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What Influences The Cost Of Metals For Progressive Stamping?

March 4, 2021

As with any commodity, metal prices are influenced by a number of factors: mining and production costs, supply chain factors, tariffs, and more. Here’s a quick look at what drives prices of the metals that go into stampings.

Raw metals and the products made from them commonly originate as mined ores, like iron or copper, from which the metals are extracted and processed. The more complex these processes the higher a metal’s price. Prices are also influenced by things like where and how widespread in the world deposits occur, the available workforce for mining, and the price of oil and fuels to power equipment and for transportation of materials.

Material Processing Costs

According to this article, “a direct correlation exists between tradable industrial metal prices and downstream metal material prices, but the two are never the same (much like the price of flour may influence, but does not determine, the cost of bread). The farther down the value-added stream one goes, the more factors (e.g. labor, energy and transport costs) begin to influence metal product prices.”

Turning a quantity of raw metal or alloy into a usable material for progressive stamping adds costs for:

  • Extracting metals and minerals from ores to create alloys (i.e. steel alloys) or raw metals
  • Fabrication costs related to re-rolling to thickness and slit-to-width
  • Treatments such as coating, plating, and tempering, etc.

Supply and Demand

What Influences the Cost of Metals for Progressive Stamping

Prices change according to global and regional changes in supply and demand. In general, when demand for a material is high but the available supply is limited, prices go up. On the other hand, when there is a surplus available and demand for it is low, prices go down.

For example, copper prices change over time. Availability of copper is subject to conditions in the countries that produce it, including Chile and Peru, as well as seasonal demand. In the US, automotive production and housing construction, which use copper in many applications, ebb and flow throughout the year, changing demand levels.

And in some years, additional factors come into play. Investopedia notes “at the beginning of 2020, forecasters expected a supply deficit of about 53,000 metric tons. With the global economic slowdown as a result of the coronavirus pandemic, that forecast was revised to a surplus of 200,000 to one million ton.”

In contrast, aluminum prices are often lower and more stable because it is readily available in many locations around the world.

Market Prices and More

Stampers monitor the prices of metals on commodities market exchanges such as COMEX and London Metal Exchange (LME, non-ferrous metals only). Value and pricing information from these and other sources helps them decide when and in what quantities to purchase metals.

The price a stamper pays for metal coil in turn impacts what they are able to charge for stampings (along with other cost factors like volume, design characteristics/manufacturability, turnaround requirements, etc.).

While each stamping project is unique, customers should consider these questions when it comes to pricing:

  • Have I selected a suitable alloy for the application? Examine part requirements for form, fit, and function in the final product/assembly. This ensures the chosen alloy will neither underperform nor add unnecessary costs for non-critical properties.
  • Can materials be substituted? Aluminum can be used as a substitute for copper in some applications, depending on size, weight, and conductive capacity requirements of the component. This is because aluminum is lightweight but about 50 to 60 percent as conductive as copper, so more material may be needed to produce the same conductive effect.
  • Have I considered the availability and minimum quantity requirements for purchase? Materials that are less readily available may require purchasing a larger minimum quantity and/or longer lead time than those that are less scarce.
  • Is my design optimized for reducing waste/scrap? This includes part geometry and features that are readily achievable in addition to careful layout on the strip.

Pricing is a complex subject, but it’s just one of many factors that influence custom stamping projects. At CEP Technologies, we know an informed customer makes better decisions, so please contact us to talk about your next project!

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