China slowdown impacts commodities

Posted: September 23rd, 2014 | Author: | Filed under: China, Commodities | Tags: , , | No Comments »

BCOMThe Bloomberg Commodity Index dropped 0.8 percent to 118.5683 at 1:52 p.m. in New York, after touching 118.2027, the lowest since July 17, 2009. Commodities are 12 percent lower this quarter, set for the biggest such loss since the financial crisis in 2008.

China’s Finance Minister Lou Jiwei said growth in Asia’s largest economy faces downward pressure and reiterated that there won’t be major changes in policy in response to individual economic indicators. Group of 20 finance chiefs and central bankers said low interest rates could lead to a potential increase in financial-market risk, as major economies rely on monetary stimulus to bolster uneven growth.

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Use labor productivity to drive down purchase costs

Posted: September 21st, 2014 | Author: | Filed under: Best practices, Gem, Negotiating with Suppliers | Tags: | No Comments »

Labor productivity Suppliers often use wage increases to justify nudging up prices each year, usually 1 or 2%. And it’s hard to argue: – seems reasonable, and it’s less than inflation.
But wages aren’t the real issue – labor costs are.

And the reality is that the average cost of a ‘unit of labor‘ is about the same today as it was 5 years ago.

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US ethylene hits 29-month high

Posted: September 19th, 2014 | Author: | Filed under: Chemicals, ethylene, Europe, USA | Tags: , , , | No Comments »

US spot ethyleneEthylene prices continue to be high in the spot ethylene market because of three ongoing cracker shutdowns and one scheduled shutdown at the end of October. At the beginning of this week, front-month Williams System ethylene traded at 74 cents/lb ($1,631/tonne) and then 75 cents/lb, up from a trade at 73 cents/lb the previous day.

US spot ethylene prices hit a 29-month high on Tuesday on the back of two trades, tracking continued tight supply and low inventory levels.

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Corporate Social Responsibility in supply chains: an example of aluminum refining

Posted: September 16th, 2014 | Author: | Filed under: CSR in purchasing, Gem | Tags: , | No Comments »

Corporate Social ResponsibilityCommodity production in many parts of the world causes huge problems for local communities. Extractive industries located in areas with poor environmental protection and enforcement can be particularly damaging.

For example this contentious aluminum refinery in Niyamgiri, India: The battle for Niyamgiri

Should purchasers have a role in influencing supply chains by avoiding companies with dubious social and environmental ethics? Would this be interfering with domestic governance and development, or does CSR (corporate social responsibility) pave the way for this type of decision? Are purchasers in a position to obtain and evaluate the information needed to make those decisions?


Is US gasoline price heading for $3?

Posted: September 16th, 2014 | Author: | Filed under: Commodities, Energy, Energy, Oil, USA | Tags: , , | No Comments »

US gas priceRetail gasoline prices often fall as summer vacation winds down, but the speed and size of the recent decline underscore shifts in energy markets that many analysts expect to be lasting. U.S. gasoline output climbed above 10 million barrels a day for the first time on record in late April, according to the EIA, and held above that level in 11 of the 19 weeks since then.

The average is $3.428 a gallon, down 6.2 percent since Memorial Day on May 26, AAA data show. That’s the largest decline from the start of the summer driving season since 2008. U.S. refineries operated at the highest-ever seasonal rates every week since July 4.

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Rubber tumbles to 5-year low

Posted: September 15th, 2014 | Author: | Filed under: China, Indonesia, Japan, Malaysia, Rubber, Thailand | Tags: , , , , , | No Comments »

iron ore glutTokyo rubber futures prices, which set the global trend, fell last week to their lowest level since 2009, as concerns about oversupply and weak demand from top consumer China sparked heavy selling by speculators.

Commodity experts say the increase in acreage under rubber about seven years ago in key rubber producing areas like Thailand and Malaysia has now translated into higher supply.

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The Carbon Benefits of Recycled Materials

Posted: September 11th, 2014 | Author: | Filed under: CSR in purchasing, Gem, Greening the Supply Chain | Tags: , , | No Comments »

RecyclingThe benefits of avoiding extraction and primary processing are usually significant, even when collection, transport and reprocessing of recycled material is taken into account.

An increasing range of recycled products are coming onto the market, such as glass, steel, aluminium, plastics and paper. Usually calculating the carbon benefit is reasonably straightforward. As the final products must perform to similar standards (whether from virgin or recycled materials) in order to compete in the market place, the carbon footprint during their ‘use phase’ will also be very similar.

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Iron ore mines starting to close

Posted: September 10th, 2014 | Author: | Filed under: Australia, China, India, Iron ore | Tags: , , , , | No Comments »

iron ore glutWhile the iron ore sector is already facing the brunt of the commodity price slide, which hit a new five-year low of $US83.60 a tonne over the weekend, observers are warning the effects are likely to be felt across the Australian economy.

A swift retreat in Chinese demand has already driven global iron ore prices to near five-year lows and local coal prices to their weakest in six, with analysts warning that the outlook for shipments to the country remains grim in the wake of its economic slowdown and festering oversupply.

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Brent under $100 in more than a year

Posted: September 9th, 2014 | Author: | Filed under: China, Commodities, Currencies, Energy, Oil, Russia, US Dollar, USA | Tags: , , | No Comments »

Brent crudeBrent and U.S. crude futures both fell more than $1 on Friday after data showing U.S. non-farm payrolls rose by 142,000 in August, well below a forecast 225,000, casting doubt on the pace of growth in the world’s biggest oil-consuming economy.

On Monday, brent hit $99.72 a barrel to record its lowest level since June 24, 2013 after coming under pressure in recent weeks also from easing demand growth expectations. West Texas Intermediate prices hit a session low of $92.11 earlier, a level not seen since January 14.

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7 key factors for US reshoring

Posted: September 6th, 2014 | Author: | Filed under: Gem, Labor, What's Happening in Our Profession | Tags: , , , , | 1 Comment »

Reshoring USAAfter making the case for reshoring in a previous article, PwC identified 7 key factors influencing potential US manufacturing resurgence. Obviously, labor cost is one of those factors but not the only one.

“Industrial manufacturers may increasingly rethink their U.S. strategies, including the merits of continuing to separate production and R&D and producing abroad and importing back to U.S. buyers. Depending on the industry, there may be considerable benefits to establishing regionalized supply chains and R&D facilities in the U.S.,” said Bob McCutcheon, PwC’s U.S. Industrial Products leader.

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