Thursday, August 12, 2010

Pity the Resin Purchasing Manger

I don't think I can write a better lead-in than this:
Back in the good old days, raw materials' prices typically only moved in one direction—up—and a manager was tasked with guessing the rate of increase and timing his orders to get ahead of the price hikes. That was then; now, prices for key raw materials fluctuate up and down, often dramatically...
(From Plastics Today)

It's certainly true. Watching resin prices on the last pages of each weeks' "Plastics News" is like watching the stock market. If you think you know what is going to happen, come back next year and wave your millions in my face.

When resin prices are rising, it makes sense to stock up at a lower price, but if they are falling, then just-in-time is the best option. The futures markets can be used as a hedge but only for those knowing what they are doing.

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