Factors Effecting Product Cost
Staff -- Purchasing, 10/6/2005
- The White House is considering reducing high tariffs imposed on such items as softwood lumber from Canada and cement from Mexico if building needs from Hurricane Katrina cause prices to spike. "Obviously, if there are severe price spikes and severe shortages, we would want to take a look at whether a government response (is) needed," a Treasury Department spokesman said.
- DuPont tells buyers that it plans to raise prices for all products in response to rapidly increasing costs for energy and feedstocks. The chemical giant cites a report by company economists that shows record-high energy prices, exacerbated by Hurricane Katrina, will be a factor for the foreseeable future. Diane Gulyas, chief marketing officer, says all 80 DuPont business units will be affected by higher energy costs, especially its performance materials and coatings and color technologies divisions.
- The Henry Hub natural gas price forecast for 2005 has been raised to $8.32 per million British thermal units (MMBtu) by Standard & Poor analyst Tina Vital, who also has boosted her 2006 forecast to $8.90. Due to Hurricane Katrina's shutdown on 84 billion cubic feet of natural gas capacity, Vital expects prices will average $11.61/MMBtu in the fourth quarter of 2005.
- Prices of goods imported into the U.S. increased 1.3% in August, the highest increase since March. The Labor Department reports the price gains were almost exclusively crude petroleum and natural gas. Excluding the 7.1% rise in petroleum prices, import prices were flat, the fourth month in a row with no increase. And prices of exports from the U.S. dropped 0.1% in August.
- Gold prices may climb well past 10% by year's end, suggests John Person, president of National Futures Advisory Service, who is touting $500 gold for December. August gold averaged $439 per ounce but it jumped to $456 by early September.
- Tire makers have announced yet more price increases for this autumn of 5-8% depending on model due to higher costs for shipping and such raw materials as natural rubber. Goodyear expects costs for tire raw materials to rise 10% for the year. Bridgestone Firestone North American Tire expects raw materials costs to rise 17%.
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