NEW YORK A planned price increase by GBC Metals LLC, a division of Olin Brass Inc., for light-gauge, narrow-width and specialty finish products has encouraged other domestic mills to consider implementing a similar hike, although service centers say the mills will receive quite a bit of push back from distributors and original equipment manufacturers (OEMs).
Louisville, Ky.-based Olin Brass increases will be anywhere from a "couple of cents to the mid-teens," depending on the thickness of the product (amm.com, April 15).
The company maintains that a disparity has existed for decades due to "historical pricing grids that do not reflect todays cost differential of pricing of these products," noting that light-gauge and narrow-width products require "more processing steps, more equipment time, more labor and incur more supplies and more utility expenses."
One mill source told AMM that his company is considering following Olins lead by implementing its own price increase on similar light-gauge products, although he noted that his company hasnt made a final decision yet. "If we do (introduce a price increase), wed get some feedback naturally," he said. "But I think Olin stated it pretty clearly. (There are) disparities in the cost of production and pricing."
Demand from certain industries, namely automotive, housing and ammunition, has pushed lead times for medium-gauge products out to eight to 14 weeks from six weeks previously, and lead times for light-gauge material are out to as long as 18 weeks (amm.com, March 26).
Still, service center sources say the price increase feels a bit premature for copper markets, which have been stagnant for four years.
"I think its pretty aggressive," one service center source said. "Its nice (for mills) that lead times are out, and I guess in their minds it means demand is up. But it just seems like the demand is so centered in a few markets and a broad base price increase will be difficult to sell across every market. My general feeling is that there are a couple of markets that are booming, like ammunition. But theyre really putting the price increase on the incremental business."
"They are going to get a lot of kickback," another service center source said. "I guess sooner or later we knew it would happen. Its just more difficult doing it than saying youre going to do it. And being able to make it stick (will be a challenge)."
A third service center source agreed partially with Olins rationale, although he noted that it wont stop the industry from protesting. "The narrower the product, the higher cost will be. They are more labor intensive. Those are true statements," he said. "But do I think there will be pushback? Yes."
Aurubis Buffalo Inc. president Ray Mercer told AMM that the U.S. division of copper and brass mill Aurubis AG, Hamburg, Germany, appreciates Olin Brass position. "We understand Olins rationale. I believe this is a common industrywide problem. As gauges have become thinner and order sizes smaller, the simple old accounting systems severely underestimate the costs to produce," he said.
Aurubis declined to comment on whether or not it would introduce a price increase.