Copper’s roller-coaster ride can throw you off track

Have you ever been to The Stratosphere hotel in Las Vegas? If you haven’t but you’d recognize the famous Strip from a photograph, The Stratosphere is the hotel that looks a little bit like Seattle’s Space Needle...

By Patrick McLaughlin

Have you ever been to The Stratosphere hotel in Las Vegas? If you haven’t but you’d recognize the famous Strip from a photograph, The Stratosphere is the hotel that looks a little bit like Seattle’s Space Needle, and at 1,149 feet, its tower pretty clearly stands out from the buildings immediately surrounding it.

On the inside, it’s a lot like other casino-hotels in the city, with predictable gaming attractions and hallways whose carpet patterns will give a headache to those who dare to look down while they walk to and from the elevator. But it’s the outside-with that tower, the revolving restaurant, and my (least) favorites, the thrill rides-that make it unique.

The ride in particular that came to my mind recently was X Scream, the roller coaster that sits atop the tower. I’m one of those people who won’t get on a roller coaster that starts at ground level and goes up 100 feet, so even though I once got conned into going up to the Stratosphere observation deck, I never got onto X Scream or any of the other rides up there. And I don’t expect ever to do so.

Many in the communications cabling industry have been on a roller-coaster ride not of their own choosing for the past couple years, in that they have dealt with the business implications resulting from the climbing price of copper. This magazine and others have reported on the implications of the increased demand for, and short supply of, the material that probably has more impact on this industry than any other single element found on the Periodic Table.

We visit the topic again this month, in an article written by senior editor Matt Vincent (see page 13). Matt reports that, like any good roller coaster, the copper market not only makes steep climbs but also sharp falls.

As the final pieces of Matt’s article were coming together in early January, copper prices were in a virtual free fall, dropping to nine-month lows of about $2.60 per pound, with analyst predictions they would settle somewhere around $2.50.

Because of the lag time between the article being written and arriving in your mailbox, that $2.50 price might be right on by the time you receive this issue. But who knows? And that’s the whole point of a roller coaster, isn’t it-to keep you guessing what’s coming next?

Fortunately, Matt spoke to people whose business is affected day-to-day by copper prices, and also to people whose day-to-day business is to keep tabs on such market shakers. After a big disclaimer that, of course, nobody can really predict the future, I’ll state that the perspectives and considerations in this month’s article on copper pricing provide a wide-ranging view of the market forces at play, and the article takes a logical approach to trying to figure out where the market is headed.

One point to remember going forward is that, in much the same way this magazine has a lead time that does not permit us to provide up-to-the-minute pricing information (although that info is available from several sources on the Web), commitments among cable manufacturers, distributors, contractors, and end users can stretch over several months.

So, the price you pay for a box of copper cable today very likely is based, to some extent, on the price of the metal some time ago.

Yet another complicating factor to work into your business spreadsheet.

Back to the X Scream analogy for a minute: For those brave enough to get on, once you go through the climbs, falls, and turns of that ride, then step off, you’re still on the observation deck of the hotel more than 100 stories above the city. Looking at the price of copper today compared to what it was four years ago, we may very well be experiencing nine-month lows, but the metal is far from coming back down all the way to earth.

Some might say its price range is still stratospheric.

PATRICK McLAUGHLIN
Chief Editor
patrick@pennwell.com

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