Eagle Metals forced to diversify copper, stainless suppliers

Eagle Metals Inc is looking to diversify its copper and stainless steel supply chains in the face of soaring energy costs and rising demand, which could create supply deficits, according to the specialty reroll mill’s top executive

“It’s a very dynamic market that we’ve been in the last couple of years; we’re just managing through crises at this point,” president Charles J Bernard told Fastmarkets in an interview at the company’s headquarters and main facility in Leesport, Pennsylvania. “We could be in for a rough ride over the next year, supply-wise.”

Eagle Metals — which manufactures custom light-gauge strip from copper-based alloys, stainless steel, nickel-based alloys and low-carbon steel — hosted the inaugural event for the Precision Metalforming Association’s new mid-Atlantic district on Wednesday September 21.

Roughly 60% of the company’s volume purchases are copper-based, and 35% are stainless steel, with nickel and carbon representing the remaining balance, according to Bernard. Eagle Metals operates the rerolling mill in Leesport and has a service center in El Paso, Texas.

It installed its fifth rolling mill this year, a Sendzimir ZR-24, which will be up and running by the end of the year, Bernard said. The new mill will add about 35% more rolling capacity to the Leesport plant, he said, although he declined to specify exactly how much in units. It will help Eagle Metals meet increased demand for copper and stainless strip in particular, he said.

Most copper and stainless mills have had customers on allocation, capped at 2019 levels, since the beginning of the Covid-19 pandemic, according to Bernard.

Regarding copper mills specifically, Bernard said: “I won’t say it’s as tight as it used to be — a little flexibility has opened up — but it’s still the guidelines they like to follow. With the mills still on allocation, we’re not negotiating for [annual contracts for 2023]. They’re telling us what our pricing is and we’re happy to have it.”

Domestic stainless mills, on the other hand, took customers off allocation a couple of months ago and “are looking for orders,” according to Bernard.

However, if copper and stainless mills in Europe stop producing because of high energy prices, that could have similar effects to the flooding in Germany in 2021, according to Bernard. After that flooding, some US mills started sending inventory to Europe, which tightened up the market here, he said.

“If [European mills’] cost for energy goes up dramatically, and it’s a choice between heating homes this winter or operating a bronze mill, they will close heavy industry,” he said. “Even if they could operate, they’d have to raise their prices so much they wouldn’t be competitive.”

“We do buy some stainless and copper alloys from Europe, so that’s going to be problematic,” he added.

Phosphor bronze, for example, is manufactured primarily in Germany and not at all in the United States, according to Bernard.

“If they shut down, that will directly affect the US market dramatically,” he said. “Now I have to look at China, India and Turkey… The supply chain is getting worse, it’s more fractured.”

Eagle Metals also has dealt with three hydrogen force majeures this year, which have limited how much hydrogen it can buy, Bernard said. The company uses hydrogen to produce annealed products, he said.

Meanwhile, demand for copper generally is increasing, especially from electric vehicles (EVs), and this is likely to lead to a significant supply deficit, according to Bernard.

“Copper goes into automotive, electrical, electronic and industrial, and all of those sectors are still fairly strong,” he said. But there’s not enough copper to meet the needs that automakers have outlined they’ll need to make more electric vehicles, he said.

“That’s going to weigh on the basic industrial needs for all of the existing applications,” Bernard added. “That’s a real problem, and it’s not being addressed… There’s not enough copper for current demand, or for the need for EVs and electrification in general.”

Metals and mining executives have become increasingly frustrated by continued hold-ups, hinderances and hesitation by regulatory authorities to approve their projects around the world. This is at odds with a strengthening spotlight on the development of supplies of critical minerals for the energy transition.

The London Metal Exchange three-month copper price closed at $7,737 per tonne ($3.51 per pound) on Thursday September 22, down by 16.37% from $9,251 per tonne a year ago. Fastmarkets assessed the copper grade 1 cathode premium, ddp Midwest US at 10-13 cents per lb on Tuesday September 20. The premium has increased by 35.29% year on year from 8-9 cents.

Fastmarkets’ monthly assessment for stainless steel 304 cold-rolled sheet, fob mill US was $205 per hundredweight ($4,100 per short ton) on Monday September 12, up by 10.96% from $184.75 per cwt on September 10, 2021.

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