Rising labor rates abroad and mounting steel prices will drive prices up in line with the demand growth generated from increased spending within the construction, oil and mining markets
Los Angeles, CA (PRWEB) June 01, 2014
Mechanical cable has a buyer power score of 3.2 out of 5, reflecting moderately positive conditions for buyers. In particular, buyers have benefited from rising import penetration and falling steel prices over the past three years. Low labor rates in countries like China have offset overseas shipping costs for foreign vendors, allowing them to provide products at highly competitive prices. “The rise of foreign penetration has compelled US suppliers to cut their prices,” says IBISWorld procurement analyst Daniel Krohn. Meanwhile, steel prices have dipped over the past three years, providing suppliers with additional price flexibility. As such, suppliers have been able to lower their prices without compromising their profit margins and, therefore, have been more willing to negotiate lower prices.
Nonetheless, a variety of factors have eroded buyer power. “Over the past three years, construction, oil production and private investment in industrial equipment have increased,” says Krohn. Expansion in these areas has stimulated aggressive demand growth within the mechanical cable market. Meanwhile, the market has become increasingly concentrated, giving large suppliers more power. Consequently, rising demand and market concentration have reduced the positive impact that foreign penetration has had on buyer power. In the three years to 2017, these factors are expected to drive up prices as steel prices swell and rising labor rates abroad slow foreign penetration.
The type of supplier that a buyer selects can affect buyer power depending on the order volume, location and need for related goods, which warrants careful consideration of these factors. For example, buyers with large volume orders may be able to buy directly from the manufacturer, allowing them to avoid wholesaler markups. However, wholesalers' expansive shipping networks coupled with emerging supply and inventory management technologies have been drastically reducing wholesaler costs. In turn, wholesale prices are rapidly falling and, because wholesalers offer more bundling opportunities, they are quickly becoming a more appealing supplier option. Major suppliers include ArcelorMittal, Fastenal Company, Home Depot Inc. and Kiswire LTD.
For more information, visit IBISWorld’s Mechanical Cable procurement category market research report page.
Follow IBISWorld on Twitter: https://twitter.com/#!/IBISWorld
Like IBISWorld on Facebook: http://www.facebook.com/pages/IBISWorld/121347533189
IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of mechanical cables, which are nonelectric iron and steel cables for industrial use. These include cables made from high-carbon steel, stainless steel and nonferrous metals used for lifting, towing or hauling. This report does not include electrical, communication or energy cables.
Executive Summary
Pricing Environment
Price Fundamentals
Benchmark Price
Pricing Model
Price Drivers
Recent Price Trend
Price Forecast
Product Characteristics
Product Life Cycle
Total Cost of Ownership
Product Specialization
Substitute Goods
Regulation
Quality Control
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Imports
Competitive Environment
Market Share Concentration
Market Profitability
Switching Costs
Purchasing Process
Buying Basics
Buying Lead Time
Selection Process
Key RFP Elements
Negotiation Questions
Buyer Power Factors
Key Statistics
About IBISWorld Inc.
IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.