Understanding high copper prices

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goldstar

goldstar

Senior Member
Location
New Jersey
Occupation
Electrical Contractor
I'm hearing and reading reasons why copper prices are so volatle lately. My initial thoughts and insights were that countries like China and India are going through construction booms and creating an enormous demand. Couple that up with the Hurricane Katrina disaster and the low mining of raw material and thus low production of finished material and you can somewhat understand the reasoning for the high prices.

While at the supply house yesterday one of the owners memtioned that that one of the wire manufacturers told him that mine workers in Mexico wanted to go out on strike but the mine owners just shut the mines down and thus no production in that area. There are also other problems in South American mines. Anyone hear anything else ?

I know it's purely theraputic but sometimes knowing the reasons why to helps to ease the pain. This topic will require a lot of therapy for me !!!

BTW - I noticed that several of us became "senior members". Does that entitle us to any benefits ? Are we automatically enrolled in AARP ?
 
goldstar said:
I'm hearing and reading reasons why copper prices are so volatle lately. My initial thoughts and insights were that countries like China and India are going through construction booms and creating an enormous demand. Couple that up with the Hurricane Katrina disaster and the low mining of raw material and thus low production of finished material and you can somewhat understand the reasoning for the high prices.

While at the supply house yesterday one of the owners memtioned that that one of the wire manufacturers told him that mine workers in Mexico wanted to go out on strike but the mine owners just shut the mines down and thus no production in that area. There are also other problems in South American mines. Anyone hear anything else ?

I know it's purely theraputic but sometimes knowing the reasons why to helps to ease the pain. This topic will require a lot of therapy for me !!!

BTW - I noticed that several of us became "senior members". Does that entitle us to any benefits ? Are we automatically enrolled in AARP ?
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Are we automatically enrolled in AARP ?

Nah, you have to be really old to get into AARP. This is more like being a Senior in high school. Still very young and inexperienced.
 
We are starting see contractors making changes to their normal installation practices due to the high copper prices. A few contractors have even indicated they have added a clause to their contracts stipulating adjustments in prices may vary due to copper costs. Fortunately the theft of copper from jobsites has reduced significantly since we notified the local law enforcement.
 
hockeyoligist2 said:
Me too! But as soon as I turned 50 I enrolled, It saved me about $200 on a motel bill when I went on vacation!
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Shucks and here I thought you guys would fall into the high school senior category. I've been an AARP member for 14 years, but I sometimes feel like a high school senior in comparison to the knowledge some of you guys have.:)
 
Placer Dome and ASARCO have been hit hard with strikes in south america. Chile is one of the largest copper exporters in the world I believe.
 
Mexico & South America all have very corrupt governements & the comodity markets are trading into that volatility. For what its worth most of that has fallen back in prices lately. But some compare this all to a freight train.... Its takes a while to get going & it takes a while to slow down.
Of course the global economy is growing overseas & they all need the raw materials for their infrastructure buildout. A few years ago concrete prices went crazy just like copper has done.

Because I'm personally not using any of these materials, and I'm just a middle man, I look at it as an increase in revenue for me. My percent of markup is still the same, so the more it cost, the more I make. Right? I just have to stay on top of the prices a little more than I used to.
 
I look at it as an increase in revenue for me. My percent of markup is still the same, so the more it cost, the more I make. Right?
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Not really. There will come a point in time where your customer will refuse to contract for work that he could put off. If the cost of copper wire gets too high and doing a lighting or receptacle job becomes cost prohibitive that's when things grind to a halt.
 
Very true. Most of the work I do is optional on the part of the consumer, and if copper gets too expensive, people will scale back or forget the project. You won't make more money from higher material prices if business slows down.
 
FWIW

Comments made in the year 1955:

"I'll tell you one thing, if things keep going the way they are, it's going to be impossible to buy 2 weeks' groceries for $20."


"Have you seen the new cars coming out next year? It won't be long before $2000 will only buy a used one."

"If cigarettes keep going up in price, I'm going to quit. A quarter a pack is ridiculous."

"Did you hear the post office is thinking about charging a dime just to mail a letter?"

"If they raise the minimum wage to 75 cents, nobody will be able to hire outside help at the store."

"When I first started driving, who would have thought gas would someday cost 17 cents a gallon. Guess we'd be better off leaving the car in the garage."

"Kids today are impossible. Those duck tail hair cuts make it impossible to stay groomed. Next thing you know, boys will be wearing their hair as long as the girls."



"I'm afraid to send my kids to the movies any more. Ever since they let Clark Gable get by with saying 'damn' in 'Gone With The Wind,' it seems every new movie has either "hell" or "damn" in it.


"I read the other day where some scientist thinks it's possible to put a man on the moon by the end of the century They even have some fellows they call astronauts preparing for it down in Texas."

"Did you see where some baseball player just signed a contract for $75,000 a year just to play ball? It wouldn't surprise me if someday they'll be making more than the president."

"I never thought I'd see the day all our kitchen appliances would be electric. They are even making electric typewriters now."




"It's too bad things are so tough nowadays. I see where a few married women are having to work to make ends meet."


"It won't be long before young couples are going to have to hire someone to watch their kids so they can both work."

"Marriage doesn't mean a thing any more; those Hollywood stars seem to be getting divorced at the drop of a hat."

"I'm just afraid the Volkswagen car is going to open the door to a whole lot of foreign business."


"Thank goodness I won't live to see the day when the Government takes half our income in taxes. I sometimes wonder if we are electing the best people to congress."


​
"The drive-in restaurant is convenient in nice weather, but I seriously doubt they will ever catch on."

"There is no sense going to Lincoln or Omaha anymore for a weekend. It costs nearly $4 a night to stay in a hotel."

"No one can afford to be sick any more; $35 a day in the hospital is too rich for my blood."

"If they think I'll pay 50 cents for a hair cut, forget it." ​
 
There is also the fact that speculators are also contributing to driving up the costs. One year ago, it was real estate that was the hot spot to put money into for a quick profit. Now it is commodities. And them crackpots on the am radio ads trying to push gold at everbody for the last couple of years were right on target, and not such crackpots after all. Boy do I wish I listended to them guys.
 
Copper---- The new gold.... (?) Well in the not too distant past, maybe not.

As far as speculators go, the most recent rise started with a published finding that over 1/2 of the world supply was mined, and in use. Projected future shortage in mid century. Next day it shot up due to the usuall market reaction to even the slightest news on anything. And it has surged further just by frenzy.

For instance, of say a shortage of poluted sea water would suddenly create a market for it, and drive its cost through the roof, if mentioned to a stock broker.

They take the entire worlds economy and throw it in the air to catch every day. Usually to our demise. The price of gas and oil are due mostly to "projected shortages" later this summer, IF refiners aren't on line, and IF some tiny african nation has a civil war, and IF everyone in the world takes a long driving trip, and IF just about anything else MIGHT happen.
 
77401 said:
My percent of markup is still the same, so the more it cost, the more I make. Right?
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Technically you do make more, but......

My business experience says wrong. When you figure overhead recovery, you come up with a % markup based on what your costs have been to recover your overhead. If a significant amount of your costs goes up, do you really need to keep the same % to cover your overhead? No. What you wind up doing by keeping the same % markup to recover overhead is to increase your % of profit. That's great, but has consequences. Your customer will probably move on to someone like me who will treat him/her better in this difficult pricing period.
 
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