NEW YORK Service centers are reporting extended lead times for certain copper flat-rolled products as copper mills have yet to add additional production, staff or shifts despite an uptick in demand.
"Right now Im seeing lead times for certain light-gauge products at 13 weeks. ... It means (demand) has picked up sufficiently so the mills are busy, but (it also means) theyre not bringing on any additional capacity (or shifts)," one service center source told AMM.
"I asked that question (to our mills). I said, It sounds like you need more shifts. They said they were just happy to be full right now," a second service center source said, adding that he isnt aware of any mills adding capacity or staff yet.
A third service center source confirmed the recent "surge in overall usage for light-gauge copper," which typically goes "crazy when we have bad weather" as it is used in electrical distribution.
"Many in the (light-gauge copper) market saw a surge after Hurricane Sandy," the third source said, adding that the most recent spike is likely due to the recent severe snow, ice and windstorms in the United States.
Light-gauge copper products are also used in automotive applications, another area that is seeing strength.
Despite improving demand, service centers dont expect mills to increase production or capacity any time soon. Equipment is expensivenew rolling stations cost an estimated $25 million to $30 millionand can take as long as 24 months to bring online.
Mills are also typically slow to hire additional employees until it is clear that higher demand will be sustained, sources said.
"Say (a mill) brought on 30 people, and six months from now they dont need them. Theyd need to file a WARN (Worker Adjustment and Retraining Notification) notice. That brings a lot of negative publicity," the first service center source said. "People are slower to hire because they know theyll be slower to fire. (So) rather than invest, the mills will just add a shift or two and work some overtime. That keeps lead times out."
Still, if demand remains strong until the summer, producers might have no choice but to hire additional plant workers, the first service center source added.
"I think if we get to May or June and lead times are still out there, you will see individual companies that will be incentivized to (hire more people) and go to a multishift, seven-day-a-week schedule," he said.
Aurubis Buffalo Inc., the Buffalo, N.Y.-based division of Aurubis AG, Hamburg, Germany, told AMM that it might add workers later this year (amm.com, Feb. 11).
Not all service centers are reporting long lead times, though, with a fourth source saying hes still between four and six weeks for most copper, brass and bronze products.
However, the uptick so far this year is a welcome signthe first service center source said his company produced a record 50,000 pounds of copper, brass and bronze products in January.
"We were only 3 percent over our record, which doesnt sound like much, but our prior record was in August 2007. That was a peak for many people," the first service center source said. "I have to admit, Im doing the happy dance."