Factors Affecting Product Cost
Staff -- Purchasing, 10/20/2005
- Look for the contract price of tantalum capacitors from Asia to continue to fall. The average price for a 10-microfarad 10% tolerance 10-volt tantalum capacitor fell from about 2.7¢ in February to 2.5¢ in October. The contract price will fall to about 2.4¢ in the second quarter of 2006, according to researcher iSuppli. Because the price has declined, more tantalum capacitors are being designed into electronic equipment.
- Business travelers planning to fly during the upcoming holiday season will see even higher prices than usual. First, jet fuel prices are high and financially troubled airlines will be boosting fees to cover energy costs. Also, seats are disappearing already. In an effort to cut costs, a number of airlines are reducing capacity on domestic routes and canceling international flights altogether.
- Slower-than-expected sales of flat-panel televisions and desktop personal computer monitors are exacerbating the price-depressing oversupply of larger LCD (liquid crystal display) panels. As second-half shipments of 17-in. and 19-in. panels continue below earlier expectations, market analyses by iSuppli and other market researchers now project reduced pricing through the fourth quarter.
- Watch for styrene and propylene prices to keep rising for a time because of capacity shutdowns following hurricanes Katrina and Rita. More than 17% of propylene production in North America remained shut in early October, says Chemical Market Associates, while 85% of styrene capacity was closed.
- Analysts are beginning to settle on $500/oz as the 2006 average price for gold, citing expected improved demand from such end-use markets as electronics. Spot gold has averaged $431 through September but demand—and speculator interest—might even burst the metal through $500/oz during 2006, according to Martin Murenbeeld, president of M. Murenbeeld & Associates in Victoria, British Columbia. Similar forecasts have come from Scotia Bank, Citigroup and Macquarie Bank.
- With the summer driving season at an end, refineries should be building stockpiles of heating oil for the winter. But, with 25% of U.S. refining capacity still paralyzed in the wake of hurricanes Rita and Katrina, worries exist that the world's biggest energy-consuming nation could face fuel shortages—and higher prices—in coming months. Refiners face a dilemma about whether to defer maintenance, amid soaring profit margins and pressure to boost gasoline and heating oil output.
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