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 sources said.
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.
"Business has softened," a service center source told AMM. "There is a bit more availability (of product) so lead times are coming in."
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."