In the aluminum melting production cycle have begun to impact the wire and cable industry in a significant and long term way.
On Dec 31st RioTinto, the world's third largest mining company, locked out 755 union workers at their Alma aluminum smelter, one of the largest in North America. Capacity was immediately cut by 2/3 and force majeure, now in its 3rd month, was declared. Days later production at a second Canadian smelter experienced electrical problems resulting in a significant cutback in capacity. Then on March 30th a widely publicized explosion at the Alcoa smelter in Massena, NY completely shut down production with another smelter resorting to force majeure. Such disruptions have severely constricted supply chains and forced wire and cable companies to increasingly go overseas for aluminum supply that they are unable to obtain from traditional domestic sources. Imported aluminum is much costlier and the added burden of freight and custom duties worsen the problem.
In addition, published reports indicate that rod premiums, the cost to convert aluminum into electrical grade production metal, are close to record highs due to overall capacity constraints. Clearly aluminum has made its way to center stage, alongside copper, as a new volatile cost driver.
While several aluminum wire price increases have surfaced in recent weeks and months, the MC industry has, until now, neglected to recover these mounting costs. In addition to the drama in the aluminum supply chain, copper has risen 17 cents off the lows of recent weeks, while PVC resin has continued to climb as seasonal demand tightens supply.
As a result, our cable product prices have increased as of April 30, 2012 and our aluminum flexible conduits have increased by 10%. In addtion, our aluminum armored MC, AC and HCF cables will increase to the $410 level. Also, because of differences in raw material cost, our steel armor price levels will increase to the $390 level. See pricing PDF.
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