Thefts are the dark common thread weaving copper fabricators
and their customers together, as both are vulnerable to
substantial loss of material. And while the thefts themselves
are becoming a huge problem, equally troublesome is the lack of
standardized theft-prevention methods that make policing
"On the industrial side, it's not as common an occurrence as
people think. It's still a difficult task to accomplish. But
when there's money to be made, greed is a powerful motivator.
It can fill up a truck in a hurry," a buyer for a wire maker
said. "The single most important factor is price."
A buyer at a second wire manufacturer agreed. "The higher
(the price) goes, the more vulnerable you become. A truckload
can go for a couple hundred thousand dollars to half a million
dollars very easily. The higher the cost of copper, the more
vulnerable you are to thievery. We do not like to see copper at
$3 a pound, but we can't control it so we have to deal with
it," he said.
Red metal prices, which had spent decades hovering around
the $1-per-pound mark, went on a historic bull run in 2004 that
over the next few years saw copper breach the $4-per-pound
level and remain above $2.50 most of the time since.
The new price equilibrium has attracted an unsavory element
to the industry, with most fabricators acknowledging that they
have suffered some isolated instances of employee theft. While
the volumes tend to be small and the incidents typically end in
dismissal, the presence of internal theft is compounded by
greater external threats.
"We're very careful with the truckers we use; they're
usually the same people every day," the buyer for the second
wire manufacturer said. "A very sophisticated theft could
happen, but they'd have to have pretty good documentation to
pick it up and steal it."
Carrollton, Ga.-based Southwire Co. recently suffered a
$500,000 theft when three drivers bearing legitimate-looking
paperwork loaded 131,000 pounds of copper rod onto their
trucks. The trucking was arranged by a freight broker, who
covered the cost of the loss, but the case stunned the copper
fabricating community, prompting companies to re-examine their
own security protocols, from on-site security to the level of
documentation fabricators require from truck drivers who pick
"In recent cases, it's been so organized that I think it's
probably being put on a container and shipped overseas
somewhere or down across the border into Mexico," the first
wire manufacturer source said.
And while the thefts make wire makers nervous, there
currently is no economically viable alternative to copper in
electrical wiring applications. While some transmission cables
can be made out of aluminum, copper-clad steel or lead, the
downsides to these materials often far outweigh the cost
"It could always happen, but the alternatives in electrical
wiring cable really aren't there. Copper is still the main
commodity that will be used even if it goes to $5 per pound.
It's not that easy to replace, especially with specialty
products. You have to have certain amperage capacity in cables;
you can't carry as much current with steel cable as you can
with copper-that's why there are not a lot of obvious
alternatives to switch to," the second wire maker source
The main drive behind substituting away from copper tends to
be higher red metal prices, but metal end-users consistently
suffering from thefts see an added benefit in switching to a
cheaper alternative when it comes to copper tubing.
There are some natural hurdles to a substitution decision
for manufacturers. "A substitute would take quite a bit of
potential capital investment. I would think customers or
fabricators could avoid capital expenses by changing the way
they do their processes and procedures and by tightening things
down and making their property more secure," a buyer for a
Nevertheless, sources in the copper tube industry expect to
see a higher rate of substitution as the U.S. economy exits the
recession and demand for copper product recovers.
"We're seeing substitution currently in the neighborhood of
2 to 3 percent per year. That substitution rate is going to
increase to where three years down the road we'll see the rate
move to about 4 percent per year. Our visibility tends to be
pretty good in terms of what's going to happen with different
technologies," Edward Rottmann, vice president of sales,
marketing and product development at Luvata Oy's tubes
division, told AMM on the sidelines of Metal
Bulletin's 23rd World Copper Conference in New York.
"In the global ACR (air conditioning and refrigeration)
market, the amount of aluminum substitution that's taken
place-replacing copper-is still below 5 percent," he said.
"We're coming out of a recession, so we'll see the total demand
for copper continue to grow from the lows we saw in 2009.
However, the share that's being taken by aluminum is going to
grow from the zero- to 5-percent range to 5 to 10 percent."
Substitution and theft are both sore points for copper
fabricators, but producers say that the biggest problem facing
the industry is the ease with which thieves can dispose of
stolen goods at a recycling facility.
"There's always the dark side of the scrap world that
operates in that manner. Maybe if they don't know where the
material comes from they don't want to know, and they don't ask
questions. They think they're not liable for that, or they
don't care," the first buyer said.
"It's very difficult to control all of this, because scrap
comes from so many different sources," the second buyer source
said. "The dealers are legitimately trying to do the best they
can, but it's not an easy thing to police-it's very
Fabricator sources have cited various material
theft-prevention efforts pioneered by the Institute of Scrap
Recycling Industries (ISRI), but they say the programs aren't
mandatory and rely purely on member participation.
"ISRI is trying. But the network and policing are only as
good as its members. If the membership and all the scrap
dealers are honest, there wouldn't be a place to sell stolen
scrap. But as they say, a few bad apples spoil the basket.
Ethics and honesty have to go hand in hand to make something
like that work," the first buyer said.