Friday, April 17, 2009
Raw Material Pricing - Party like it's 1999
Remember that old Prince hit?
I was dreamin' when I wrote this
Forgive me if it goes astray
But when I woke up this mornin'
Coulda sworn it was judgment day
As I was doing the research for this article, that tune kept going through my head. The events of the last 6 months do feel more like a dream than reality. Judgment day? We'll talk more about that later in the update series.
Raw materials are a large component of costs for metal stampers. So what has happened to the prices of the most commonly used raw materials?
Metal stampers care most about these input costs:
Steel
Copper
Aluminum
something to make the steel not rust (usually zinc or nickel)
For Copper, Aluminum, Zinc & Nickel, prices are back down to 2004 levels. In a few cases, even below 2004 levels. See these charts, courtesy of Kitcometals.com
Steel prices are down below 2007 levels.
So it's not 1999, but in a lot of ways, it's 2004 all over again.
What does this mean for stampers? Well, a major input cost has reverted to 5 years ago levels. Is that enough to ensure a return to profitability? Not usually. Stay tuned for the next part of the puzzle.
I was dreamin' when I wrote this
Forgive me if it goes astray
But when I woke up this mornin'
Coulda sworn it was judgment day
As I was doing the research for this article, that tune kept going through my head. The events of the last 6 months do feel more like a dream than reality. Judgment day? We'll talk more about that later in the update series.
Raw materials are a large component of costs for metal stampers. So what has happened to the prices of the most commonly used raw materials?
Metal stampers care most about these input costs:
Steel
Copper
Aluminum
something to make the steel not rust (usually zinc or nickel)
For Copper, Aluminum, Zinc & Nickel, prices are back down to 2004 levels. In a few cases, even below 2004 levels. See these charts, courtesy of Kitcometals.com
Steel prices are down below 2007 levels.
So it's not 1999, but in a lot of ways, it's 2004 all over again.
What does this mean for stampers? Well, a major input cost has reverted to 5 years ago levels. Is that enough to ensure a return to profitability? Not usually. Stay tuned for the next part of the puzzle.
Labels: aluminum, brass, Copper, nickel, steel, zinc
Sunday, June 01, 2008
Metals tumble on rising LME stocks
Yahoo! Malaysia News
Industrial metals lead, zinc and tin fell sharply on Thursday, hit by waning demand and rising stockpiles in warehouses.
While zinc is certainly down from recent highs (as much as $2 in December/January 06/7) to "only" a buck now, it was 50 cents 5 years ago. So we still have some adjusting to do to get back to historical levels.
The other metals are the same story. Copper was $4 recently, now it's "only" $3.67. But 5 years ago, less than a buck.
A year ago nickel touched $25 briefly. It's currently $10, but was $5 5 years ago.
Industrial metals lead, zinc and tin fell sharply on Thursday, hit by waning demand and rising stockpiles in warehouses.
While zinc is certainly down from recent highs (as much as $2 in December/January 06/7) to "only" a buck now, it was 50 cents 5 years ago. So we still have some adjusting to do to get back to historical levels.
The other metals are the same story. Copper was $4 recently, now it's "only" $3.67. But 5 years ago, less than a buck.
A year ago nickel touched $25 briefly. It's currently $10, but was $5 5 years ago.
Labels: Copper, nickel, steel, zinc
Thursday, January 17, 2008
Copper drops, but not as much as you might think (or wish for)
For an amusing hour or so yesterday, Kitco, my favorite metals reporting web site, was claiming that Copper had dropped a dollar to $2 and change. It must have been a reporting glitch, because later the metal went back up to $3 and change. But for a few minutes there I was ready to break out the champagne.
But copper at $3 is a lot better than a year ago, when it was up to $4.
Likewise, zinc is still above "normal" levels, but has subsided recently to a buck (it had been $2 just over a year ago).
Nickel, having been close to $25 a year ago, is down around half that now. For a while, in late 2007, it was actually down under 12
But copper at $3 is a lot better than a year ago, when it was up to $4.
Likewise, zinc is still above "normal" levels, but has subsided recently to a buck (it had been $2 just over a year ago).
Nickel, having been close to $25 a year ago, is down around half that now. For a while, in late 2007, it was actually down under 12
Labels: brass, Copper, nickel, zinc
Wednesday, August 01, 2007
Nickel Pricing forecast for the short and medium term
From: MEPS
Nickel prices moved lower in July as they fell further into their deep descent. The July monthly average is set to be around $US8,500 per tonne lower than June's figure. Values are now forecast to go below the psychological $US30,000 per tonne in August as stocks on the LME continue to rise. There is still the possibility for another severe drop in the cost of nickel. Stability should return to the market later this year as production cuts from stainless steel producers over the Summer months come to an end. New nickel capacity, due on stream later this year and in 2008, is expected to prevent values rising dramatically before the end of the forecast period.
Nickel prices moved lower in July as they fell further into their deep descent. The July monthly average is set to be around $US8,500 per tonne lower than June's figure. Values are now forecast to go below the psychological $US30,000 per tonne in August as stocks on the LME continue to rise. There is still the possibility for another severe drop in the cost of nickel. Stability should return to the market later this year as production cuts from stainless steel producers over the Summer months come to an end. New nickel capacity, due on stream later this year and in 2008, is expected to prevent values rising dramatically before the end of the forecast period.
STAINLESS STEEL PRICES IN TURMOIL AFTER COLLAPSE OF NICKEL ON LME
From MEPS, a steel-supplier-side news service, but important for us steel consumers too.
Western stainless steel producers of strip mill products have temporarily abandoned their traditional basis plus surcharge mechanism for selling their material. Most EU and US mills are now quoting only transaction (effective) figures. This is, principally, to disguise the discounts necessary to obtain orders after the fall in the price of nickel since early June.
Technically, surcharges in July for grade 304 increased by around 5 and 3 percent in the EU and US, respectively. With the prospect of them falling over the next two months by almost €750 and $US1400 per tonne it is not surprising that customers are refusing to pay the current inflated figures. The alloy surcharge is almost meaningless in negotiations at this time.
Mill orders have dried up. Many producers have plans to cut output in the short term but are pushing material into stock and selling at substantially discounted levels to generate the limited business available.
Western stainless steel producers of strip mill products have temporarily abandoned their traditional basis plus surcharge mechanism for selling their material. Most EU and US mills are now quoting only transaction (effective) figures. This is, principally, to disguise the discounts necessary to obtain orders after the fall in the price of nickel since early June.
Technically, surcharges in July for grade 304 increased by around 5 and 3 percent in the EU and US, respectively. With the prospect of them falling over the next two months by almost €750 and $US1400 per tonne it is not surprising that customers are refusing to pay the current inflated figures. The alloy surcharge is almost meaningless in negotiations at this time.
Mill orders have dried up. Many producers have plans to cut output in the short term but are pushing material into stock and selling at substantially discounted levels to generate the limited business available.
Wednesday, July 11, 2007
Material Prices
It's been a while since I reported on material pricing.
At the end of May, there were reports of a fall in copper prices.
Well, yes and no.
Copper hit a high of about $3.75 US at the beginning of May, fell to a low of $3.20 in early June, but is as I write is back up to almost $3.60.
Other materials: zinc got up to $1.85 in the early days of May but is down to $1.55 at the moment.
Brass is an alloy of zinc and copper, so the price of brass will be a blend of the copper and zinc prices.
Nickel (the major component at the moment for stainless steel surcharges) has dropped from $24 in early May to a little over $15 now. However, I haven't seen the prices change much yet, probably because the service centers still have stock at the old prices. Hopefully that will change soon.
At the end of May, there were reports of a fall in copper prices.
Well, yes and no.
Copper hit a high of about $3.75 US at the beginning of May, fell to a low of $3.20 in early June, but is as I write is back up to almost $3.60.
Other materials: zinc got up to $1.85 in the early days of May but is down to $1.55 at the moment.
Brass is an alloy of zinc and copper, so the price of brass will be a blend of the copper and zinc prices.
Nickel (the major component at the moment for stainless steel surcharges) has dropped from $24 in early May to a little over $15 now. However, I haven't seen the prices change much yet, probably because the service centers still have stock at the old prices. Hopefully that will change soon.
Thursday, May 31, 2007
STAINLESS STEEL PRODUCERS SET TO ACTIVELY PROMOTE NICKEL-FREE GRADES
The question becomes, will end use customers accept the new materials? Will they form similarly enough that they can be used with existing tooling? Or will jobs need to be retooled?
Our experience with one these grades (409) was that it was less "stainless", and that it required different tool steels to cut and form.
The significant investment in new equipment by steel mills implies they believe the run-up in nickel prices is not going to be short-lived. They presumably know - they're in the business. But re-tooling decisions (if needed) of stamping jobs would be made with people with less experience forecasting the future. So it isn't clear if customers will be able to switch all that quickly.
MEPS
The global stainless steel scene is changing rapidly. Customer backlash against the rising cost of nickel has been taken on board by the producers. Mills are now taking seriously market demand for low or non nickel grades.
Posco has launched a nickel free stainless steel into its portfolio. This follows similar actions earlier by Japanese producers. Outokumpu, which has traditionally been mainly a supplier of austenitic grades, is to increase its production of ferritic types. This has involved a significant investment in new equipment. Output of ferritic grades is also to be expanded from the new melting shop at Lianzhong, in China.
Global supplies of 300 series material have in the past formed 75 percent of total stainless deliveries. It is interesting to note that Thyssen Krupp recently announced that it may lift output of nickel free steel from the existing figure of 30 percent up to 35 percent. We have reports that an Arcelor Mittal senior executive sees the potential to push up production of non nickel grades to 70 percent in the long term.
Our experience with one these grades (409) was that it was less "stainless", and that it required different tool steels to cut and form.
The significant investment in new equipment by steel mills implies they believe the run-up in nickel prices is not going to be short-lived. They presumably know - they're in the business. But re-tooling decisions (if needed) of stamping jobs would be made with people with less experience forecasting the future. So it isn't clear if customers will be able to switch all that quickly.
MEPS
The global stainless steel scene is changing rapidly. Customer backlash against the rising cost of nickel has been taken on board by the producers. Mills are now taking seriously market demand for low or non nickel grades.
Posco has launched a nickel free stainless steel into its portfolio. This follows similar actions earlier by Japanese producers. Outokumpu, which has traditionally been mainly a supplier of austenitic grades, is to increase its production of ferritic types. This has involved a significant investment in new equipment. Output of ferritic grades is also to be expanded from the new melting shop at Lianzhong, in China.
Global supplies of 300 series material have in the past formed 75 percent of total stainless deliveries. It is interesting to note that Thyssen Krupp recently announced that it may lift output of nickel free steel from the existing figure of 30 percent up to 35 percent. We have reports that an Arcelor Mittal senior executive sees the potential to push up production of non nickel grades to 70 percent in the long term.
Friday, May 11, 2007
Copper Heads for Largest Weekly Drop in 3 Months
Bloomberg.com
Copper headed for its largest weekly decline in three months in London on speculation that demand growth will slow in China, the world's biggest user. Nickel and zinc rose.
China's copper imports probably slowed in April, said analysts including Kevin Norrish at Barclays Capital.
``The Chinese market is suffering temporary indigestion after the amount of material delivered into Shanghai in the first quarter,'' Norrish said today by phone from London. ``Some people expected them to buy this week when they returned to the market after the holiday, but that hasn't happened.''
Copper headed for its largest weekly decline in three months in London on speculation that demand growth will slow in China, the world's biggest user. Nickel and zinc rose.
China's copper imports probably slowed in April, said analysts including Kevin Norrish at Barclays Capital.
``The Chinese market is suffering temporary indigestion after the amount of material delivered into Shanghai in the first quarter,'' Norrish said today by phone from London. ``Some people expected them to buy this week when they returned to the market after the holiday, but that hasn't happened.''
Friday, April 27, 2007
Korean firm introduces nickel-free stainless steel
The Toronto Star
Posco, the world's fourth-largest steel maker, will raise output of a nickel-free stainless steel fivefold next year as the price of nickel has hit a record.
Posco plans to sell 10,000 tonnes a month of the steel, which it introduced this month, from 2,000 this year, the Pohang-based firm said yesterday. The steel, which uses chromium instead of nickel, is the equivalent of $2,762 (Canadian) a tonne, half the price of so-called 300-series cold-rolled coil steel.
Posco, the world's fourth-largest steel maker, will raise output of a nickel-free stainless steel fivefold next year as the price of nickel has hit a record.
Posco plans to sell 10,000 tonnes a month of the steel, which it introduced this month, from 2,000 this year, the Pohang-based firm said yesterday. The steel, which uses chromium instead of nickel, is the equivalent of $2,762 (Canadian) a tonne, half the price of so-called 300-series cold-rolled coil steel.
Sunday, April 15, 2007
Material Pricing
Here's a brief update on material pricing.
Zinc has now fallen from the $2 US/lb that it was late last year to about $1.50 US now. However, many platers buy zinc on contract, and so until their contracts run out, higher prices will prevail. By comparison, zinc was $0.50 in June of '05
Copper is again on the rise. It got down as far as $2.50 in February, but is up around $3.30 now. A year ago it was $4.00, so it's a bit off the peak, but not enough to feel comfortable.
Nickel is climbing and shows no sign of stopping. It's currently about $22.75, up from $16 at the year boundary, from $8 a year ago, and $3 five years ago.
Zinc is used in almost every method of rust-proofing steel (except stainless steel). Nickel is used in stainless steel. Brass is a combination of zinc and copper.
Zinc has now fallen from the $2 US/lb that it was late last year to about $1.50 US now. However, many platers buy zinc on contract, and so until their contracts run out, higher prices will prevail. By comparison, zinc was $0.50 in June of '05
Copper is again on the rise. It got down as far as $2.50 in February, but is up around $3.30 now. A year ago it was $4.00, so it's a bit off the peak, but not enough to feel comfortable.
Nickel is climbing and shows no sign of stopping. It's currently about $22.75, up from $16 at the year boundary, from $8 a year ago, and $3 five years ago.
Zinc is used in almost every method of rust-proofing steel (except stainless steel). Nickel is used in stainless steel. Brass is a combination of zinc and copper.
Labels: brass, Copper, nickel, steel, zinc
Saturday, March 24, 2007
Material Prices
Copper has bounced and is back on the rise. From a low of $2.40 a few weeks ago, it's gone back up to $3. It's still a whole lot better than the $4 it hit a while back, but not nearly low enough or stable enough for metal stampers to specify it reliably.
Other metals:
Zinc, having hit $2, is down to $1.45, but there was a short run up a few weeks ago.
Nickel, which was $3 5 years ago, is now $22, more than 5 times the price of 5 years ago and shows no sign of slowing down.
You can see the historical charts yourself here: Copper, Zinc & Nickel
all courtesy of Kitco Metals.
Other metals:
Zinc, having hit $2, is down to $1.45, but there was a short run up a few weeks ago.
Nickel, which was $3 5 years ago, is now $22, more than 5 times the price of 5 years ago and shows no sign of slowing down.
You can see the historical charts yourself here: Copper, Zinc & Nickel
all courtesy of Kitco Metals.
Labels: brass, Copper, nickel, zinc
Tuesday, March 06, 2007
Commodities: Nickel and copper lead a slump amid worry on growth
International Herald Tribune
Nickel and copper led a global slump in commodities Monday as tumbling share prices stoked concern that slowing Chinese and U.S. economic growth would curb demand for raw materials.
Nickel fell 3.7 percent, its biggest drop in a month, after stockpiles rose for a fourth consecutive session. Copper dropped 3 percent and oil fell almost 2 percent. Commodities climbed to record levels in May before ending lower last year.
Nickel and copper led a global slump in commodities Monday as tumbling share prices stoked concern that slowing Chinese and U.S. economic growth would curb demand for raw materials.
Nickel fell 3.7 percent, its biggest drop in a month, after stockpiles rose for a fourth consecutive session. Copper dropped 3 percent and oil fell almost 2 percent. Commodities climbed to record levels in May before ending lower last year.
Saturday, January 27, 2007
Is change good?
capecodonline
A penny costs about 1.73 cents these days, with the metals used, zinc and copper, accounting for 1.12 cents of production costs.
According to the latest U.S. Mint figures, a nickel costs the government 8.34 cents to make. The cost of the metals - copper and nickel - account for 6.99 cents.
Spurred to cogitation, a noted economist has just floated the idea of making pennies worth 5 cents, and ceasing production of nickels altogether.
A penny costs about 1.73 cents these days, with the metals used, zinc and copper, accounting for 1.12 cents of production costs.
According to the latest U.S. Mint figures, a nickel costs the government 8.34 cents to make. The cost of the metals - copper and nickel - account for 6.99 cents.
Spurred to cogitation, a noted economist has just floated the idea of making pennies worth 5 cents, and ceasing production of nickels altogether.
Coin Shortage Means a Penny Could Be Worth 5 Cents Soon
FOXNews.com
A potential shortage of coins in the United States could mean all those pennies in your piggy bank could be worth five times their current value soon, says an economist at the Federal Reserve Bank of Chicago.
Sharply rising prices of metals such as copper and nickel have meant the face value of pennies and nickels are worth less than the material that they are made of, increasing the risk that speculators could melt the coins and sell them for a profit.
Such a risk spurred the U.S. Mint last month to issue regulations limiting melting and exporting of the coins.
A potential shortage of coins in the United States could mean all those pennies in your piggy bank could be worth five times their current value soon, says an economist at the Federal Reserve Bank of Chicago.
Sharply rising prices of metals such as copper and nickel have meant the face value of pennies and nickels are worth less than the material that they are made of, increasing the risk that speculators could melt the coins and sell them for a profit.
Such a risk spurred the U.S. Mint last month to issue regulations limiting melting and exporting of the coins.
Friday, December 22, 2006
WORLD AVERAGE STAINLESS STEEL PRICES
MEPS STEEL NEWS
In the short term we forecast stainless steel prices moving even higher, due to further nickel price rises on the LME during December. This gain will impact on transaction values into the second quarter of 2007. March should be the highest month with cold rolled 304 transaction figures reaching almost $US4,900 per tonne and grade 316 figures topping $US7,300 per tonne. In the longer term, we expect stainless selling values to decline as nickel prices reduce and the US economic slowdown begins to take its toll on stainless consumption in the US
In the short term we forecast stainless steel prices moving even higher, due to further nickel price rises on the LME during December. This gain will impact on transaction values into the second quarter of 2007. March should be the highest month with cold rolled 304 transaction figures reaching almost $US4,900 per tonne and grade 316 figures topping $US7,300 per tonne. In the longer term, we expect stainless selling values to decline as nickel prices reduce and the US economic slowdown begins to take its toll on stainless consumption in the US
Labels: nickel
Copper prices hit 8-month low; other metals fall as well
CNN Money
Copper hit an eight-month low on Thursday as a build-up in stocks and worries about a slowdown in demand weighed on the market.
Copper dropped decisively below $3 US as I was battling my cold this week, closing Thursday at $2.878 US.
Zinc also dropped, perhaps in sympathy, in the last few days, but nowhere near as impressively - it's still close to record high levels.
Nickel doesn't seem to be dropping at all.
Just so's you know:
Zinc is used in electroplating and also in pre-galvanized steel stock. So basically, if you want your steel to not rust, one way or the other, you'll need zinc.
If your parts' made of brass, that's copper and zinc.
If your parts' made of stainless steel, a major price factor is nickel.
Copper hit an eight-month low on Thursday as a build-up in stocks and worries about a slowdown in demand weighed on the market.
Copper dropped decisively below $3 US as I was battling my cold this week, closing Thursday at $2.878 US.
Zinc also dropped, perhaps in sympathy, in the last few days, but nowhere near as impressively - it's still close to record high levels.
Nickel doesn't seem to be dropping at all.
Just so's you know:
Zinc is used in electroplating and also in pre-galvanized steel stock. So basically, if you want your steel to not rust, one way or the other, you'll need zinc.
If your parts' made of brass, that's copper and zinc.
If your parts' made of stainless steel, a major price factor is nickel.
Thursday, December 21, 2006
GLOBAL STAINLESS STEEL OUTPUT TO RISE 14 PERCENT IN 2006
MEPS STEEL NEWS
In the short term, this is good for stampers. Stainless steel markets have been tight, forcing prices up. Also contributing to high stainless prices were nickel prices. If the markets loosen up a bit, because production goes up, this will bring stainless prices more back into historical line. However, in the long term, it's less clear. The pendulum is still swinging too much, and that means highly unpredictable raw material prices. Which leads to uncertainly back when material selection is made for stamped parts.
The world's stainless steel sector will record an unprecedented jump in crude production this year. We expect total output in 2006 to climb to 27.8 million tonnes - 3.4 million tonnes above the outturn in the previous twelve months.
Such a rate of increase is unsustainable. The long term growth in production has been around 5 percent per annum. This year, the figure will be nearer 14 percent.
A substantial rise in output will be recorded in the EU this year. The gain will be almost 12 percent. A significant increase was expected after the decline in 2005 but not a double digit percentage gain.
A noteworthy production rise will also be reported for the United States this year - expanding to an estimated 2.55 million tonnes from 2.2 million tonnes twelve months earlier. New capacity pushed the growth to above 15 percent.
In the short term, this is good for stampers. Stainless steel markets have been tight, forcing prices up. Also contributing to high stainless prices were nickel prices. If the markets loosen up a bit, because production goes up, this will bring stainless prices more back into historical line. However, in the long term, it's less clear. The pendulum is still swinging too much, and that means highly unpredictable raw material prices. Which leads to uncertainly back when material selection is made for stamped parts.
The world's stainless steel sector will record an unprecedented jump in crude production this year. We expect total output in 2006 to climb to 27.8 million tonnes - 3.4 million tonnes above the outturn in the previous twelve months.
Such a rate of increase is unsustainable. The long term growth in production has been around 5 percent per annum. This year, the figure will be nearer 14 percent.
A substantial rise in output will be recorded in the EU this year. The gain will be almost 12 percent. A significant increase was expected after the decline in 2005 but not a double digit percentage gain.
A noteworthy production rise will also be reported for the United States this year - expanding to an estimated 2.55 million tonnes from 2.2 million tonnes twelve months earlier. New capacity pushed the growth to above 15 percent.
Labels: nickel
Wednesday, December 13, 2006
WORLD AVERAGE STAINLESS STEEL PRICES
MEPS STEEL NEWS
In the short term we forecast stainless steel prices moving even higher – due mainly to an unprecedented hike in the price of nickel on the LME during October. This gain will impact on transaction prices in December and January.
We believe that the turn of the year will be the peak of the current cycle. In the longer term, we expect stainless selling values to decline, albeit at a much slower rate than the escalation this year.
In the short term we forecast stainless steel prices moving even higher – due mainly to an unprecedented hike in the price of nickel on the LME during October. This gain will impact on transaction prices in December and January.
We believe that the turn of the year will be the peak of the current cycle. In the longer term, we expect stainless selling values to decline, albeit at a much slower rate than the escalation this year.
Labels: nickel
Monday, October 02, 2006
NICKEL PRICES DRIVING THE STAINLESS STEEL MARKET HIGHER
MEPS STEEL NEWS
Nickel prices at the time of writing, hovered around $US30,000 per tonne. This suggests that alloy surcharges on stainless steel will remain at their current unprecedented high levels for at least two months.
[...] Alloy surcharges have risen by more than 150 percent since January.
The LME price of nickel has doubled since March, and there is much controversy about the reasons for this. Users continue to claim that the nickel market is not under-supplied, and that the upsurge in prices is the result of speculation by financial investors. It is true that LME nickel stocks have been extremely low. And this tends to support the opinion of those who say there is a structural shortage.
The hike in nickel prices is increasing the supply of scrap onto the market. World trade in stainless scrap has risen by more than 1 million tonnes over the last four years. But so far this is not having a dampening effect on the price of nickel.
Nickel prices at the time of writing, hovered around $US30,000 per tonne. This suggests that alloy surcharges on stainless steel will remain at their current unprecedented high levels for at least two months.
[...] Alloy surcharges have risen by more than 150 percent since January.
The LME price of nickel has doubled since March, and there is much controversy about the reasons for this. Users continue to claim that the nickel market is not under-supplied, and that the upsurge in prices is the result of speculation by financial investors. It is true that LME nickel stocks have been extremely low. And this tends to support the opinion of those who say there is a structural shortage.
The hike in nickel prices is increasing the supply of scrap onto the market. World trade in stainless scrap has risen by more than 1 million tonnes over the last four years. But so far this is not having a dampening effect on the price of nickel.
Labels: nickel
Saturday, September 02, 2006
Commodity costs test suppliers' mettle
This is a better article than most I see in the public press on the subject.
A few of the words in the article need explanation. This article is written for a local audeince in Indiana. People who live in Indiana are called Hoosiers.
The Indianapolis Star
Indiana manufacturers are getting pinched as the cost of the basic ingredients of their products -- steel, aluminum, nickel, copper and other commodities -- have soared.
Auto supplier BorgWarner spent an extra $12 million in the first half of the year because of higher commodity prices, with aluminum contributing the biggest increases. Spot prices for aluminum, which BorgWarner uses to cast transmission parts, have shot up 32 percent in the last year.
So far, Hoosier consumers haven't taken a big hit from these higher commodity prices yet. That's because manufacturers have been able to offset some of the three-year price run-up with cuts elsewhere.
But such cuts often translate to fewer jobs and sometimes lower wages for Hoosier laborers.
Higher commodity prices are hitting the auto industry particularly hard. Because sales competition is so fierce between automakers, they will brook no price increases from their suppliers. So as commodity costs rise, the 90,000 Hoosiers employed at auto companies are under increasing pressure.
Among employees, BorgWarner has cut out overtime for some, asked for wage concessions from others, left vacant spots open and even laid off some workers. In Muncie, BorgWarner announced 76 layoffs last week. It employs more than 800 there making transfer cases.
A few of the words in the article need explanation. This article is written for a local audeince in Indiana. People who live in Indiana are called Hoosiers.
The Indianapolis Star
Indiana manufacturers are getting pinched as the cost of the basic ingredients of their products -- steel, aluminum, nickel, copper and other commodities -- have soared.
Auto supplier BorgWarner spent an extra $12 million in the first half of the year because of higher commodity prices, with aluminum contributing the biggest increases. Spot prices for aluminum, which BorgWarner uses to cast transmission parts, have shot up 32 percent in the last year.
So far, Hoosier consumers haven't taken a big hit from these higher commodity prices yet. That's because manufacturers have been able to offset some of the three-year price run-up with cuts elsewhere.
But such cuts often translate to fewer jobs and sometimes lower wages for Hoosier laborers.
Higher commodity prices are hitting the auto industry particularly hard. Because sales competition is so fierce between automakers, they will brook no price increases from their suppliers. So as commodity costs rise, the 90,000 Hoosiers employed at auto companies are under increasing pressure.
Among employees, BorgWarner has cut out overtime for some, asked for wage concessions from others, left vacant spots open and even laid off some workers. In Muncie, BorgWarner announced 76 layoffs last week. It employs more than 800 there making transfer cases.
