By Nick Zieminski
NEW YORK (Reuters) - U.S. manufacturers expect some relief from certain raw materials prices, but don't anticipate across-the-board declines, and the ability to pass on costs remains a sticking point.
For large consumers of commodities, lower prices could mean a bit less pressure on profit margins this year, executives said this week at the Reuters Manufacturing Summit in New York.
Diversified manufacturer Ingersoll-Rand Co. Ltd. (IR.N: Quote, Profile, Research, Stock Buzz), which makes security and cooling systems and machines used in construction, expects to pay more for raw materials this year than in 2006.
But the pace of the increase may not be as fast as previously expected, said the company's CEO, Herb Henkel.
Ingersoll is paying less than $3 per pound for copper -- used in electrical coils and locks -- compared with $3.30 to $3.40 per pound in the latter half of 2006. But prices of nickel and zinc, used in steel, remain high, Henkel said.
Prices for raw materials have soared in recent years, driven by global economic growth including a boom in China.
China's consumption of steel, copper, plastics and other goods used in making products or building infrastructure has driven up costs for manufacturers worldwide, while driving up profits for the companies that pump, cut or dig up the raw materials.
Ingersoll expects its raw materials bill will rise $30 million to $50 million over last year, which is about $20 million less than it estimated in January because of the drop in copper prices. Continued...
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