The Material Report #001

Aluminum, Copper, and Steel Are All Up. Here's What to Do About It.

Manufacturing PMI just broke into expansion for the first time in a year. That's good news for backlogs, but it's coming with a price tag that'll eat your margins if you're still quoting off last quarter's numbers.

Here's where things stand and what to do about it.

Aluminum: $3,030-$3,100/tonne and holding

LME aluminum hit a 3-year high of $3,270 in late January before pulling back to the $3,030-$3,100 range. That pullback might feel like relief, but we're still well above where we were a year ago. China hit its 45-million-tonne output cap last year, and new smelting capacity elsewhere isn't coming online fast enough to fill the gap. The floor is higher now, and it's probably staying there.

Copper: $5.80-$6.00/lb and volatile

This is the one to watch. Copper is hovering around $5.80-$6.00/lb (roughly $13,000/tonne), up nearly 30% year-over-year. JP Morgan is forecasting a refined copper deficit for 2026, driven partly by data center buildouts creating what one analyst called "inelastic demand." That said, some analysts are pushing back, calling the recent rally speculation-driven and potentially unsustainable. Either way, at these prices, any heavy copper job you quoted more than 30 days ago needs a second look.

Steel HRC: $970-$980/ton and climbing

US Midwest hot-rolled coil is sitting around $970-$980/ton as of early February. Nucor kicked off February with another price increase after holding at $950 through January. Domestic mills are keeping supply tight and imports have dropped significantly under the current tariff regime.

The 50% tariff wall

Section 232 tariffs on steel and aluminum went to 50% in June 2025 for nearly all trading partners, including Canada and Mexico (UK stays at 25% under a separate deal). Here's what that means in practice: if you're buying imported aluminum that would otherwise land at $2.00/lb, the tariff adds a hard $1.00/lb before it even hits the distributor. Domestic producers are pricing under that umbrella, so there's no cheap alternative right now.

PMI expansion: good news with a caveat

The ISM Manufacturing PMI jumped to 52.6 in January, up from 47.9 in December. New Orders hit 57.1, Production hit 55.9. First expansion in 12 months after what was really a 26-month contraction streak with only a brief interruption.

The caveat: ISM's own chair noted that January is a reorder month after the holidays, and some of the buying activity looks like shops getting ahead of expected tariff-driven price increases. So this might be a real inflection point, or it might be a one-month bump. Either way, the work is picking up while input costs are rising, which means the risk of winning jobs at yesterday's prices is real.

What to do this month

Shorten your quote windows. With copper at $6/lb and aluminum bouncing around $3,100/tonne, a 30-day quote is a liability. Move to 7-10 days, or add a material price adjustment clause.

Stock your standard materials now. If you have the cash flow, buy your 6061 and 1018 now. The combination of rising demand (PMI expansion) and constrained supply (tariffs) points toward higher prices into spring.

Review any long-run POs. If you're sitting on a 12-month purchase order, call the customer. You need a material escalation clause. Absorbing a 50% tariff swing on a year-long contract will wreck your margins.