June, our Materials Prices Index dropped to its lowest level in more than two years. At its current level it indicates that materials prices for moldmakers are still high by historical standards, but the trend upward has clearly lost momentum in recent weeks. The recent decline in worldwide commodities prices is largely due to a deceleration in global economic growth. The growth rates in Asia and North America were slower in the first half of 2012 than they were at the end of 2011, and it is likely that Europe is currently in a recession. Overall economic growth will remain tepid for another quarter or two, and this will keep the lid on materials prices in the shortterm. Unfortunately, it will also keep a lid on aggregate demand for manufactured goods during this period. In the long-run, materials prices will start to rise again as global economic growth increases. Resins prices in North America will likely go lower at some point due to the relatively low prices for domestically-produced natural gas.
Bill Wood, MoldMaking Technology's Economics Editor
MoldMaking Technology's Economics Editor,
Mountaintop Economics & Research Inc.