Buy Copper Now, Even If You Plan On Building Later

In an age of “wireless” everything and silicon computer chips, it’s easy to forget the humble, ancient metal that supports the vast majority of power grids and IT networks: copper. Copper is a common construction material, making it a global commodity that is subject to global market forces. When you’re planning for miles and miles of electrical cabling, a price fluctuation can hit your budget like a reddish-orange wrecking ball. 

Historically, the price of copper has correlated with the pace of new construction and more abstractly, overall economic health. New homes and buildings need copper for plumbing and electrical. As with so many other things, coronavirus has disrupted this historical connection. Despite a predictable price slump when China locked down in early 2020, copper has steadily climbed from a low in March 2020 at $2.10 per pound, nearly doubling by March 2021. In just 12 months the price of copper has hit its lowest and highest since October of 2016.

This bull run, as Goldman Sachs has termed it, is likely due to a pincer effect. A large portion of the “virgin” (as opposed to recycled) copper is mined in South America where coronavirus lockdowns have limited output. Alternately, China’s economy has resumed a steady pace and demand is up.

The factors that have propelled copper to more than $4/lb don’t look like they’re going to shift dramatically in the near future. Coronavirus vaccines should help return developed economies back to normal, which would theoretically boost demand even more. Mines should also return to pre-pandemic production levels, but how fast they can ramp up is anyone’s guess. Suffice to say, the recovery won’t happen overnight, and current price trends are likely to continue. If you’re planning new construction in the next six months to a year, it may be time to hedge against higher prices. Especially if your budget projections were built when the price was much lower.

You probably wouldn’t dream of asking a general contractor to stockpile lumber or concrete to save money. In market conditions like these, it’s a smart idea to explore your options for purchasing network cables and power supply cabling ahead of time. 

I.e. Smart Systems has already taken steps to help clients avoid copper surcharges by bulk purchasing at current prices. And while this isn’t a guarantee on future copper prices or savings, it’s a great way to build stability into your budget projection. 

For example, had you contracted to stockpile copper at the 12-month price low ($2.10/lb in March 2020) your costs would be nearly 50% lower for electrical and structured cable materials compared to prices in March 2021. Whatever happens to the price, you’re holding a durable good. Excess material can be resold if need be (and potentially at a profit). Higher copper prices also bring other unwelcome risks that you can minimize with preparation.

Recycled copper often comes from legitimate demolition and equipment salvage. It can also come from thieves who recognize copper and strip it from buildings or steal it from warehouses. Copper theft is up 81% since 2008 and even though the Texas Metal Theft Statute provides helpful regulation, metal theft is still a major issue for Texas businesses and consumers.

The true cost of copper theft can be tens or even hundreds of times the price a scrap yard is willing to pay. Thieves cut some wires, saw off a few pipes, and pocket $25 at the scrap yard. Whereas you have to hire someone to repair or replace the equipment and contend with service outages that affect your business, or your clients’ businesses. The best remedy for metal theft is enhanced security — stop the problem before it starts.

The easiest time for thieves to take copper is during active construction when coils of wire or racks of pipe are out in the open, protected only by a temporary chain link fence. 90% of copper theft occurs when staff are gone, at night and on weekends. Standard building security measures such as motion-sensing spotlights and cameras can help avoid casual theft while locking and hiding materials (in a portable shipping container for example) can offer protection against determined metal thieves. It’s also a good idea to speak with your architect and general contractor about ways to disguise installed copper material to avoid attracting attention down the road. There’s no pain quite like saving thousands of dollars by stockpiling copper, only to spend thousands more to clean up after a criminal with bolt-cutters.

i.e.Smart Systems is a Houston, TX based technology integration partner that specializes in design and installation of audio/visual technology and structured cabling. For more than three decades, our team of in-house experts has partnered with business owners, architectural firms, general contractors, construction managers, real estate developers, and designers in the Houston market, to deliver reliable, scalable solutions that align with their unique goals.