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
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
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.