The Wall Street Journal is reporting today that copper prices are up on news that private U.S. companies added 217,000 jobs in February. This comes on the back of earlier reports of copper prices increasing after last week's announcement that U.S. manufacturing hit a 22-1/2 year high in February. In fact, going back to the beginning of the year, copper prices have been continuously flirting with the all-time high, reached in December 2010.
While cotton's rising prices have received a lot of attention, the cost of copper could ultimately be more troubling for the promotional products industry and manufacturing as a whole.
Unlike cotton, copper is not a renewable resource. There is a finite amount of copper on the planet, and while the majority of it is able to be reused, there is an upper limit on the volume available. And while there is a cap on the amount, the demand is unlimited: copper demand is increasing four times faster than mining can produce it. As with cotton, a great deal of this demand is due to China, which is increasing demand by 15 percent annually.
The hard numbers are that copper prices have increased 275 percent since they dipped during the 2008 recession. Prices are now hovering between $9,000 and $10,000 a ton, with the expectation that they'll hit $12,000 by 2012.
Copper is used in nearly every industry: pipes and tubing in heating, ventilation and air condition; roofing material in construction; and copper wires, electromagnets and switches in electronics are just a few examples. Copper and its alloys (blends with other metals) like brass and bronze have countless further applications in jewelry and in the creation of other common metals.
Should distributors be concerned? Maybe not yet, but they may feel the pinch soon. Products ranging from key chains to MP3 players can all have copper components, and as the materials prices rise, those costs could be passed on to distributors and end-buyers. Consumer electronics in particular may be hard hit, as the electrical conductivity of copper cannot be easily replaced with alternate metals.
Have copper prices impacted your business yet? For suppliers, have you experienced increased component costs? For distributors, have increased costs been passed on to you or to your clients? What are you doing to keep rising costs from affecting your business?
Kyle A. Richardson is the editorial director of Promo Marketing. He joined the company in 2006 brings more than a decade of publishing, marketing and media experience to the magazine. If you see him, buy him a drink.