Factors Affecting Product Cost
Staff -- Purchasing, 12/8/2005
- The steady price decline of NAND flash chips appears to have slowed. According to figures gathered by DRAMeXchange, 8-gigabit chips were $39.80 apiece in November, down from $40.80 in October and from $59.40 in January. Meanwhile, prices in the low-density segment remained stable at $6.30 for the second month, down from $8.14 earlier in the year.
- Weak dynamic random access memory (DRAM) market conditions will continue well into 2006 with revenues falling by 5% off this year's $15.7 billion, and prices falling by a staggering 37%, according to Gartner Dataquest. Senior memory analyst Andrew Norwood says prices are falling because of overcapacity and product mix problems related to the failure of DDR-2 memory to be adopted as fast as producers had hoped.
- Platinum prices are expected to fluctuate between $890 and $1,030 over the next six months, predicts Johnson Matthey. The refiner says the global platinum market is expected to remain in deficit in 2005 at 6.71 million ounces of demand—driven by a continued rise in demand for catalysts on diesel powered vehicles—against 6.59 million ounces of supply.
- Steel service center inventories in September of 12.7 million net tons (or 2.7 months of supply) are 20.3% off the last peak in January of 2005. The latest data from the Metals Service Center Institute "is very bullish for the steel market," suggests independent analyst Michelle Applebaum in Chicago. "The inventory picture supports our view that price declines won't be evident at least for the next three months."
- A $10/ton price increase for cement has been announced in U.S. and Canadian markets for January. So far this year, average cement prices have risen in the U.S. by 13% from this time last year and by 6% in Canada. Ready-mix concrete average prices have increased by 9% across North America.
- Increased demand and tight supply have pushed up coal prices, according to analyst Mark Reichman at A.G. Edwards & Sons in St. Louis. Prices have increased due to factors ranging from a train wreck last spring to economic growth in China. The price of a futures contract for a ton of coal in the Western U.S. rose from about $9 in June to $19.50 in October, and that's no blip, Reichman said in a recent news report: "I think maybe we are entering a little bit of a new price range for coal."
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