Factors Affecting Product Cost
Staff -- Purchasing, 9/1/2005
- September delivery of APT tungsten is being priced as low as $200/short-ton unit (stu) due to low-priced Chinese material in the marketplace this summer. What had been a sales range of $210-230 for the ammonium paratungstate slipped to $200-225 in August, buyers report. Prices are down from historic highs of $300-320/stu in mid-May. Meanwhile, processors report the tungsten-ore market has softened to $130-140/stu from $140-155.
- Drewry Shipping Consultants says to watch for high double-digit growth in freight rates for 2005 between Europe and the U.S. Container shipping company CP Ships reports that average transatlantic freight rates are close to 10% higher through June. And the Transatlantic Conference Agreement, or TACA, a coalition that consists of seven major container lines, is planning further rate hikes during the second half. However, with "significant new capacity coming on-stream in the container shipping industry, 2005 will be the pricing cycle peak," says analyst Randy Cousins at BMO Nesbitt Burns,
- U.S. and Canadian freight-by-rail is getting more expensive, says analyst Randy Cousins at BMO Nesbitt Burns, as the railroads are increasing base prices and passing along higher fuel costs in the form of fuel surcharges. For instance, year-over-year freight revenue/ton-mile for the Burlington Northern Santa Fe railroad was up 12% in the second quarter with half from price hikes and half from fuel-cost-recovery charges.
- Personal-computer buyers might not see the level of price cuts they've been seeing lately from Dell. CEO Kevin Rollins told reporters recently the company was too aggressive in price cuts, producing lower than expected first-half revenues. Dell is selling some notebooks for less than $600 to widen its lead over Hewlett-Packard.
- Palladium prices remained flat ($190/ounce) during the second quarter, and have averaged $191 for the first half, according to Purchasingdata.com. "While mine production is currently lagging consumption, the market appears to be in an oversupply due to the existing above-ground stocks," says producer American Palladium in its second-quarter earnings statement.
- Prices of goods imported into the U.S. rose in July for a second straight month. Or did they? When excluding petroleum, import prices fell for a third consecutive month, the Labor Department says. Import prices increased 1.1%; but when petroleum is excluded, the import price index fell 0.1% (after a 0.2% decline in June).
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