Factors affecting product cost
Staff -- Purchasing, 4/1/2004
- Softwood pulp demand has rebounded enough that North American producers easily implemented $20/metric ton price hikes for two key grades sold to papermakers: northern bleached softwood kraft, now at $620/tonne, and southern bleached softwood kraft, at $600. These are the highest prices encountered by open market buyers in three years. Also, sales prices for northern bleached hardwood kraft rose $10/metric ton to $525.
- Recent increases in raw materials pricing, notably benzene and natural gas, have eroded margins for nylon intermediates, says Solutia sales executive Mike Berezo. So, with demand improving for adipic acid, the firm will increase its price by 5¢ in April.
- Sharp increases in steel prices are affecting contractors and builders, who are looking for architectural solutions that involve using less steel. Key construction-grade steels have increased in price by 46% since February 2003.
- North America's corrugated box makers want higher prices. Some have proposed 8% box price increases, some have proposed 9%, and some have floated 10%. Market mavens generally expect packaging product prices to remain volatile.
- Polyvinyl chloride resin prices rose again in February, adding 2¢/lb to prices that already had moved up 2¢ in January. Polyethylene makers, meantime, delayed a 5¢/lb hike due to softening demand. Market insiders say suppliers will try the 5¢ price hike again in April.
- Several bleached board producers have begun talking to folding carton makers about a $50/ton price hike on high-grade bleached board. Will it stick? Mark Wilde at Deutsche Bank isn't sure. "Demand has been soft in the carton grades and any link between prices of pulp and prices of folding carton grade is weak," he says.
- Flat-rolled stainless steel prices have risen 22% since January. Market demand has been showing improvement and availability of some stainless grades has become tight. Making things even tougher for buyers are skyrocketing alloy surcharges—already up 60% since December.
- The world price average for lead was 23¢/lb in 2003, but has risen since the start of the year to a Q1 average of 38¢. Mine and smelter shutdowns have resulted in the market slipping into deficit. Upshot: Full-year London Metal Exchange spot forecasts are now running as high as 47¢.
View All Blogs
Now Playing:
