Material Impacts On The Precision Machining Industry - June 2008

As of June 2008, steel is up 109%, coke is up 105%, aluminum, copper, brass and oil are at record highs. Nickel and stainless show some softening of price. Five of the seven items we track are up over the same month last year. Lead times are extending as inventories are lean and who wants to build inventory in a volatile market? So focusing on understanding what your suppliers can do for you may be the key to your improved performance in the months ahead.

Steel, Up 109% Coke, Up 105%, Aluminum, Copper, Brass and Oil at record highs. Nickel and stainless show some softening of price. Five of the seven items we track are up over same month last year.

Good approach to communicating raw materials cost escalation with your customers:

"We continue to execute strategies designed to improve efficiencies and reduce operating costs, but it is essential that we implement price increases to recover these cost increases and sustain our viability as a valued supplier to our customers and their industries." -James L. Hambrick, Lubrizol's chairman, president and CEO.

Lubrizol's raw material and energy costs have been impacted significantly by the unprecedented surge in crude oil and natural gas costs, both of which have increased over 40% since early 2008.

http://www.industryweek.com/ReadArticle.aspx?ArticleID=16493

Coke in China is on a tear due to tight supplies of good quality metallurgical (coking) coal. Coking coal prices are up 60-70% since January. Reports that China has shut down about 1% of its electrical generating capacity due to coal shortages mean this will get worse before it gets better, as transportation will be prioritized for steam coal rather than coking coal.

The Metals Activity Report from the Metals Service Center Institute reports April shipments of steel products from U.S. service centers rebounded 3.3% to 4.65 million tons, compared with year-earlier volume, and month-end inventories finished at 12.4 million tons, 15.1% lower than April 2007, but up slightly (+2.6%) above March stocks.

Lead times are extending as inventories are lean and who wants to build inventory in a volatile market? So focusing on understanding what your suppliers can do for you may be the key to your improved performance in the months ahead. If you can get material and quote better delivery, delivery trumps cost…

Read the complete Material Impacts Report (PDF format): Material Impacts On The Precision Machining Industry - June 2008.

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Material Impacts On The Precision Machining Industry - April 2008

Prices are rising in materials needed for precision machining despite the economic malaise, lead by the dramatic $162 per ton increase to #1 bundles this week. Dumping cases against Chinese firms for fasteners, threaded rod, and pipe and tube are making news around the world. The talking heads on the TV news shows all seem to agree that there is a slowdown going on. Could someone please tell the Commodities that the Precision Machining Industry consumes that that is the case?