At this time last year, we were being confronted with a problem that no person or business had ever seen or knew how to confront with COVID-19. We’re now presented with another unique issue that has no expiration date: rising commodity prices.
Commodity fluctuation is nothing new to our industry. Copper, aluminum, zinc, and steel make up a vast majority of the material used in electrical supplies and pricing moves daily. What is different this time is the speed and breadth of the increases.
Usually, we see a few basis points change over the course of a couple months and over the duration of a project, little remains unchanged. Also, it is unusual to see all metals mentioned above move at the same rapid pace together.
Copper has hit a 10-year high, which is being credited to a couple of factors: analysts expect demand to outpace supply and inventory is falling. Both cold and hot rolled steel are up over 100% in the last 6 months. Aluminum is at a two-year high and inventory is dropping.
PVC is also something to keep your eye on. Throughout 2020 we saw an increase in PVC prices, so this topic is not new to the market. In the last week, we received word that there has been a disruption in the resin supply used to make PVC. We will continue to see inventory shortages and increases in PVC for the foreseeable future.
My advice that I give to all customers is that you should lock in your pricing with a distributor when you feel comfortable and not try to predict the market. If anyone knew what the price of copper was going to do today, they would be sipping on a margarita on their own private island somewhere in the Caribbean.
Enough of the doom and gloom and on to the positive! The exciting part is that there is a light at the end of the tunnel of this pandemic. Most economists are forecasting growth in 2021 and 2022. Life will get back to normal and we’ll be able to interact with our employees, coworkers, and customers face-to-face again. The best part of this industry are the people in it, and I can’t wait to see everyone again at a Brewers game, festival, or at the office.
Evan Hunt is the general manager at CED/Lappin Electric in Waukesha, WI. He has been with CED for over 12 years and has had several leadership roles throughout the company. Before moving to Wisconsin, he spent most of his career in the Chicago market focusing on major construction and tenant improvement projects in the area. CED/Lappin Electric was Lemberg’s Vendor of the Year for 2017, 2018 and 2019. For more information on commodities and availability, contact Evan at Consolidated Electrical Distributors, 262.547.5500.