Factors Affecting Product Cost
Staff -- Purchasing, 3/18/2004 2:00:00 AM
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Expect digital signal processor (DSP) tags to be volatile this year. The good news for buyers is that the average price will fall from about $5.97 at the beginning of the year to $5.69 at year end. According to market researcher IC Insights, much of the price erosion will be in low to mid-range DSP units used in cell phones, toys and consumer electronics equipment. See full story starting on page 17 of this issue.
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Purchasingdata.com says sodium chlorate recently slipped to $412/ton after months at $415, but analyst Gerry Hannochko at Canaccord Capital Corp. believes improved demand will boost prices 3% this year. He also forecasts "little price improvements" for sulphuric acid, liquid sulfur dioxide and sodium hydrosulphite.
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Corporate travel managers expect hotel prices and airfares to remain flat during 2004, which should help rekindle business travel. Nearly three in four participants in the survey by the National Business Travel Association believe that business travel will rebound significantly this year.
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Chief executive Jan Johansson of Boliden, the European mining and smelting company, expects base metals prices to rise as world inventories are running low and demand continues to grow. "Copper inventories are beginning to be very low globally, for example," Johansson says. "In Europe, there's hardly anything left at all, and it's almost impossible to obtain any copper products unless you have a supply contract."
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Alternative plastic materials "are becoming more attractive as copper alloy part prices keep climbing," says Joseph Gartland, vice president of H.M. Hillman Brass & Copper. The world copper price was 81¢ last year, but has risen to an average of $1.18 in the first two months of 2004. "What concerns me is that copper is pricing itself out of its own markets of utilities, containers, defense and automotive," says Gartland.
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The European Union is investigating chipmakers for price-fixing of dynamic random access memory (DRAM) chips for computers and other electronic devices. European regulators are probing allegations that the world's biggest computer memory chip companies colluded over prices and output. The investigation mirrors a Department of Justice case targeting DRAM makers, widely believed to center on a claim of price-fixing, launched in 2002.
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