Raw Material Pricing – Party like it’s 1999

Remember that old Prince hit?
I was dreamin’ when I wrote this
Forgive me if it goes astray
But when I woke up this mornin’
Coulda sworn it was judgment day

As I was doing the research for this article, that tune kept going through my head. The events of the last 6 months do feel more like a dream than reality. Judgment day? We’ll talk more about that later in the update series.

Raw materials are a large component of costs for metal stampers. So what has happened to the prices of the most commonly used raw materials?

Metal stampers care most about these input costs:
something to make the steel not rust (usually zinc or nickel)

For Copper, Aluminum, Zinc & Nickel, prices are back down to 2004 levels. In a few cases, even below 2004 levels. See these charts, courtesy of Kitcometals.com

Steel prices are down below 2007 levels.

So it’s not 1999, but in a lot of ways, it’s 2004 all over again.

What does this mean for stampers? Well, a major input cost has reverted to 5 years ago levels. Is that enough to ensure a return to profitability? Not usually. Stay tuned for the next part of the puzzle.

Copper drops, but not as much as you might think (or wish for)

For an amusing hour or so yesterday, Kitco, my favorite metals reporting web site, was claiming that Copper had dropped a dollar to $2 and change. It must have been a reporting glitch, because later the metal went back up to $3 and change. But for a few minutes there I was ready to break out the champagne.

But copper at $3 is a lot better than a year ago, when it was up to $4.

Likewise, zinc is still above “normal” levels, but has subsided recently to a buck (it had been $2 just over a year ago).

Nickel, having been close to $25 a year ago, is down around half that now. For a while, in late 2007, it was actually down under 12

Material Pricing

Here’s a brief update on material pricing.

Zinc has now fallen from the $2 US/lb that it was late last year to about $1.50 US now. However, many platers buy zinc on contract, and so until their contracts run out, higher prices will prevail. By comparison, zinc was $0.50 in June of ’05

Copper is again on the rise. It got down as far as $2.50 in February, but is up around $3.30 now. A year ago it was $4.00, so it’s a bit off the peak, but not enough to feel comfortable.

Nickel is climbing and shows no sign of stopping. It’s currently about $22.75, up from $16 at the year boundary, from $8 a year ago, and $3 five years ago.

Zinc is used in almost every method of rust-proofing steel (except stainless steel). Nickel is used in stainless steel. Brass is a combination of zinc and copper.

Material Prices

Copper has bounced and is back on the rise. From a low of $2.40 a few weeks ago, it’s gone back up to $3. It’s still a whole lot better than the $4 it hit a while back, but not nearly low enough or stable enough for metal stampers to specify it reliably.

Other metals:
Zinc, having hit $2, is down to $1.45, but there was a short run up a few weeks ago.
Nickel, which was $3 5 years ago, is now $22, more than 5 times the price of 5 years ago and shows no sign of slowing down.

You can see the historical charts yourself here: Copper, Zinc & Nickel
all courtesy of Kitco Metals.