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Ardent Listener
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 Posted - 06/15/2006 : 06:12:48
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Builders and renovators, beware: Copper is worth a pretty penny
Last year, it cost $695 to wire a hot tub. This year? Try $895
By KATE SHELLNUTT, The Virginian-Pilot
© June 14, 2006
When Sam Dowdy hands over the bill for electrical work, usually customers just sign on the line.
Recently, however, he has begun to hear this type of response: “That seems like it’s a little high.”
To Dowdy, “a little high” is an understatement. Last year, it cost $695 to wire a hot tub; this year, it costs $895. Last year, it cost $1,000 to wire a three-bedroom house; this year, it costs $4,000.
In recent months, electricians, plumbers and contractors have raised prices significantly to cover the rising price of copper. The monthly average price on the London Metal Exchange was $3.65 per pound for May, up 70 percent from $2.15 for January.
Copper prices peaked at $3.99 per pound on May 12. While prices have dipped recently, investors predict the price will stay relatively high. On Monday, copper closed at $3.28 per pound in London.
“In the end, the ultimate cost is going to the actual homeowner or potential home buyer,” said Dowdy, owner of Breaker Box Plus Inc., an electrical contractor in Virginia Beach.
The increases do not just affect electrical costs, but plumbing as well. The cost to install copper piping in a two-bathroom house has gone up $2,500 or more, said Terry Spry, a shop manager at Jethro Byrd Electric and Plumbing Contractor Inc. in Suffolk.
The costs add up, with the average single-family home containing more than 400 pounds of copper. Commercial and industrial centers typically have much more than that.
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The U.S. is the world’s second-biggest copper user, and construction makes up 40 percent of its demands, according to the Copper Development Association, based in New York.
Copper travels through several intermediary stages in its route from an underground mine abroad to under the floorboards of U.S. homes, said Ken Geremia, communications manager for the trade association.
After extracted, an on-site chemical process produces cathodes, which are thin, square sheets of copper. The mines send the cathodes to domestic mills, where they are melted and machined into blocks, tubes, wires, and sheets before ending up on hardware store shelves.
This year, expansion and extraction difficulties have limited the worldwide copper supply. Worker strikes have slowed production at Cananea, the biggest mine in Mexico, and at Grasberg, the biggest copper mine in Indonesia. The second-biggest copper mine in the world, Grasberg will produce 235 million pounds of the metal this quarter, 45 million pounds less than predicted.
In Zambia, mines were also unable to meet copper forecasts for the end of their fiscal year in March. Even the Chilean mining company Codelco, the world’s largest copper producer , has output concerns and struggles with rising demand, expensive fuel and environmental regulations.
“It’s your basic supply-and-demand situation,” Geremia said.
Copper has many uses in the construction industry, and few other metals or plastics can compete with its durability, rust-resistance, strength and safety.
Aluminum wiring, used in the 1970s, has since been found to be too dangerous because it is prone to overheating and fire, said Barbara Lloyd, a saleswoman at Lloyd’s Electric Co. in Virginia Beach.
Polyvinyl chloride or polyethylene piping cannot withstand the pressure and temperature changes that copper and copper alloys can, said Frank Murphy, owner of Dolsey Ltd., a Norfolk company that installs pipes on military ships.
“It’s a need situation. It’s not a commodity that they can do without,” said Norman Caroon, president and owner of Todd Marine Electrical Supply in Norfolk .
Market speculation has complicated the copper shortage. As prices rose, investors began to purchase commodities instead of stocks and bonds, distorting demand for the metal. Copper prices have increased more dramatically than other metals, said Cliff Casey, senior project manager at Hampton Sheet Metal Inc., which also works with stainless steel, aluminum, brass and titanium.
The volatile market has left local electricians, plumbers and metal companies struggling to provide price quotes that have staying power . Once standing for weeks or months, price quotes now remain good, in many cases, for a few days.
“The price goes up every day,” said Leigh Karney, a saleswoman at Water Works Inc., a piping contractor in Chesapeake. “We can’t give them one price, then come back and say, 'Hey, it’s gone up.’”
Bloomberg News contributed to this report.
Reach Kate Shellnutt at (757) 446-2643 or kate.shellnutt@pilotonline.com.
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If you can conceive it, you can achieve it. -Napoleon Hill
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Edited by - Ardent Listener on 06/15/2006 06:15:12 |
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Copper is worth a pretty penny
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Posted - 06/15/2006 : 17:29:57
