Copper Prices – How Do We Minimise the Risks For Our Customers?
When Christoph Bechtold switches on his computer in the morning, the first thing he looks at are the prices of copper on the metal exchange. Bechtold is neither a broker nor a speculator, but the purchasing manager at HELUKABEL. He buys about 10,000 tonnes of copper each year for the production plants in Germany, and more than 1,000 tonnes of ready-made cables and wires containing copper. It goes without saying that he keeps an eye on copper prices so he can buy when they’re favourable. The prices are constantly changing: no other precious metal experiences so much fluctuation than this reddish, glimmering raw material. There are many reasons for this, Christoph Bechtold explains: “Copper prices used to be purely based on the traditional economics of supply and demand.
Nowadays, other factors play a role too. For example, the price we pay is affected by fluctuations in the US dollar/euro exchange rate because the London Metal Exchange trades in dollars, but we pay in euros.” Copper prices have been extremely volatile since some large equity funds started using the raw material as a speculative currency. The global political situation also directly affects the stock exchange climate and thusly, copper prices. “It’s part of my job to read the newspaper every day,” says Bechtold, grinning. His experience and intuition do not only benefit HELUKABEL; customers profit from it too. “When customers have large orders, with large cross sections containing lots of copper, we recommend they secure the value of the material,” explains Bechtold. First of all, this involves discussing how much material is needed when. HELUKABEL procures the copper at the best possible price. This is the price the customer pays later when the delivery is released, regardless of any interim fluctuations in price. Other customers buy a certain amount in advance and get it delivered in small batches over a fixed period of time. For these customers too, the price paid by Bechtold is the price that applies for the whole amount over the whole period. “Order details are entered in our books and suppliers are instructed to deliver the material as the customer needs it,” he explains and adds: “The benefit to our customers is obvious. They have a fixed value for a certain amount over a fixed time span, which allows them to calculate their prices without worrying about fluctuations. This is how we help them minimise their risk.”