10/7/2009

Material Impacts on the Precision Machining Industry - October 2009

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Of course prices have risen. Manufacturing expansion following 18 months of decline. Supply chain pretty much destocked. Low inventories. Domestic mills operating at 47 percent of capacity. Global influences on scrap and raw materials. You need a program to follow this game. We're providing you one with this edition of PMPA's Material Impacts Report.

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Quick Summary: The prices of the raw materials that we track have continued to rise with double-digit percentage gains over January with one exception: China Coke. Year over year, all prices are still down significantly.

Aluminum: Up 18.65% from January
Copper: Up 86.67% from January.
Nickel: Up 27% from May, up 4.44 % since January.
Steel, Busheling: Up 26.67% from January.
China Coke: Down 2.73% from January.

We have seen price increase announcements in addition to surcharge increases since our last report. Why? The Institute of Supply Management reports that Manufacturing resumed expansion in August following 18 consecutive months of contraction. Right on its heels due to low inventories--price increases for raw materials!

“The August index of 52.9 percent is the highest since June 2007. The 4-percentage-point increase was driven by significant strength in the New Orders Index, which is up 9.6 points to 64.9 percent, the highest since December 2004. The growth appears sustainable in the short term, as inventories have
been reduced for 40 consecutive months and supply chains will have to re-stock to meet this new demand." http://www.ism.ws/about/MediaRoom/newsreleasedetail.cfm?ItemNumber=19641

Read the complete October 2009 Material Impacts Report (PDF format) here.


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