Cost trends and analysis of material prices, such as copper wire, are a hot topic of ongoing debate in the construction industry and beyond – whether in response to public policy, infrastructure concerns or pandemics and natural disasters. Effects of disasters.
Copper is a major material used in nearly every area of residential and commercial construction, from copper wiring to heavy equipment to roofing. Copper is commonly and frequently used in the construction industry because of its durability, resistance to deformation and corrosion. The aesthetic and design benefits of copper on commercial buildings and transportation architecture are also noteworthy. Even the price of copper is seen as an important economic indicator - a rising market price indicates economic health and a falling price indicates economic downturn. Due to the global economic disruption caused by COVID-19, rising copper prices are a positive indicator of economic recovery.
Tracking the Cost of Copper Wire
After the increase in copper prices in 2019, the data shows that the price of copper wire remained stable for almost two years without any fluctuations.
Copper wire prices began to rise significantly again in late 2020, rising more than 14% as we did in 2021. But that was just the beginning of the meteoric rise. During the last quarter, the price of copper wire for 600 volt stranded THWN-THHN #10 has increased to $280.65 per MLF. Overall, nearly 67 percent higher since the third quarter of 2020 – the highest copper wire prices in recent years.
Contributing Factors for the Rise in Copper Wire Costs
In an analysis of market conditions and the impact on construction costs, experts found that prices of aluminum, steel and copper-based products were rising due to tariff pressures prior to COVID-19. These costs continued to rise during the pandemic.
Raw material prices are the driving force behind construction material prices. However, they are not the only drivers of final material costs as there are many components that go into the production of final construction materials, particularly metals.
Data engineers identified four contributing factors to price volatility in base metals such as copper: fabrication and manufacturing costs, installation labor, transportation costs and tariffs, and supply and demand.
Let's factor in supply and demand. The impact of the pandemic has hit industrial manufacturers and factories hard, especially those that depend on workers whose jobs cannot be carried out remotely. Public health needs and the impact of the COVID-19 outbreak have halted or delayed production and lost thousands of jobs. At the worst of the pandemic, the United States has seen thousands of manufacturing jobs disappear. The high-demand nature of the pandemic recovery has freed up stressed supply chains and pushed prices up at a rate we haven't seen in recent years.
Five industries are driving the demand for copper. These industries and applications include construction, electronics, automotive and transportation, industrial machinery and equipment, and medical surfaces. Building construction is the single largest market for the use of copper.
Copper’s Critical Role Against Global Warming and Climate Change
There is another demand for copper that will only grow in the coming decades: copper's critical role in sustaining a low-carbon economy. Copper has the highest thermal and electrical conductivity of any base metal and is widely used in solar energy systems, wind-driven industrial processes, energy storage technologies and electric vehicle production and infrastructure. . By using copper in energy applications, energy efficiency and reliability are improved and greenhouse gas emissions are reduced.
All of these factors contribute to the increase in copper prices, but there are additional factors as well. In fact, this is just a small sample of the more than 180 different listening posts that data engineers track to determine market fluctuations.
Other Notable Increases in Electrical Costs
Copper wire isn't the only spike popular with electrical components. Electrical metallic conduit, commonly referred to as EMT, is a thin-walled conduit for protecting electrical wiring. It is made of coated steel and aluminum, both metals that have seen recent cost increases. EMT conduit is seen more in industrial and commercial buildings than in residential homes because it comes in different sizes and dimensions.
Due to supply and demand, EMT conduit prices fell at the start of the COVID-19 pandemic and rose as the U.S. economy recovered. EMT conduit prices have risen nearly 54 percent since the fourth quarter of 2020 — bringing it to its highest price in recent years.
We are tracking rising price trends in recent quarters that will impact construction costs for the foreseeable future. This volatility of price hikes has stunned the market. We'll continue to track these changes and more to keep you updated on what the data says.
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