Materials-cost increases pushing UTP prices
Cost increases in the primary
materials used to make unshielded twisted-pair (UTP) cable have
prompted UTP cable manufacturers to subsequently bump up the cost of
their products in recent weeks. Many UTP cable makers have announced
price-increase percentages that range from high single digits to the
high teens. Most of these increases will take effect in early March.
Costs for copper and polyvinyl chloride (PVC), of which most
cable jackets are made, have ticked up steadily over the past
several months. Many cable manufacturers have correspondingly
increased their prices.
PVC is a petroleum byproduct, and
has increased in cost as petroleum products worldwide have.
Within the past few weeks, both suppliers of fluorinated
ethylene propylene (FEP)-Daikin and DuPont-have announced price
increases. In a letter to its customers dated February 2, DuPont
announced a $2/pound price increase, effective March 1. Several
cable manufacturers corroborate that represents about a 20% price
DuPont's letter says the increase "takes into
account leading economic indicators and improving market conditions,
which are driving high capacity utilization and tightening FEP
A Daikin production facility in Japan has been
closed since a January accident. Daikin has not announced a reopen
The increasing demand for, and shorter supply of,
copper are playing a significant role in the recent and soon-to-come
price increases. Last fall, cable manufacturers could purchase
copper for 76 cents per pound. By late February, that cost had
reached $1.30 per pound.
On February 25, Bloomberg reported
that copper futures reached an eight-year high on concern that
worldwide production is not keeping up with increasing demand.
Bloomberg cited researcher CRU International as saying that
demand for copper rose 2.7% last year and will rise 5.5% this year,
led by gains in China, Japan, and North America.
with that increased demand is the temporary halting of output from
the world's second-largest copper mine. Freeport-McMoRan issued a
declaration of force majeure to its copper-concentrate customers in
December, after an October slippage and a December debris flow in
its Grasberg mine in Papua, Indonesia. Since Decmeber, efforts in
that mine have been spent on stabilizing the pit wall and regaining
access to the mine's higher-grade ore areas, including copper.
"As we evaluate our stabilization activities during the
first quarter of 2004, we will be able to provide additional
information on estimated sales volumes for 2004 and future periods,"
said Richard Adkerson, president and chief executive officer of
Freeport-McMoRan Copper & Gold Inc.
Before copper mining
was halted in December, Freeport-McMoRan intended to sell 1.4
billion pounds of copper from that mine in 2004. The plan called for
approximately 64% of that copper to be sold in the second half of