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.

Commodities: Nickel and copper lead a slump amid worry on growth

International Herald Tribune
Nickel and copper led a global slump in commodities Monday as tumbling share prices stoked concern that slowing Chinese and U.S. economic growth would curb demand for raw materials.

Nickel fell 3.7 percent, its biggest drop in a month, after stockpiles rose for a fourth consecutive session. Copper dropped 3 percent and oil fell almost 2 percent. Commodities climbed to record levels in May before ending lower last year.

Is change good?

A penny costs about 1.73 cents these days, with the metals used, zinc and copper, accounting for 1.12 cents of production costs.
According to the latest U.S. Mint figures, a nickel costs the government 8.34 cents to make. The cost of the metals – copper and nickel – account for 6.99 cents.
Spurred to cogitation, a noted economist has just floated the idea of making pennies worth 5 cents, and ceasing production of nickels altogether.

Coin Shortage Means a Penny Could Be Worth 5 Cents Soon
A potential shortage of coins in the United States could mean all those pennies in your piggy bank could be worth five times their current value soon, says an economist at the Federal Reserve Bank of Chicago.
Sharply rising prices of metals such as copper and nickel have meant the face value of pennies and nickels are worth less than the material that they are made of, increasing the risk that speculators could melt the coins and sell them for a profit.
Such a risk spurred the U.S. Mint last month to issue regulations limiting melting and exporting of the coins.


In the short term we forecast stainless steel prices moving even higher, due to further nickel price rises on the LME during December. This gain will impact on transaction values into the second quarter of 2007. March should be the highest month with cold rolled 304 transaction figures reaching almost $US4,900 per tonne and grade 316 figures topping $US7,300 per tonne. In the longer term, we expect stainless selling values to decline as nickel prices reduce and the US economic slowdown begins to take its toll on stainless consumption in the US

Copper prices hit 8-month low; other metals fall as well

CNN Money
Copper hit an eight-month low on Thursday as a build-up in stocks and worries about a slowdown in demand weighed on the market.

Copper dropped decisively below $3 US as I was battling my cold this week, closing Thursday at $2.878 US.

Zinc also dropped, perhaps in sympathy, in the last few days, but nowhere near as impressively – it’s still close to record high levels.

Nickel doesn’t seem to be dropping at all.

Just so’s you know:
Zinc is used in electroplating and also in pre-galvanized steel stock. So basically, if you want your steel to not rust, one way or the other, you’ll need zinc.

If your parts’ made of brass, that’s copper and zinc.

If your parts’ made of stainless steel, a major price factor is nickel.


In the short term, this is good for stampers. Stainless steel markets have been tight, forcing prices up. Also contributing to high stainless prices were nickel prices. If the markets loosen up a bit, because production goes up, this will bring stainless prices more back into historical line. However, in the long term, it’s less clear. The pendulum is still swinging too much, and that means highly unpredictable raw material prices. Which leads to uncertainly back when material selection is made for stamped parts.

The world’s stainless steel sector will record an unprecedented jump in crude production this year. We expect total output in 2006 to climb to 27.8 million tonnes – 3.4 million tonnes above the outturn in the previous twelve months.
Such a rate of increase is unsustainable. The long term growth in production has been around 5 percent per annum. This year, the figure will be nearer 14 percent.
A substantial rise in output will be recorded in the EU this year. The gain will be almost 12 percent. A significant increase was expected after the decline in 2005 but not a double digit percentage gain.
A noteworthy production rise will also be reported for the United States this year – expanding to an estimated 2.55 million tonnes from 2.2 million tonnes twelve months earlier. New capacity pushed the growth to above 15 percent.



In the short term we forecast stainless steel prices moving even higher – due mainly to an unprecedented hike in the price of nickel on the LME during October. This gain will impact on transaction prices in December and January.
We believe that the turn of the year will be the peak of the current cycle. In the longer term, we expect stainless selling values to decline, albeit at a much slower rate than the escalation this year.


Nickel prices at the time of writing, hovered around $US30,000 per tonne. This suggests that alloy surcharges on stainless steel will remain at their current unprecedented high levels for at least two months.
[…] Alloy surcharges have risen by more than 150 percent since January.
The LME price of nickel has doubled since March, and there is much controversy about the reasons for this. Users continue to claim that the nickel market is not under-supplied, and that the upsurge in prices is the result of speculation by financial investors. It is true that LME nickel stocks have been extremely low. And this tends to support the opinion of those who say there is a structural shortage.
The hike in nickel prices is increasing the supply of scrap onto the market. World trade in stainless scrap has risen by more than 1 million tonnes over the last four years. But so far this is not having a dampening effect on the price of nickel.

Commodity costs test suppliers’ mettle

This is a better article than most I see in the public press on the subject.

A few of the words in the article need explanation. This article is written for a local audeince in Indiana. People who live in Indiana are called Hoosiers.

The Indianapolis Star
Indiana manufacturers are getting pinched as the cost of the basic ingredients of their products — steel, aluminum, nickel, copper and other commodities — have soared.

Auto supplier BorgWarner spent an extra $12 million in the first half of the year because of higher commodity prices, with aluminum contributing the biggest increases. Spot prices for aluminum, which BorgWarner uses to cast transmission parts, have shot up 32 percent in the last year.

So far, Hoosier consumers haven’t taken a big hit from these higher commodity prices yet. That’s because manufacturers have been able to offset some of the three-year price run-up with cuts elsewhere.

But such cuts often translate to fewer jobs and sometimes lower wages for Hoosier laborers.

Higher commodity prices are hitting the auto industry particularly hard. Because sales competition is so fierce between automakers, they will brook no price increases from their suppliers. So as commodity costs rise, the 90,000 Hoosiers employed at auto companies are under increasing pressure.

Among employees, BorgWarner has cut out overtime for some, asked for wage concessions from others, left vacant spots open and even laid off some workers. In Muncie, BorgWarner announced 76 layoffs last week. It employs more than 800 there making transfer cases.