Last hurrah for chemical prices?
Staff -- Purchasing, 5/6/2004 2:00:00 AM
Demand for chemicals continued to rise in April as the chemical processing industries showed slow but steady improvement. Higher energy prices coupled with producer efforts to hike profit margins have led to steadily increasing pricing levels.
The latest report from www.purchasingdata.com indicates several positive developments, however:
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Product availability from producers has been rising coincident with demand. Capacity that had been mothballed during the growth recession of two-to-three years ago is coming back on line to take advantage of higher pricing and
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The worst may be over on the pricing front because of forecasts that energy prices will stabilize. Barring a new outbreak in the Mideast, oil prices could drop as much as $8/bbl by the end of the year to around $30/bbl.
Keep an eye on possible speculative surges in plastic resins. Plastics have a long history of roller coaster price and supply developments— the same kind of insanity currently impacting steel buyers.
All of the ingredients are there: prices have been depressed, margins have been very depressed, significant amounts of capacity have been closed in recent years and supply pipelines have been dry.
Producers will jump at an opportunity to jack up prices. Several recent attempts at significant polyethylene price hikes have had spotty success. This is a good time to lock in relationships with suppliers you trust. Get current info at www.purchasingdata.com.
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