Such is demand for copper across industries, supply shortfalls will be felt keenly

The global economy is seeing some indicators for growth - however, that optimism is challenged by unpredictable supply, logistics production bottlenecks, fuel prices spiking, and labor shortages. While solution providers work hard to keep pace with demand, these challenges have put restrictions on operational efficiency and margins, as many organizations have announced price increases to control impacts of rising costs.

The increasing use of copper in the emerging markets has put supply under considerable strain. It is thought more than 95 per cent of all copper ever mined and smelted has been extracted since 1900. This demand continues, with demand for copper currently increasing by 575,000 tons annually.

Rising prices can pose potential issues for the entire supply chain. Prices of raw materials have kept an upward momentum that began in the second quarter of last year. The price of copper is largely influenced by the health of the global economy, due to its widespread applications in all sectors of the economy.

Copper is a great electricity conductor, cheaper compared to other electrical materials, and has a variety of applications. The reddish-brown metal is in everything from consumer electronics and car parts to cabling. It’s also a finite resource, which means supply will eventually decline due to increased application and demand.

If crude oil prices rise over time, it impacts everything from the cost to extract and deliver raw materials to manufacturers, to value-add pieces like PVC and polyethylene jackets found on UL-rated copper wiring. Once the wire is shipped, distributors must pay more for the final products on top of higher shipping costs. Finally, distributors pass the added expenses on to contractors, electrical companies, and others who need wire to complete projects.

China is known to be the world’s leading electronics manufacturer and the largest copper consumer. As more focus is put on the green revolution, including the rise of solar power and electric vehicles, the need for copper will likely grow.

Ultimately the cable business, and specially copper cables, are directly affected by the copper price and supply. The higher prices are, the greater it would cost the consumer, and more challenging it would be for new projects to commence, particularly the renewable ones. As copper is defined as an essential pillar in building these projects.

The obstacles are not just in the high price of copper, but it has more do to with the extreme high global demand and the shortages in supplying them.

The writer is CEO of Ducab Group.

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