Copper rod premium hike reflects tightness
Reuters, Monday, March 02, 1998 at 19:02
By Derek J. Caney
PALM BEACH GARDENS, Fla, Reuters - Asarco Inc's (NYSE:AR)
decision to raise its conversion charge for continuous cast
copper rod in March will not be followed by other rod
producers, but it does set the stage for an increase in April
in an increasingly tight market.
Strong demand from wire and cable manufacturers have been
driving all rod producers to capacity. And while no producer
has put any customers on allocation at this point, no one has
any extra metal to sell either.
"If we see another six percent increase in rod demand this
year," said one rod producer, "we could be looking at a very
serious shortage down the road."
According to the American Bureau of Metal Statistics, rod
shipments grew by approximately six percent in 1997.
Asarco raised its rod coversion charge by 0.25 cent to all
locations late last week. Producers' combined cathode and rod
coversion charges are believed to range between 8.25 and 8.50
cents over COMEX to most Midwest locations.
"It's obviously something we're studying very closely,"
said another rod producer. "It will probably be successful, but
the timing of it is a little strange."
Producers usually announce any premium changes in the
middle of the month.
"Making a change late in the month won't make many friends
among the consumers," one source said.
Grupo Mexico and Encore Wire are individually slated to
bring on new rod production in 1997. Grupo Mexico's Caridad
plant is expected to be producing rod shortly, while the Encore
plant is expected to be producing in the second half of the
year.
derek.caney@reuters.com)) |
