Electrical Distribution Supply Chain Update
DECEMBER 2021 SUPPLY CHAIN UPDATECopper has slipped some, but it is only off a dime from last month’s trading, which equates to a very slight drop in some finished copper cable costs. These ebbs and flows are expected yearend. But copper remains very strong, as this time last year it was trading under $3.50 per pound, and it could be had around $2.50 per pound in winter 2019. Our industry’s most common steel continues to climb. As you can see by the below, it has more than doubled in the past year. This has lead to record highs for most all products that use US made steel, whereas the cost of a bundle of pipe, has doubled since last summer. Most all trade metals continue to be strong. Even plastics, like PVC, are still hard to get for some parts. Lead times on items not in stock are trending at 2-3 months. The biggest news in our supply chain issues continues to be transportation. More and more products make it to US ports every day. But it has been slow going getting material from the docks to their actual destinations. This backlog doesn’t have an easy fix, and many suggest these issues will stretch well into 2022. Chicago recently made national news as a chokepoint for rail cars. Some railroads have restricted container shipments into the key Midwestern freight hub as bottlenecks from a flood of container imports stretch inland from the West Coast. And the ports out West have made global headlines, with many news specials covering the influx of containers. The problem here isn’t getting goods to the US, it is how slowly we are handling them once they hit our shores.
NOVEMBER 2021 SUPPLY CHAIN UPDATECopper, while slightly volatile in October, seems to have settled around $4.40 lately. Which represents a very strong market, as looming copper shortages continue to make headlines. Steel continues to stay strong as well. Looking at Cold Rolled Steel, October did close $19 off this year’s high mark, which was the highest CRC has ever sold for in the US. It is still nearly double the price we saw at the beginning of the year. US mills seem to be keeping pace with production for now, but in some cases, steel finished goods brought in from abroad are still taking quite awhile before they make their way to Distributors’ shelves. This has more to do with shipping issues, than anything else. While steel and copper have been fairly steady, they are still priced near their peaks, both of which were record highs. The same can now be said for Aluminum (AU) as well. With demand for “Green” goods at an all time high, Aluminum is expected to have the same shortage concerns as copper, which also is being used in the same segment. Aluminum is currently priced over 80% higher than its May 2020 low; trading at its highest cost in the past decade. A lot of AU supply is sitting in Asia, and with ongoing shipping issues, both the US and EU are facing supply shortages. ————
OCTOBER 2021 SUPPLY CHAIN UPDATEWith many product families returning to nearly normal availability, there are still a few categories feeling the supply chain strain. The Chart below gives a high level overview of what we are seeing currently and is provided to help our customers plan ahead for their project needs. Copper took a dip for part of September, as news got out about China’s construction sector not doing very well. To start October, copper has been climbing once more. And as of now, it has currently regained any recent closes. While it is still trading nearly 60 cent per pound below this year’s high, it is worth noting, that that high was a record price paid for modern copper futures. Steel continues to be relentless. While the supply side has improved from earlier in the year, the cost of US made finished has stayed at historic levels. This is driving costs up on anything that touches US steel. Import steel remains flat, as Chinese steel production seems to be very strong. With the below, you can see the difference in cost for a metric ton of CRC from China ($865) VS the US counterpart above ($2,298). While that difference is huge, for the essentially the same steel. Once you add the costs of tariffs, import duties and transportation, those numbers become much closer together. Beyond the cost of metals, there are still major delays on some goods. Be it staffing, sourcing or simply taking longer to move material from one place to another. Lead times can still be high, but should continue to improve throughout the years end. ——–
SEPTEMBER 2021 SUPPLY CHAIN UPDATESteel has continued to smash records, with August ending in yet another record high. As you can see from the chart below, Steel has nearly doubled since the start of the year. Not only does it cost more, it is still rather scarce. When buying some finished products for our industry, lengthy back orders from manufacturers have been quite common in 2021, and continue to be an issue as we enter Q4. From boxes and rings, to fittings and even conduit, the industry simply cannot keep up with demand right now. Similarly, PVC pricing continues at an all-time high as well. With the recent hurricane off the Gulf leading to issues with poly production in Texas, and just general transportations disruptions, PVC tube is now a “Price in Effect” item. That is to say, no one is holding pricing on conduit from one day to the next. It is very fluid, and they reserve the right to raise the price without notice. This can be troublesome, especially if you have a project you need to plan. The “red metal”, Copper dipped briefly, despite recent reports that CU production would not keep pace with demand (which should have kept costs high). It appears this looming 4th wave of COVID has a lot of people scared about the global economies tightening up again. Therefore, investors might not be pumping up construction metals like they were before this Delta variant started running rampant. The dip can be seen on the graph below, but it was very short lived. That break in price, led to a flurry of action from market speculators. Couple that with an ever decreasing global stock of copper, less than what should be needed for expected demand, and copper has since rebounded to pretty much the same average we have seen the past few months. Beyond the uptick in pricing, sourcing has been the biggest trouble area in our industry in 2021. Many manufacturers continue to allocate material, limit new purchase orders or otherwise keep us from buying all that we want. Rationing of material is only slowing the bleed for most of those that make goods for our industry. Back orders and lead times continue to be a source of frustration for all involved. With all of that, and the national trucking shortages, it has been a challenge to keep product moving. We here at Paramont EO will continue to work our extensive network of partners to try and stay in front of all these issues and help keep your projects on track to the best of our ability, and encourage our customers to order material well ahead of time whenever possible.
AUGUST 2021 SUPPLY CHAIN UPDATESteel pricing has been relentless, leading to even higher costs on finished goods. Nearly every month sets off a new round of “All Time Highest” prices on many common goods. As you can see below, Cold-Rolled Coil steel started 2021 at $1,169 per ton. As of our last update in July, it was $2,057. Now, to start August, we are looking at $2,193 for raw material alone. To better put things in perspective, a bundle of ½” EMT pipe now costs twice as much today, as it did last summer. That expense really adds up, in a pipe and wire market such as ours. Copper itself is no slouch either. The chart below shows the 1 year progression of copper costs. Exactly a year ago, a pound of CU could be had for $2.76. Now? It has been trading in the mid $4.40’s lately. Many reports are predicting a copper shortage in 2021. Beyond our industry, many Green Energy projects (Hydro, Solar & Wind) are chewing through a large amount of CU. As has the automotive industry, as they are producing more electric cars now than ever before. Same as with steel, a spool of 12 STR building wire now costs twice as much as it did last summer. Same goes for most all building wire. And also as with steel, the supply chain is still struggling to keep up with demand. These record high costs for finished goods are not just tied to cable and conduit either. A simple strut strap, as an example, now costs twice as much as it did last year. Same goes for things such as PVC fittings, nearly all of which has at least doubled in price. And other conduit, such as PVC pipe, has quadrupled in cost since last summer, mostly in part to resin shortages. With such strong demand for building supplies, surging costs on raw material and a supply chain that has now been strangled for nearly a year, it doesn’t appear there will be any price relief in the near term. If anything, with so many manufacturers now allocating material to Distributors, and limiting just how much we can buy, expect to see more surge pricing on harder to get items in the near future.
JULY 2021 SUPPLY CHAIN UPDATECopper has continued its rebound in cost. As of this writing, it is currently trading at nearly $4.40 once more. But, the price of actual finished copper building wire never waned much. The material that goes into the jacket of the most common type of cable(s) in our market, THHN (Polyvinylchloride) & XHHW (Polyethylene) are both very much in short supply, and priced higher than they ever have been in the past. Lead times from the factories are continuing to rise, due to both demand and some shortages in raw material. The same PVC shortages that are forcing cable pricing up, are doing the same to nearly every product that relies on plastic. Most major US manufacturers of PVC pipe are still not making certain sizes of conduit. As of this writing, Schedule 40 ½”, 1 ¼”, 2 ½” & 3 ½” still are not in production, as these companies are using the PVC and resin they have on hand to make more common sizes of pipe. Same goes for Schedule 80 PVC sizes, 3/4”, 1”, 1 ¼”, 1 ½”, 2 ½”, 3 ½” & 5”. Steel continues to be nearly unstoppable, breaking records almost every couple of weeks. In the middle of March, a metric tonne of Cold Rolled Coiled Steel, which is most commonly used in our industry, was trading at $1,525. Currently, that is up over $525 more right now. Steel is actually in sort supply, and it appears to stay that way at least through summer. From October 2020 until now, Raw Steel has nearly tripled in value
JUNE 2021 SUPPLY CHAIN UPDATESteel pricing continues to be the talk of the town. With an extremely tight supply chain for raw material, and steel costs setting record highs here in the US almost weekly, most everything that touches steel has gone up in price. And more and more items are becoming harder to source because of all these factors. As you can see from the below, CRC had one lull to close April. And immediately shot back up in value shortly after. As of this writing, we are nearing $1,900 per metric ton. That is up $1,000 YTD. Well more than double what steel was trading for at the end of last year. While Copper is not necessarily in short supply, it is still in demand. As with most everything metal, the price of CU is just as strong as ever. One year ago to the day, a pound of copper could be had for $2.40. Currently, it is nearing $4.70 once more. Now nearly double the price it was. Outside forces are pushing the finished cost of copper cable up as well, beyond the surging cost of the red metal itself. The raw materials used to make the jacket that goes on finished cable, have often been hard to source and most certainly cost more right now as well.
MAY 2021 SUPPLY CHAIN UPDATESteel continues to be pricey, as the 1 month chart shows below. In fact, the cost of a metric ton of Cold Rolled Steel has more than doubled in cost over the past year to date. Domestic steel mills that idled furnaces last year amid fears of a prolonged pandemic-induced economic downturn, have been slow in ramping up production. This is leading to them playing catch up, as prices are soaring due to demand as well as these shortages. The mills are constantly overbooked, and many are now past capacity. With the US Mills still not producing enough steel to meet demand. Many US manufacturers are once more turning to foreign steel, and just paying any import tariffs on that. This is now taxing an already strained foreign steel market as well. The EU is seeing their own steel shortages and price surges as well. A pound of copper? That has more than doubled in cost as well. Whereas steel has already broken its own cost record, Copper is just pennies away from doing the same.
APRIL 2021 SUPPLY CHAIN UPDATEOur previous update saw CRC Steel hit an All-Time high of $1,464 per MT. As of last week, it was up to $1,624 per MT, with no signs of slowing down; continually breaking new records since the start of the year.
OVERVIEW OF ELECTRICAL SUPPLY CHAIN KEY COMPONENTS
MARCH 2021 SUPPLY CHAIN UPDATEThe cost of base metals has been steadily climbing for months. This effects not only the costs for cable and conduit, but most everything we stock. Cold Rolled Coil, the steel our industry relies on, went from $850 in October 2021, to $1100 by New Years, and is currently at $1464 as of this update.
MARCH 2021 SUPPLY CHAIN UPDATE
NEW YEAR, NEW PRICE INCREASES
January Supply Chain UpdatesThe cost of base metals have been steadily climbing for months. This effects not only the cost for cable and conduit, but most everything we stock. If the US dollar stays weak, it organically costs more to buy materials. If the supply chain stays strangled, it costs more due to demand. If the Pandemic drags on, things cost more due to COVID shutdowns. Combine all three dynamics and price increases become inevitable.
January 2021 Supply Chain Updates
NEW KINKS IN THE SUPPLY CHAIN — NOVEMBER EDITION
As the US continues to wait for a COVID Stimulus plan to be released, so does the EU. And with every new report of a highly functioning vaccine that gets reported, metals have been spiking. The market always responds well to positive outlooks. The vast majority of products in our industry touch both Copper and Steel. And as such, the value (and replacement costs) of those goods are at near recent record highs. CU hit its 2 year high yesterday, topping out at $3.2395. This is the highest its been since June 2018. As you can see below, Copper has soared back to life nearly every week since the initial COVID shutdowns. We have gone from a 1 year valley of $1.97 per pound. to a 1 year peak of $3.24 per pound.
Steel is no slouch either. CRC, Cold Rolled Coiled, is the base for our metallic raceway, and the metal that most effects our finished pipe price. The below chart shows that is was being purchased for $700 US per ton over the summer. It is currently at $942 and climbing. This has lead to record prices being asked for finished goods in our market. Nearly all “like” manufacturers are asking for the same higher costs these days. Forcing everyone to raise prices for product effected by these base metal increases.
In addition to price increases, we are still seeing some abnormalities in our supply chain as shown below:
November 2020 Supply Chain Updates
September 2020 Supply Chain Updates:
Coronavirus Impact on Supply Chain July Update:
As most supply availability stabilizes, many prices are rising.