NEW YORK Copper
and brass service centers lead times have dropped
dramatically as a result of an ongoing slump in demand.
Lead times from mills
to service centers for medium-gauge productsincluding
copper rod, bar and platehave narrowed to one to six
weeks from five to 12 weeks at the end of May, service center
Lead times for
light-gauge copper products, such as copper sheet and coil,
also have narrowed, shrinking to a timeframe of three to eight
weeks vs. 15 weeks previously.
softened," a service center source told AMM. "There is
a bit more availability (of product) so lead times are coming
Once service centers
have metal in stock, their lead times to consumers are as
little to one or two weeks, distributor sources said.
Wider lead times
earlier this year may have been artificially inflated due to an
expectation of higher demand, market participants said.
But the usual summer
slowdown started earlier than expected this year, with activity
in the market described as abnormally slow, according to
traders and buyers (
amm.com, June 12).
Even the drop in
copper pricesthe July Comex contract, the most actively
traded, settled at $3.155 per pound June 18, down 6.6 percent
from $3.3775 on May 22has not spurred more activity.
The rapid decline in
copper prices can have a negative effect on profits, several
service center sources said, noting that many service centers
charge customers for the price of the metal at the time of
shipment, not at the time it was ordered.
"With the price
sliding, it makes it a little difficult to lose stock," a
southern service center source said.
If the copper price is
far lower at the time of shipment than at the time of ordering,
service centers will lose money unless they have anticipated
the decline and acted accordingly.
Service centers can
protect themselves against such volatility in the market by
turning around orders more quickly or hedging, an East Coast
service center source said. "Whenever theres volatility
you have to keep it close to the vest. Increasing volumes keeps
buyers from making long-term decisions."