Rolling, Drawing, and Extruding of Copper

SIC 3351

Companies in this industry

Industry report:

This industry consists of establishments that roll, draw, or extrude copper, brass, bronze, and other copper-based alloys. These establishments create basic shapes such as plate, sheet, strip, bar, and tubing.

Industry Snapshot

The 118 companies in the rolling, drawing, and extruding of copper industry in the United States as of 2009 are commonly known as copper fabricators. Wire rod mills, brass mills, ingot makers, and powder plants are all classified as copper fabricators. Copper foundries are discussed in SIC 3366: Copper Foundries. After receiving smelted and refined copper ore and copper scrap, fabricators convert the raw copper into wire, strip, sheet, plate, rod, bar, and other copper products used by various industries.
Key end-use markets for copper and copper alloy are industries including building/construction, electrical and electronic products, transportation, industrial machinery and equipment, and consumer products. Valued for its conductivity, copper wire is essential to heating and cooling systems and is the primary type of building wire used. After experiencing a jump in product shipments in 2006 as new housing starts hit record highs during the mid-2000s, the copper rolling, drawing, and extruding industry experienced more turbulent times during the late 2000s when the U.S. housing market collapsed.

Like other commodities markets, the copper industry is prone to cyclical price fluctuations. Shipments for 2006 were just shy of $15 billion, up from $10.3 billion in 2005 and $7.7 billion in 2000. Shipment values fell slightly to $14.47 billion in 2008. Although demand declined during the latter 2000s, high price per pound keep industry values elevated until 2009. Shipment values declined significantly in 2009 due to decreased demand and declining price.

Organization and Structure

Copper in the United States passes from the mines to the smelters. In some cases these facilities are owned by the same company, and in some cases the mining and smelting are done nearby. The mining and smelting companies produce copper, and the wire rod mills, brass mills, and foundries are the consumers of copper who prepare the metal for delivery to manufacturers in various industries.

Mining companies process copper ores, most of which comes from open-pit mines. The ores are refined and sometimes alloyed with other elements, such as zinc or beryllium. In 2009, the United States had 29 active copper mines (although 99 percent of production came from 20 mines). There were three primary smelters, four electrolytic and three fire refineries, and 15 solvent extraction-elecctrowining operation that were in operation during 20009. Copper--both refined and scrap--was processed at 30 brass mills, 15 rod mills. The country also had about 500 foundries, chemical plants, and other facilities that consumed copper. About 50 percent of copper was used in building construction in the late 2000s, 21 percent in electric and electronic products, 11 percent in consumer and general products, and 8 percent in industrial machinery and equipment.

Most brass mills in the United States operate in three areas. While one division produces rod, bar, and shapes, another division manufactures strip, sheet, and plate, and the third division produces commercial and plumbing tube. Brass rod and brass strip, two of the most popular copper alloys produced in the industry, possess the kind of corrosion resistance, machinability, and electrical properties that enable them to be used under adverse climatic conditions. Air-conditioning tube and plumbing tube are examples of the unalloyed copper and high-copper alloys that make up another major segment of mill output.

There are several associations for copper production. Foremost is the Copper Development Association, which tracks market statistics and releases public relations reports. The American Copper Council--also a trade organization central to the copper industry--had 120 members in 2009. The American Copper Council emphasizes education for the industry 's members.

Background and Development

Copper mining began in the Middle East and reached its zenith in the American West. Small mining operations spawned prosperous towns in Michigan and Arizona. In the mid-eighteenth century, miners in the colonies discovered copper ores in what is now the northeastern United States. They mined the ores, but English law forbade construction of smelting works, so the ore was sent to England for smelting and refining.

After the American Revolution, many copper workers moved to the new United States. Copper sheathing began being used on wooden ships as early as the 1790s. The copper protected the ships from the pressure and corrosive effects of the ocean. Great demand from the shipping industry helped the budding copper industry, but the United States still depended on copper imports from England and South America. In 1806 U.S. importers of copper asked Congress to exempt copper from customs duty. Protests by copper industry pioneers resulted in lower tariffs on copper imports.

Steamships had copper parts by this time, because copper was better than pinewood at containing steam in boilers. Later, with the rise of American industry, growing copper fabricators created stripping, boiler plates, rivets, and other copper-based items that were used in an increasingly diverse number of industries and products. Copper nails replaced cast iron nails in building, and the boom in building towns and cities across the new nation resulted in a windfall for the copper industry.

Development of efficient flotation processes around the turn of the century and advances in open-pit mining techniques quickly turned the United States into the world's largest producer of copper.

The brass mill industry began in Connecticut during the early days of colonial America. There were copper mills from Waterbury south to Ansonia, where melting and rolling techniques were developed and tested. Though largely forgotten in Connecticut, the industry remains centered in the eastern United States.

Like many other mineral and mining industries, the copper market was plagued by overcapacity and falling prices in the 1980s. As a result, companies began merging to try to improve efficiency and gain some protection from the fluctuations of the market. This continued in the early 1990s, as buyouts and consolidation led to a leaner field. Mining companies were previously tied to large, multiproduct wire and cable mills, but in the mid-1990s, they spun off their fabricators to try to become more efficient. Some refining companies, however, added continuous cast wire rod mills to the end of their production process, thereby effectively opening their own millworks.

According to the trade magazine Copper Talk, shipments of strip, sheet, and plate declined in the 1980s, but demand for copper products increased slightly. Shipments to the electrical and electronic products markets grew to represent 36 percent of shipments; this was an increase of 12 percent from two years earlier, according to Copper and Brass Development Association statistics. The percentage of copper mill products that were consumed by the building construction industry was more than 40 percent in 1991. Electrical and electronic products industries received 24 percent, and the industrial machinery industry accounted for 13 percent.

In 1996 the copper industry was shaken again--this time by a trading scandal at Sumitomo Corp. Yasuo Hamanaka, Sumitomo's chief copper trader, was exposed as a heavy speculator in copper futures. His unauthorized dealings cost the company more than $1.8 billion and sent the price of copper plummeting. By mid-June 1996, copper prices had fallen 64 percent to 79 cents per pound; they rebounded in the fall to 91 cents per pound. By 1997, copper prices stabilized, and demand became steady. A 1997 strike at Chile's Escondida copper mine, the world's largest, made copper prices rise as inventories fell. Stockpiles at the London Metal Exchange were low, falling in a year by more than 50 percent to 149,100 metric tons.

In 2000, the value of refined copper shipments was more than $7.7 billion. During the late 1990s, wire rod mills, brass mills, ingot makers, powder plants, and other industries in the copper fabrication sector had consumed more than 4 million short tons of copper annually. Wire rod mills--the largest segment of the industry--consumed approximately 2.3 million short tons of refined copper and 28,000 short tons of scrap copper per year in the late 1990s. As Trends in the Use of Copper Wire & Cable in the USA noted, "Nearly all newly mined copper...goes into the production of wire rod, and thence to wire and cable products." Brass mills consumed a total of 1.9 million short tons of copper, alloy, and ingot, while powder plants used more than 19,000 short tons and other industries a total in excess of 95,000 short tons.

The building/construction industry--including building wiring, plumbing and heating, and air-conditioning and commercial refrigeration--was the most sizable end-market for fabricated copper products, accounting for approximately 46 percent of the market in the early 2000s. Electrical and electronics products, such as power utilities, telecommunications systems, business electronics, and lighting and wiring devices, absorbed roughly 23 percent of fabricated copper in the early 2000s. The transportation industry, which had been the third-largest consumer of fabricated copper in the late 1990s, fell behind consumer and general products in the early 2000s. Transportation accounted for just more than 10 percent, incorporating copper parts into cars, trucks, buses, railroads, ships, and aircraft. Consumer and general products, mainly appliances and electronics, used almost 11 percent of fabricated copper produced in the United States in the early 2000s. Industrial machinery and equipment--such as in-plant equipment, industrial valves and fittings, non-electrical instruments, off-highway vehicles, and heat exchangers--represented just less than 10 percent of the early 2000s market.

When the economy in the United States began to slow in the early 2000s, copper demand in certain industries, including the floundering telecommunications industry, began to wane. However, plunging interest rates bolstered demand in the automobile and home construction industries, which helped to offset diminished copper demand elsewhere.

Copper fabricators benefited in the mid-2000s with a U.S. housing boom at its height. With the price of copper continually setting new highs, the value of product shipments for the copper rolling, drawing, and extruding industry jumped from $10.3 billion in 2005 to $15 billion in 2006 even as the U.S. housing market began to crumble.

The strength of the housing market had pushed copper prices past $4 per pound in early 2006, and prices stayed at or near that level into 2008 despite slumping demand in the United States because of record demand in developing nations. That created a problem for copper fabricators, who attempted to keep inventories at a minimum, unsuccessfully in many cases. "This is an extremely high level of inventory in virtually all of our large markets and smaller markets, and inventory looks like it won't correct in the near term," Greg Miller, first vice president and chief economist at SunTrust Bank Inc., told American Metal Market during the American Copper Council's annual meeting in 2008.

The slumping housing market affected copper fabricators in other end-market sectors as well. Copper sales for use in home appliances, most often purchased in conjunction with new homes, had dropped in the late 2000s. Moreover, residential builders as well as commercial construction companies increasingly opted for alternative materials such as plastic tubing with the cost of copper remaining high.

Some copper fabricators started to reorganize as early as 2005 in response to the high prices they were paying to primary and secondary copper producers. In addition to the high cost of copper, fabricators also had to deal with increased fuel costs exacerbated by a string of hurricanes in late 2005. Wolverine Tube Inc. of Huntsville, Alabama, restructured in late 2005 by trimming 20 percent of the workforce at its headquarters.

Current Conditions

In 2009, with the U.S. economy in recession, the unemployment rate hovering over 10 percent, and U.S. banks in crisis, new housing starts were at the lowest levels in 50 years, since 1959 when the federal government began keeping statistics. Having hit a record high of over 2 million new starts in 2006, just three years later, new residential housing starts numbered just 566,000. As a result, brass and wire rod mills saw significant declines in reduction. In addition, the record high prices that had buoyed copper during the mid-2000s decreased somewhat during the latter 2000s.

Specifically, according to the Copper Development Association, consumption of refined copper by wire rod mills declined through each year between 2004 and 2009, from 1.96 million short tons in 2004 to 1.64 million short tons in 2008; demand dropped significantly in 2009 to 1.27 million short tons. Wire rod mills also consumed 19,000 short tons of copper scrap, for a total copper consumption of 1.29 million short tons in 2009, compared to a total of 1.99 million short tons in 2004. Brass mills fell from 632,000 short tons of refined copper in 2004 to 472,000 short tons in 2009. Brass mills, which depend much more heavily on scrap copper for production, consumed, 620,000 short tons of copper scrap in 2009, compared to 748,000 in 2004, for a total copper consumption of 1.09 million short tons in 2009, compared to 1.38 million short tons in 2004. Price, which reached over $4.00 per pound in the middle 2000s and an annual average of $3.28 during 2006, fell to an annual average of $2.37 per pound in 2009. Nonetheless, price for copper remained historically high--roughly double the price of the mid-1990s.

The decline in the construction--particularly residential housing, although other segments such as commercial, transportation, and hotels also saw lesser declines--hit the industry with full force in 2009. For example, between 2008 and 2009, copper building wire shipments feel from 1.26 million short tons to 1 million short tons, and total insulated wire and cable shipments fell from 2.92 million short tons to 2.34 million short tons. Over the same period, strip, sheet, plate and foil shipments declined from 3.09 million short tons to 2.5 million short tons. Although the economy showed signs of recovery during 2010, demand remained sluggish.

Industry Leaders

Major companies engaged in copper rolling, drawing, and extrusion processes include Marmon Group, Inc., of Chicago, Illinois, a conglomerate of more than 125 autonomous manufacturing and service companies, that racked up almost $5.1 billion in sales in 2009. Mueller Industries Inc., of Memphis, Tennessee, a manufacturer and distributor of copper tubing and related fittings, reported 2009 sales of $1.6 billion. As one of the leading U.S. manufacturers of copper and copper alloy tube for commercial products, Wolverine Tube Inc. of Huntsville, Alabama, manufactured fabricated copper for residential air-conditioning units, heat exchangers, and utilities. With 1,368 employees, down from 3,316 a decade earlier, Wolverine Tube's 2009 sales were $815 million. Chase Brass & Copper Company Inc. (CBCC) of Montpelier, Ohio, a subsidiary of KPS Capital Partners, primarily manufactures brass rods for plumbing fixtures and heating and air-conditioning parts.

Workforce

In 2006, the industry employed 14,189 workers, down from 19,955 in 2000 and 22,500 in 1995. While there was better growth potential elsewhere, the outlook was not nearly as bleak as that in other copper-related industries beyond the late. The number of mining, quarrying, and tunneling occupations, for instance, was expected by some observers to fall by almost 20 percent, while the number of foundry mold assembly and shakeout workers was expected to fall more than 20 percent.

America and the World

According to the Copper Development Association, copper wire mill product imports in 2009 was an estimated 311,000 short tons and imports of brass mill products totaled 426,000 short tons. Total imports for 2009 (including powder products) were744,000 short tons, down from 1.03 million short tons in 2008. Imports declined due to decreased demand. Generally speaking, mill product imports increased during the 2000s, up from 521,000 tons in 1990.

Exports of wire mill products in 2009 totaled 402,000 short tons, down from 488,000 short tons in 2008; brass mill product exports totaled 217,000 short tons, down from 297,000. Total exports (including powder products) were 634,000 short tons in 2009. Like imports, exports were generally higher in the 2000s relative to the 1990s; brass product exports in 1990 totaled 325,000 short tons. Thus, in 2009, the United States had a trade deficit of 110,000 short tons. However, trade deficit varies depending on production and demand, ranging from a low of 38,000 in 1993 to a high of 568,000 in 2000.

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