By Ben Klayman
CHICAGO (Reuters) - Raw materials like steel, copper and plastics are likely to remain expensive this year due to the voracious appetite of such emerging markets as China, but several prominent manufacturing executives hope customers cover any increased costs.
And don't think a weakening U.S. economy will give companies any kind of break, top executives said this week at the Reuters Manufacturing Summit in Chicago.
"Steel prices are escalating to all-time highs," John Stropki, chief executive of welding equipment maker Lincoln Electric Holdings Inc (LECO.O: Quote, Profile, Research, Stock Buzz), said at the summit.
"We have to pass that on to the customers and we are going to," he added. "We will pass on our costs as well as try to capture as much if not all of the margin as possible."
Stropki said the steel industry in Japan and Korea just settled on a 65 percent price increase for iron ore, while the cost of coking coal is projected to double. That translates to a $200 increase in the cost of producing a ton of steel.
In addition, U.S. crude oil has surged to an all-time high above $100 a barrel, while COMEX copper futures recently touched a life-of-contract peak of almost $3.88 a pound. Throw in that the price for resins used in plastics has risen steadily since 2002, and times look tough for manufacturers.
"In spite of the fact that there's weakening demand in North America, we're still seeing prices go up," Illinois Tool Works Inc (ITW.N: Quote, Profile, Research, Stock Buzz) CEO David Speer said of steel prices. "Commodity prices are going to continue to press upward."
He said the maker of fasteners, food-service and welding equipment, countertop materials and other products expects a 7 to 10 percent increase this year for the raw materials used in plastics and chemicals. Steel, plastics and chemicals account for almost 70 percent of ITW's input costs. Continued...
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