2013 Metals Forecast: Inputs to Building a Cost Management Strategy

Based on our analysis from this morning and some of the macroeconomic and related variables factoring in demand, speculation and price trends, our sister site MetalMiner suggests a range of considerations and strategies for 2013 focused on metals and related commodity sourcing. Specifically, Lisa Reisman told Spend Matters that companies should consider the following:

  • Formally evaluating "no hedge" policies and whether these remain the right strategy
  • Hedging their demand (if possible) for the first half of the year (MetalMiner is basing this prediction on a moderately optimistic prediction for the economy based on third party economic forecasters which we leverage internally in our own commodity forecasts); note "hedging demand" is not speculation – it is taking understanding commodity pricing and currency risk off the table based on closely forecast demand
  • Investing in the right tools, skillsets and capabilities to monitor and manage commodity volatility
  • Consider flexible strategies for the remainder of the year (2H2013) given uncertainty with predicting demand and economic strength
  • Consider that many analysts are calling for rising commodity prices throughout the year and plan accordingly (the MetalMiner take is that this is likely true for many markets, but not all)

What's MetalMiner's final word for 2013 forecasting and manufacturing? Watch copper. "It's an industrial bellwether," Lisa observes. "If it's down and if you see companies like Caterpillar (which closely monitors the price of Copper) laying workers off, be concerned. You can be sure manufacturing is to follow."

For further reading on the topic, we suggest the following papers from our free research library:

Making Sourcing Savings Stick: New (and Not-so-New) Strategies to Drive Savings Implementation

A Foundational Look at the Evolution of Sourcing Technology and Platforms

Advanced Sourcing Technologies and Platforms to Broaden a Portfolio

Minimizing Commodity Volatility Through Advanced Commodity Management and Hedging Approaches

- Jason Busch

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