Copper & lubricating oil prices jump
By Staff -- Plant Engineering, 7/1/2000
While economists are busy revising their inflation forecasts upward, plant managers are already living under the strain of today's new inflationary environment. For example, plant engineers now are shelling out considerably more for copper wire and copper tubing than a year ago. In the 12-mo period ending April 2000, prices in the copper rolling and drawing industry increased 5.1%. That's quite a reversal from the 12.8% price decline in copper rolled products during the 12-mo ending April 1999.
Another inflationary hot spot is lubricating oils and greases. Here, average industry prices jumped 2.2% in the 12-mo ending April 2000, up from a 0.3% price hike 12-mo prior.
Unfortunately, both the drawn and rolled copper and lubricating oils industries have a good case for their inclination to hike prices. Both industries have seen their margins suffer under the burden of escalating costs. Unalloyed copper prices, for instance, rose a whopping 30.5% between April 1999 and April 2000. And the cost of materials received from refineries by lube manufacturers soared 46.3% over the same period.
Industry SIC Average Product Prices1Change, %, During 12-Mo Ending...Jan 00 Apr 00 Direct Mfg. Costs²and Margins Grade Costs are... Grade Growth in U.S. End Markets3Change, %, During 12-Mo Ending... Jan 00 Apr 00 Wood pallets and skids 2448 0.01 -0.06 Stable C 2.79 3.19 Polishes and sanitation goods 2842 1.12 1.30 Rising B 2.87 3.26 Surface active agents 2843 -2.28 -1.88 Stable F 1.16 1.52 Adhesives and sealants 2891 -0.02 -0.45 Stable F 11.86 13.28 Lubricating oils and greases 2992 1.08 2.16 Falling F 7.43 8.92 Rubber and plastics hose and belting 3052 0.12 -0.19 Rising C 7.03 7.08 Abrasive products 3291 -1.18 -0.76 Rising F- 10.39 12.18 Steel wire and related products 3315 -2.29 -2.05 Rising C 4.99 5.24 Copper rolling and drawing 3351 -0.09 5.13 Rising C 22.83 27.49 Nonferrous wire drawing and insulating 3357 -3.36 -0.17 Stable B 26.52 30.12 Heating equipment, except electric 3433 1.45 1.34 Stable B 4.04 3.92 Fabricated plate work, and boiler shops 3443 1.47 1.14 Stable B 1.74 2.56 Bolts, nuts, rivets, and washers 3452 -0.45 -0.51 Stable C 5.10 5.35 Industrial valves 3491 2.13 1.64 Stable B 3.58 3.92 Fluid power valves and hose fittings 3492 1.92 1.90 Stable B 3.58 3.92 Other valves and pipe fittings 3494 1.21 1.53 Stable B 3.58 3.92 Miscellaneous fabricated wire products 3496 0.69 0.68 Rising B 9.44 10.60 Fabricated pipe and fittings 3498 -2.52 -0.40 Stable C 3.58 3.92 Ball and roller bearings 3562 0.85 0.80 Stable B 4.34 5.62 |
1Average product price changes are calculated from the producer price index for each 4-digit SIC (standard industrial classification) industry from the U.S. Bureau of Labor Statistics.
²Analyses of each industry's direct manufacturing cost changes are from Thinking Cap Solutions, Inc.'s proprietary Industry Cost Escalation (ICE) model. The "grade" indicates that recent price/cost changes have produced record high (A+) margins to average margins (C) to record low (F-) margins for the average producer in an industry. Grades of A to A+ mean plant engineers may be able to strike a better bargain with suppliers and better control plant costs.
3Growth in U.S. end markets data are from the ICE model and are estimates of output for the domestic end markets which purchase a given industry's products.
All data prepared and presented by Thinking Cap Solutions, Inc., Port Angeles, WA (telephone: 360-452-6159; e-mail: ebaatz@ice-alert.com).
