``There is a major shortage of copper,'' says Arthur Butts, senior vice-president of Barnes & Co., a commodities trading company in New York. ``Although the immediate demand has been somewhat reduced, every time [copper users] go into the warehouse, they deplete the supplies.'' Copper wire warehoused by the London Metals Exchange (LME) and New York's Commodity Exchange (Comex) is down dramatically. On Jan. 2, 1987, combined stocks of copper added up to roughly 300,000 short tons, compared with Feb. 29, 1988, when about 80,000 short tons were on hand, according to Kali Das, a technician at Phelps Dodge Corporation.
Copper is primarily used for building construction, telephones, automobiles, appliances, and computers. Mr. Butts believes the latest demand for copper stems from a 700 percent increase in its use for communications over the last two years.
Meanwhile, the shortage has hurt the plumbing industry, says Robert C. Avino, president of Ramm Plumbing, in Elk Grove, Ill. The company is a subcontractor to large commercial construction projects. ``We don't have escalation clauses, so we got hurt on the current projects. The upcoming work will reflect an increase in price.''
William Reiger, a senior electrical engineer with Gibson Electric, in Westchester, Ill., says the electrical construction industry was also affected. ``We've taken a kick in the pocketbook'' with the higher copper prices. ``If we bid a job on March 10 for start in April, we may not get the copper for a couple of months. On a big building, it may take a year to get to the place where you lay the wire down. The price paid is effective at time of delivery,'' Mr. Reiger says.
By the time Reiger took delivery of the copper he needed for the jobs he estimated a year to a year and a half ago, the cost of the metal had gone up 50 to 100 percent more than he had expected to pay. ``That came out of profit,'' he says.