Should you be celebrating the increasing costs of Copper Alloys?

11th August 2021

Few people love a price increase, least of all customers. With the historic rising costs of Copper alloys, you'd think that both suppliers and their customers would have little to celebrate. But in the wake of an unprecedented global crisis, we've surely learnt by now that things aren't always that predictable. 

The impacts of the Covid-19 pandemic have been felt in many ways throughout almost all industries within our economy, and arguably none have been left untouched. While resource planning is essential to running any successful business, you only have to look at the shortage of toilet rolls and other everyday essentials in the pandemic's earlier days to understand that no one could have fully prepared for what was to come. Loo roll should never be considered a luxury item! But despite the strange amalgam of panic buying and the novelty of more free time, most of us expected life to return to normal as quickly as it was disrupted. Manufacturers rallied around, switching gears in their production to make ventilators and essential medical equipment. Despite overwhelming challenges, a shared belief that we could get through this together and strengthened partnerships gave the industry hope. As the months rolled on and the pandemic stretched into 2021, optimism faded. Manufacturing was further hit by the complications of Brexit, a cargo ship blocking the Suez Canal, dwindling contingency stock and staff shortages. A glimmer of hope was needed, and that is where Copper comes in.  

The link between the copper industry and economic recovery may not be immediately obvious. But it's real enough – and as one of the most important commodities in the financial market, the consequential nature of that link is well worth understanding as we come to terms with our new, much changed reality.    

Copper has excellent properties that make it ideal for use in different industry sectors. It's a dense, malleable, highly conductive, ductile metal that even boasts antimicrobial properties. Thanks to these properties, Copper has made its way into electrical cables, fuel cells, telecoms, water purifiers and many other appliances. Today billions of people around the world benefit indirectly from Copper. Copper is an integral material for many industries, and at Knight Precision Wire, we supply manufacturers across many sectors, including automotive, electrical, medical, telecoms, transport, construction and power generation. The vast array of applications and the reliance of so many industries on Copper makes its trading patterns a historically reliable barometer of the economy's health. Unsurprisingly Copper prices fell substantially, slumping at the pandemic's peak, but since early 2021 we have seen a sharp rise and Copper reaching a decade-high peak in May 2021.

As the pandemic begins to subside and industry has slowly re-opened, the rising demand for certain commodities such as copper and steel has naturally pushed prices up as businesses started to play catch-up in the post-pandemic economy. Even a pandemic cannot alter the rules of supply and demand, and this shift is a positive indication that markets are stabilizing. While it may be painfully slow, with no clear sign of pre-pandemic economic growth rates or profits, manufacturers returning to production is resoundingly good news. As committed partners to manufacturers around the globe, we share the desire and challenges to return to pre-pandemic outputs. Our goals remain unchanged. We aim to consistently deliver the best quality materials and strive for the best price.  

While the Copper price may have already reached its peak, this doesn't mean we can expect the price to drop substantially over the coming months. Tempting though it may be, we can't blame everything on the pandemic, including the increase in Copper alloy costs.  

The Cost of a Low Carbon Future   

Outside of pandemics and politics, another topic that has dominated our news cycle is climate change. World leaders certainly don't agree on everything, but there has been a substantial shift in focus by many governments on clean energy and lowering our carbon footprint. The enormous level of investment in technology is already happening as awareness of global warming is rising rapidly, and new solutions must be found urgently.

Copper plays a role in almost every emerging energy technology and is the backbone of virtually all modern electrical systems. Copper conductors carry roughly 90% of all electricity around the world, and this percentage grows ever-higher as more renewable energy is added to the grid. Additionally, copper and copper alloys play a major role in the insulation of wires and cables as well as the manufacture of transformers. It offers many benefits to renewable applications, including use in solar panels, wind turbines, and energy-efficient buildings.  

The newfound popularity of electric vehicles is equally transforming the automotive industry, with demand increasing year on year. Though once something of a novelty, the proliferation of electric vehicles worldwide will continue to put pressure on Copper supply chains. EVs require double the amount of copper compared to a traditional combustion engine. According to a report by Scottish consultancy Wood Mackenzie,

"By 2040, we predict that passenger EVs will consume more than 3.7 million tonnes of copper every year."

If commitments to development and the associated spending towards these goals continue, the demand for copper products will increase dramatically. Let us help you stay ahead of the curve. At Knight Precision Wire, under our Rowan Cable Products brand, we continue to produce a wide range of copper-based conductors to meet demand across multiple industries. We produce products to the highest international standards, with the experience and technical ability to provide solutions no matter the need. 

Find out more about our specialty products, contact us today on 01707 645 261 or email wire.sales@knight-group.co.uk

Should you be celebrating the increasing costs of Copper Alloys?
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