Prices
-- Purchasing, 11/19/2009 2:00:00 AM
Buyers see higher raw materials prices in fourth quarter (National, 90-day price expectations)
| UP | DOWN | SAME | INDEX | |
| Source: www.purchasingdata.com Index registers movement; 50 = no change, above 50 = growth, below 50 = contraction. |
||||
| Steel | 41% | 17% | 43% | 61.9 |
| Copper & brass | 32% | 12% | 56% | 59.6 |
| Aluminum | 33% | 15% | 51% | 58.9 |
| Fabricated metals | 29% | 13% | 58% | 58.1 |
| Tooling | 25% | 9% | 66% | 57.5 |
| Molded plastics | 26% | 12% | 62% | 57.1 |
| Plastic resins | 30% | 17% | 53% | 56.6 |
| Energy | 30% | 20% | 50% | 55.3 |
| Paper | 21% | 12% | 67% | 54.6 |
| Transportation | 28% | 19% | 52% | 54.5 |
| Corrugated | 21% | 13% | 66% | 54.4 |
| Inorganic chemicals | 19% | 13% | 67% | 52.9 |
| Semiconductors | 14% | 10% | 76% | 52.4 |
| Passive electronics | 14% | 10% | 76% | 52.4 |
| Organic chemicals | 16% | 16% | 68% | 50.0 |
| Industrial machinery | 16% | 21% | 63% | 47.4 |
| Computers | 7% | 35% | 57% | 36.1 |
WHAT'S AHEAD: Commodity prices dropped so much in 2009 that increases won't be inflationary. Buying plans remain about flat (50) according to the latest Purchasingdata.com survey of buyers.
Carriers Hike Freight Rates
In an effort to boost rates, the Westbound Transpacific Stabilization Agreement carrier group, which represents 10 carriers shipping from the U.S. to Asia, is pushing a rate increase of $100/40-foot container and $80 on every 20-foot equivalent (TEU) coming through the Southern California ports, effective December 1, only three months after its last rate hike took effect. On October 1, the WTSA issued a rate increase to reflect higher average bunker fuel prices from June through August.
Chlorine Prices Spike
Prices for chlorine shot up signifantly in October, according to Purchasing's October buyers' survey. Experts say chlorine prices were driven up by lower production of caustic soda, which produces chlorine, and a desire by producers to make up for slumping caustic soda prices.
Intel Charged with Bribery
New York attorney General Andrew Cuomo has filed a federal antitrust lawsuit against Intel, charging the company paid computer makers billions of dollars to use Intel microprocessors rather than processors from rival Advanced Micro Devices (AMD). Cuomo says Intel used "bribery and coercion to maintain its stranglehold" in the microprocessor market.
Duties Hit Chinese Wire Rod
The commerce department has set preliminary duties ranging from 2% to 438% on imported steel wire decking from China to offset government subsidies. The preliminary decision last month concerns welded-wire rack decking, a product used in industrial and other commercial storage rack systems. U.S. companies imported an estimated $317 million of such decking in 2008, an increase of 49% from 2006.
Chemical Prices Plateau
After a steep drop a year ago, chemical prices in general have been on the increase since July. Purhasingdata.com's chemical price index sits at 192. A year ago it was in the 270 range.
Low Steel Prices Ahead
November sheet steel prices have begun to decline. That's no surprise to analyst Sal Tharani at Goldman Sachs Group who says "subdued industrial activity and intense competition for sales will keep steel prices depressed" at least through year's end.
Watch for $2,000 Gold
Gold bullion prices will reach $2,000/troy ounce by the end of 2010, forecasts Rob McEwen, CEO of Goldcorp. Gold crossed the $1,000 threshold in October. Goldcorp is Canada's second largest producer after Barrick Gold.
Natural Gas: Buyers' Market
International energy agency forecasts that global supplies of natural gas will rise faster than demand in coming years. "Global gas markets have evolved from a seller's market, driven by tight supply and demand, to a buyer's market as demand weakens while new supply comes on stream," the IEA says in a new report. Average world natural gas prices have fallen 45% this year.
OCTG is Getting Cheaper
Market prices for oil country tubular goods (OCTG) fell another 1.8% in October from September to $1,575/ton as low-demand and high inventory continue to persist. Prices now are almost 51% below peak prices in September 2008. At current natural gas supply levels, analysts see only a slight near-term recovery in North American OCTG demand.
Copper Price Spike Forecast
Copper prices are expected to hit record highs within the next two years, supported by tight supplies and strong Chinese demand, forecasts Tiffany Essex ,the manager of an RAB Capital equity fund in London. Essex forecasts that copper prices will rise to $4.06 by the end of 2011. Her forecast is above the consensus forcast of $2.90 (see next item).
Base Metals Prices will Rise
J.P. Morgan securities has boosted its price forecasts for copper, zinc and lead next year. The 2010 copper price expectation was bumped up to $2.70/lb from $2.52; zinc prices went to 86¢/lb from 78¢/lb; lead rose to 85¢/lb from 69¢. By comparison, the consensus forecast for 2010 is $2.90 for copper, 8¢ for zinc and 91¢ for lead.
Steel Plate Sticks at $650
Steel plate mills have gotten about half of the $40/ton price hike announced back in September so the October and November market prices for grade A36 are stuck around $650. Buyers are limiting purchases, keeping tight control of inventories and refusing to accept any higher prices through the month of December.
Gas Prices Forecast to Drop
Good news for buyers and consumers. The U.S Energy Department's latest Short-Term Energy Forecast calls for the monthly average regular-grade gasoline retail price to fall from $2.62/gallon in August to an average of $2.44/gallon for the fourth quarter of 2009. Higher projected crude oil prices in 2010 will lead to an expected increase in regular-grade gasoline prices averaging $2.65/gallon next year. Diesel prices, which averaged $2.63/gallon in August and September, will dip to $2.60 for the fourth quarter.
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