Copper fluctuation could cause cable price rise
Weak dollar sees copper costs increase cable prices
Fluctuations in copper prices are likely to cause cable prices to increase in the Middle East, a representative of Reichle & De-Massari MEA, has said.
Citing the weak US dollar as the root cause of the price fluctuations, Aslam Zuberi, GCC sales director for the Swiss owned cables company, said that copper prices fluctuating had increased overhead costs for cable manufacturers in the region.
“The cable industry has been affected as copper cables account for anywhere from 40% to 60% of cabling costs, which causes overhead costs of infrastructures to be high,” he told MEP Middle East.
While prices may have declined for the moment, Zuberi said that manufacturers bought stockpiles of copper when prices were at their highest, thus leading to high infrastructure costs.
As a result of the price fluctuations in recent months, they have been forced to adjust prices accordingly, to ensure their profit margins are not affected.
With a belief in the international markets being that growth and development will decrease in the future, despite the increased demand from India and China, copper prices are expected to continue to decline further.
Zuberi said that he saw the slump continuing for another 10 to 12 months, sparked by the deepening economic recession.
As a result, he expected contractors and manufacturers to face challenges in convincing their customers of their ability to provide ‘quality solutions’.
“Contractors have started looking for lower cost solutions which has caused the quality of networks to go down and thus affecting the network performance,” he said.
"High performance and high quality manufacturers and solution providers face big challenges to convince their customers of their ability to provide quality solutions,” he explained.
Illustrating the volatility of the market, copper prices locked in gains on 31 August, as worries about supply and signs of better demand from China boosted prices, the Wall Street Journal reported.
Copper for September delivery, the front month contract, rose 6.40 cents or 1.6%, to settle at $4.1870 a pound.
The paper said that copper prices increased as worries over disruptions to copper-mine output sparked concerns among market participants.
Data released by Chile, the world’s largest copper producer, has shown that strikes by mine workers in July substantially reduced output.
Goldman Sachs told the newspaper that it remained very bullish on the metal as problems with supply would reduce the amount of metal available to the market by more than previously expected.
“Copper supply disruptions will amount to at least 8% of total production loss this year, compared to 4% to 5% we had expected earlier in the year,” Goldman said.