The price of zinc has reached unprecedented levels since the beginning of the year, posing new challenges for the industry.
While rising copper prices have attracted most of the headlines in recent years, the cost of zinc is hitting new heights, too.
Several electrical manufacturers said zinc die cast fittings are up 50 percent or more since the beginning of the year. The price of weatherproof boxes and covers and other products containing zinc have jumped significantly in price as well.
The rising price of zinc — which was up to $1.59 per pound at press time, and had not reached $1 per pound until late January — has been a contributing factor to Regal Fitting Inc.'s financial troubles. Regal Fittings, City of Industry, Calif., surprised the electrical industry in late April when word spread that the company had reportedly stopped manufacturing zinc die cast fittings because of the high price of zinc and might be going out of business.
In a statement Regal provided to Electrical Marketing newsletter May 2, the company said it was scaling back production of its zinc die cast fittings line at the City of Industry location because of the high price of zinc.
“This is being done as it (Regal) evaluates several options in maintaining the goal of continuing to serve the electrical distribution market,” said Mary Butler, president of Regal Fittings/Creftcon Industries. “This evaluation has been precipitated by the current environment of escalating zinc cost and stable steel levels, coupled with a U.S.-based production operation.”
Distributors and manufacturers' reps said the rising price of zinc and the situation at Regal Fittings are creating chaos in the electrical industry. David Rosenstein, president of Brook Electrical/Sonepar USA, Lincolnshire, Ill., said electrical distributors were scrambling to get realigned with other manufacturers of zinc die cast fittings. “It's real chaos,” he said. “Brand preference goes out the window when something like this happens. People really look to functionality, price and the availability of the product.”
Mark Gibson, a manufacturers' rep with Wood Dale, Ill.-based Agents Midwest, represents Regal Fittings. He sold a “boatload of fittings” through the end of April and through the first week of May.
“We basically sold two or three months of supplies and tried to take care of our major users, both contractor good friends and our distributors, and took care of as many orders as we could by doing that,” he said. “The major players, both residentially and commercially, are taken care of for at least two months in distributor stocks (with Regal zinc fittings).”
Several die cast fittings manufacturers said the situation at Regal would mean more business for them. “Fittings competitors are going to pick up some portion of that business,” said Paul Suzio, president, Bridgeport Fittings Inc., Stratford, Conn. “There is no question about it. There are enough fittings manufacturers to pick up the load, and some of us will probably pick up more than our fair share.”
Thomas & Betts (T&B), Memphis, Tenn., has been dealing with the inquiries about Regal as they come in. “There are certainly people looking to buy die cast fittings because Regal was a major supplier,” said Ann Jaehn, T&B's manager of channel marketing and pricing. “We're just managing it case by case, because we don't want to run short either.”
T&B has announced two price increases this year on its zinc products. In March, the company raised prices on its zinc die cast fittings by 15 percent and on zinc weatherproof products by 10 percent. Effective May 22, T&B raised the price of zinc die cast fittings by another 50 percent for the year, and weatherproof boxes by another 15 percent.
Jaehn said the price increases were necessary because of “continuing, escalating costs.”
“What our philosophy has been, even going back to the steel raw material craziness in 2004, is that we monitor the cost that our plant incurs daily and then decide when we pass that on. We try to absorb as much as possible, but we have to pass the cost on through the channel. That's what we do,” she said.
She said customers are not overly thrilled with the price increases, but they understand. “Anybody can see what's happening in the world,” she said. “All you have to do is open up the Wall Street Journal or USA Today, or watch a television financial channel. I don't think it's a surprise to anybody.”
Suzio of Bridgeport Fittings calls the price increases “unprecedented” in the fittings market. “It's probably never been undertaken before,” he said.
Bridgeport Fittings raised its price on zinc die cast fittings 6 percent in January and 48 percent for May. Originally, Bridgeport Fittings had intended just to raise its prices on zinc die cast fittings by 10 percent for the May 15 increase, but had to revise its price increase because the price of zinc rose from $1.30 per pound to $1.99 per pound in early May.
“It's really driven by the raw material zinc,” said Suzio. “Aluminum is up, but zinc has really gone through the roof. I would say in the last couple months, distributors have started to pay attention to zinc as a raw material. I think a lot of them were expecting a big increase, but I don't know if they were expecting it to the level that we have gone up.”
Similarly, Arlington Industries implemented two price increases since the beginning of the year for zinc die cast fittings of 10 percent each and had another price increase of 35 percent set for May 22. Tom Stark, president of Arlington Industries, Scranton, Pa., believes the electrical industry was slower than it should have been to raise prices on zinc products.
When Stark announced a second price increase of 10 percent on zinc die cast fittings for May 1, he said some of his manufacturers' reps complained that the company was a “lone ranger” because none of the other companies had announced one. “We had to have it because the price of zinc had gone up so much that that wasn't even adequate up until that point,” said Stark.
“Right now if I'm Mr. Contractor and I can get a steel fitting for half the price of what die cast is going to be, I'm going steel right now,” said Gibson of Agents Midwest. “And no one can predict when zinc is going to settle down.”
Rosenstein of Brooks Electrical/Sonepar USA said some companies consider steel as an alternative to zinc die cast, but he does not believe the product lines in steel are as wide or as deep as they are in die cast. “There are a lot of unique fittings that have zinc in them,” he said. “The steel offering isn't as comprehensive as the die cast.”
Like the rising price of other commodities, no one knows exactly when zinc is going to reach its high, although most die cast fittings manufacturers believe it is close now.