Some prices finally fall

Regular readers of this column may notice that the demand data in the Plant Engineering operating materials and supplies table have been revised downward. In some cases, the revisions are significant. For example, in the 12 months ending July 2001, end-market demand for lubricating oils was revised from 7.

01/15/2002


Regular readers of this column may notice that the demand data in the Plant Engineering operating materials and supplies table have been revised downward. In some cases, the revisions are significant. For example, in the 12 months ending July 2001, end-market demand for lubricating oils was revised from 7.7% to 4.8%. Demand for abrasive products like grinding wheels was revised from 12.5% to 7.4% and end-market growth for adhesives and sealants was adjusted from 11% to 6.4% over the same 12-month period.

The growth in U.S. end-markets that we report is based on industrial production data from the Federal Reserve Board. The updated measures reflect the incorporation of newly available, more comprehensive source data and the introduction of improved methods for compiling a few series.

Overall, industrial output is now reported to have increased at a slower rate in 1999 and 2000 than previously reported. Despite the downward revision, the general contour is the same as in the earlier estimates. After having picked up in the second half of 1999 and after having posted rapid gains in the first half of 2000, increases in industrial output abated noticeably at mid-year. According to the revised data, however, industrial output was weaker in the second half of 2000 than in the earlier estimates. In 2001, industrial production declined at about 5

With these revisions impacting factory operating materials and supplies, end-market growth now are slowing or falling more rapidly in our near-term forecasts. Prices for factory operating supplies, meanwhile, will show even stronger deflationary trends in the months ahead.

Price/cost/demand roundup

Industry

SIC

Average Product Prices

Average Product Prices

Direct Mfg. Costs

Direct Mfg. Costs

Growth in U.S. End Markets

Growth in U.S. End Markets

Average 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.
Analyses 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.
Growth 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).

Wood pallets and skids

2448

0.54

0.56

Falling

A+

-1.92

-4.17

Polishes and sanitation goods

2842

1.00

0.93

Falling

B

2.00

1.62

Surface active agents

2843

2.84

2.69

Falling

C

-3.12

-3.95

Adhesives and sealants

2891

3.04

3.36

Falling

B

6.39

1.55

Lubricating oils and greases

2992

7.70

7.29

Falling Fast

B

4.78

1.19

Rubber and plastics hose and belting

3052

2.31

3.20

Stable

A

0.95

-2.00

Abrasive products

3291

-0.09

0.09

Stable

D

7.36

1.08

Steel wire and related products

3315

-1.07

-1.42

Stable

F

3.22

1.84

Copper rolling and drawing

3351

1.07

-2.52

Falling

C

21.21

8.55

Nonferrous wire drawing and insulating

3357

1.84

-0.72

Falling

B

22.28

10.20

Heating equipment, except electric

3433

1.24

1.24

Stable

A

1.47

0.49

Fabricated plate work, boiler shops

3443

1.06

1.01

Falling

A

2.78

-0.65

Bolts, nuts, rivets and washers

3452

0.06

0.07

Falling

C

3.48

2.10

Industrial valves

3491

1.69

1.77

Stable

A

1.47

0.06

Fluid power valves and hose fittings

3492

1.44

1.34

Stable

A

1.47

0.06

Other valves and pipe fittings

3494

2.78

3.91

Falling

A

1.47

0.06

Miscellaneous fabricated wire products

3496

0.13

0.31

Falling

C

5.12

0.66

Fabricated pipe and fittings

3498

1.91

1.37

Stable

A

1.47

0.06

Ball and roller bearings

3562

1.46

0.91

Stable

A

3.77

-0.76





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