently trading at two-year highs, which analysts
suggest may be driven by the potential that copper supply will
struggle to keep pace with rising global demand. Depleted inventory
combined with an uptick in demand from industries with high copper
consumption translates into a scenario where many analysts predict
the price of copper to rise far beyond $5/lb.1
CCA building wire reduces the impact of
rising copper prices in the new construction industry.
Many experts saw May's new price point coming as copper had
already increased in value by about 20%, but an understanding of
the numerous factors impacting copper supply are leading some
experts to accelerate their prediction timelines for reaching the
long-expected $15,000-per-metric-ton
($6.80/lb) milestone as early as
2025.1
The rising price of copper
Analysts attribute much of the copper price explosion to soaring
demand, mainly due to the large role the metal plays in renewable
energy, decarbonization efforts, and power grid investments.
However, this latest round of copper price increases does not stem
from demand alone; it is also due to concerns about copper
production and standing inventory's struggle to keep
pace.2
Copper supply is further threatened by the increased tightening
of mining regulations and geopolitical tensions. In 2022, copper
production was about 22 MMT, while demand was about 26 MMT, with
recycled copper scrambling to help make up the 4 MMT difference.
Despite copper producers' efforts to increase output, there is also
a shortage of new mine development. Simply put – mines are not
producing as much copper as the market requires.2
As a result of these factors, the U.S. Department of Energy
classified copper as a "Critical Material" in their 2023
report.3 This classification is reserved for a
substance that the Secretary of Energy designates as "a high risk
of supply chain disruption; and serves an essential function in one
or more energy technologies."4
What does this mean for the building wire market?
The greater a market's reliance on a critical material, the greater
its vulnerability to instability.
Few industries will feel the impact of record-setting copper
price increases like the construction industry, which accounts for
almost half (46%) of the nation's copper supply. According to the
United States Geological Survey (USGS), within the construction
industry, building wire alone uses 20% of the total U.S. copper
supply.5, 6
But, the factor impacting the building industry's vulnerability
to copper price fluctuation is more closely tied to a single
product's dependency on copper: building wire. For decades, the
primary conductor material for building wire has been composed of
100% copper. So logically, the price of copper has an outsized
impact on the price of building wire.
Steep increases in building wire costs
Over the past few months, builders and electrical contractors who
use solid-copper building wire have felt the financial and
administrative fallout of record-setting building wire costs. When
copper prices spike, building costs soar, requiring copper price
approvals, re-estimations, construction delays, and slower cycle
times. These factors devastate budgets, reduce profits, and
frustrate relationships.
From March to May of 2024, copper building wire experienced
several wire cost increases, each around 5%.7,
8 During these events, building wire distributors buy
wire at higher levels, allowing them to 'hold back' price increases
for a few weeks; but when distributors exhaust lower-price copper
wire inventories, builders and contractors see dramatic price
increases. As a result, copper wire cost fluctuations occur in
cycles rather than through a linear relationship with the price of
copper. Currently, the construction market is anticipating the
build-up of another building wire cost increase.
During copper events like this, home builders are getting
'hammered' by increase after increase after increase in copper
pricing. The resulting impact on building wire costs has been
dramatic: a massive surge of 25%-35%, on average. And, that's just
over the past 3 months!
The relationship between copper price and wire theft
There is another, more sinister, relationship with the price of
copper — the incidence of wire theft. Home builders have long
observed the direct impact of high copper prices on the prevalence
of building wire theft. The higher the price of copper, the greater
the incentive for thieves to assume risk in hopes of a big
payoff.
Copper building wire is a prime target for thieves because of
its increasing value as scrap. Whether via outright theft of
complete circuits by skilled thieves or pilferage via liberal
end-cutting by third-party installers, many job sites experience
some degree of copper theft. It is estimated that as high as 8% of
the copper wiring in new construction is lost to copper theft and
insider pilferage. Annually, this would amount to enough copper
building wire for 112,000 homes (15.7 million pounds of
copper).
And, when copper wiring is stolen from a new construction site,
there are even more costly factors to consider: production delays
and lost time for the builder, repairs to circuit components and
sheet rock, replacement of appliances and luminaires caused by
damage, the cost of private security, and an increased risk of fire
hazards — all costs that come out of the builder's pocket.
What are the obvious solutions?
- Use less copper.
- Deter incentives for theft.
Fortunately, the building construction industry already has an
alternative to single-metal copper wire in place. Copper-Clad
Aluminum (CCA) is a bimetallic conductor that has been referenced
by the NEC since 1971 and is listed for use by UL and ETL. CCA
building wire is being rapidly adopted by builders and electrical
contractors who are looking for safe and effective alternatives to
copper building wire.
CCA building wire uses less copper
CCA building wire uses 1/6th the amount of copper when upsized
two AWG sizes against copper
conductors, as is required by the NEC for most electrical circuits.
This upsizing allows CCA to provide comparable electrical
performance to equivalently rated copper conductors. Credible
reports also find that CCA conductors, when upsized, are on average
2.7% more efficient due to lower impedance.9
Utilizing CCA instead of single-metal copper for commodity
building wire applications could have potentially saved the nation
nearly 700 million pounds of copper in 2022! That's equivalent to
the copper required for 3.8 million EVs or 3.6 million homes. Using
this 2022 potential saving model, CCA building wire could conserve
3.2 billion metric tons (7 billion lbs) of copper resources over
the next decade, not even accounting for market growth.10,
11
CCA building wire reduces theft incentives
While substations have used CCS grounding conductors to reduce
theft incentives for decades, builders and electrical contractors
are turning to Copperweld's CCA products to help mitigate the costs
associated with copper wire theft.
Copperweld's metallurgically bonded CCA building wire has little
scrap value, making it less attractive to copper thieves. If a
thief carts a load of CCA wire to a local copper recycler, he will
likely leave embarrassed, empty handed, and bimetal educated.
CCA reduces the impact of rising copper prices
While increasing copper prices send shock waves through the
building wire market, there is a simple way to mitigate the
impacts. Implementing a CCA building wire adoption strategy can
help better protect profits in addition to positively impacting
copper conservation efforts and reducing theft incentives.
Sources:
-
https://markets.businessinsider.com/news/stocks/is-copper-heading-to-15000-1033314787
-
https://www.morningstar.co.uk/uk/news/248802/is-copper-entering-a-new-supercycle.aspx
-
https://www.energy.gov/eere/articles/us-department-energy-releases-2023-critical-materials-assessment-evaluate-supply
-
https://www.energy.gov/cmm/what-are-critical-materials-and-critical-minerals
-
https://www.mckinsey.com/industries/metals-and-mining/our-insights/bridging-the-copper-supply-gap
-
https://www.statista.com/statistics/254870/use-of-copper-and-copper-alloys-in-the-us-by-purpose/
- https://www.southwire.com/pricing
- https://www.cerrowire.com/products/price-sheets/
-
https://www.americanbimetallic.org/post/important-differences-between-cca-and-aluminum
-
https://www.copper.org/publications/pub_list/pdf/A6191-ElectricVehicles-Factsheet.pdf
- https://www.copper.org/education/c-facts/home/
If you'd like to assess the effects of switching to CCA
building wire for your residential and commercial construction
projects, contact a Copperweld representative at 615-377-4200 or
csr@copperweld.com.
Media contact: katwood@copperweld.com
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SOURCE Copperweld