Copper is one of the most important materials for hydronics. It’s also one of the most important materials for many manufacturing sectors, and it’s growing in importance all the time. Contractors and the manufacturers who supply them have been dealing with a jump in copper prices this past year. It could be a sign of things to come.
Copper is considered a “base” metal, meaning it’s common and inexpensive, as compared with precious metals like gold and silver. That description of copper is fairly outdated. Copper has become such a key industrial component that some refer to it as “Dr. Copper” because its price acts as a leading economic indicator.
Copper prices started rising last fall and reached one of their highest levels ever in the first quarter. They have come down somewhat since then, as China has released some of its reserves. But the higher prices for raw materials already drove up the prices of copper tubing and fittings, said Jeff Thompson, senior vice president of F.W. Webb, one of the largest hydronics distributors.
“Contractors handled the first several increases at the end of 2020, but currently many are pushing back or asking to hold pricing for longer periods of time, which we cannot accommodate because the supply chain is simply not strong enough,” Thompson said.
The supply chain for copper has been strained like the supply chain for almost everything else in the past year and a half. But the metal faces extra challenges. For one, the amount easily available is limited. CME Group, a major commodities exchange, reports that the rate of copper supply growth lags far behind other industrial materials, such as iron and aluminum.
At the same time, demand for copper grows all the time. It’s a key component of electrification. For example, electric vehicles use twice as much copper as vehicles with internal combustion engines. Copper is critical to electrification because it conducts electricity so well.
Few Less Expensive Alternatives
It also conducts water extremely well. It’s more corrosion resistant and durable than other metals. This makes it valuable when placing pipes under floorboards to generate heat. But more demand from other sectors and a limited supply means higher prices for those in the hydronics business. As a result, some are looking at alternatives.
“Stainless steel is one product that usually can be a substitute for copper,” Thompson said. “PVC pipe could be another replacement in certain applications, but with the resin shortage, it is not an option due to availability.”
It’s not just the tubing being impacted, either. Betsy Gaucher, senior vice president of global supply chain for Taco Comfort Solutions, said copper prices directly impact the price of pump and circulator motors, among others. The biggest impact is on motor windings, which Gaucher said contain a significant amount of copper wire. Taco’s motor vendor has increased its prices since last year. Gaucher said copper also affects the prices for alternative materials.
“Increasing copper prices also indirectly impacts the costs of our brass and bronze components, as the copper content of these is often well over 50%,” she said. “As with the motor vendors, our brass and bronze vendors have also passed through those price increases to us. Fortunately, we aren’t seeing any supply issues yet.”
So the outlook going forward is likely one of higher prices, although maybe not as high as the current levels. The good news for contractors is demand should remain fairly steady. As more people shift their activities to their homes, they are finding the need for more comfort solutions on a room-by-room basis. More demand will mean more price pressure, but it will also mean that some of that increase equipment cost can be passed on to consumers.