Materials-cost increases pushing UTP prices higher
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 increase.

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 supply."

A Daikin production facility in Japan has been closed since a January accident. Daikin has not announced a reopen date.

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.

Coinciding 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 the year.