Spend Matters Afternoon Coffee

afternoon coffeeSpend Matters would like to introduce a new segment of our blog -- daily (or every other day) coverage of news stories in purchasing, spend management, commodities, outsourcing, etc., peppered with our own seasoned opinions. Please feel free to share your opinions as well -- we're always interested in what you have to say. With the absence of Purchasing, we miss catching up with the news and we hope this fills a void.

Watch out Nano -- You've got Competition

The Nano is a great innovation in India's car market, but Renault and partner Nissan are working with Bajaj Auto (India's second-largest motorcycle manufacturer) to throw some competition into the mix for 2012. And they're not just matching the Nano in price and design -- they're busting out some trendy new CSR guidelines as well. Managing director Rajiv Bajaj says, "the car would have better fuel mileage (up to 70 miles per gallon) and lower carbon dioxide emissions than the Tata Nano."

Spend Matters is curious to see how the battle comes out in the coming years -- at similar prices, are consumers more bent to support a greener market? And will Renault/Nissan employ the same supplier development and joint engineering approach to get costs down, or will they simply employ a hammer?

China Using Electrical Power Production to Increase Economic Power

China's electricity production industry may not be particularly profitable but it is certainly expanding fast.

Over on our sister site Metal Miner: According to a (subscription only) Economist article, China's endless power-plant construction boom has accounted for 80% of the world's new generating capacity in recent years and will continue to do so for many years to come. Capacity added this year alone will exceed the installed total of Brazil, Italy and Britain, and come close to that of Germany and France. By 2012, China should produce more power annually than America, the current leader. Read more...

As cheap energy sources increase, will the prices of the produced goods of energy-dependent industries rise as well? And what about emissions?

Speaking of Energy -- Supplier Choice vs. Dependency

US's Growing Dependence on Foreign Energy

Boing Boing provides us with a list of rather interesting presidential proclamations on the state of the (energy) nation.

JP Morgan says it's all sunshine, glitter, and roses...in terms of rising demand.

Investors Should Expect Higher Commodity Prices, JPMorgan Says

Stronger manufacturing is bolstering demand, according to JPMorgan Chase & Co., especially in crude oil and industrial and precious metals. "Conditions for future commodity demand growth are more supportive now than a month ago and will continue to improve," global commodity strategist Ruy Ribeiro wrote. "We remain positive on improving fundamentals, but prices are likely to remain under pressure near term."

What does this mean for procurement? It seems to be somewhat of a mixed bag -- on the precious metals side (gold & silver) both Spend Matters and MetalMiner advocate that "demand" is actually a reactionary flight for safety in terms of the current Euro situation. And regarding industrial metals, we must also consider the massive overproduction of steel in China, where demand actually isn't supported. With oil, will the spill chill the drills? (Sorry, had to do it). The overall message for procurement is: be cautious about what banks say about growth. As far as we're concerned, this rosy forecast has already been "built in" to the current prices. Therefore, how much higher can they go? That is, unless there's real demand or inflationary pressure in general, which causes greater inflows into commodities.

Sheena Moore

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