We have received price increase announcements in the past week from all of our suppliers of metal closures. This includes both Continuous Thread (CT) and Twist (Lug) closures. The increases run between 25% and 35% from our current prices. Unfortunately, these price increases are also immediate.
Price increases of this size in a recession surprised us. We asked a lot of questions and learned that there are two major causes: Tinplate supplies have been tight for the past year, largely the result of consolidation in that industry. Steel prices have been dropping, but tinplate demand and other specialty uses for steel like tin cans have remained strong. Much tinplate comes from overseas, so exchange rates, freight costs and high interest rates have had unsteadying effects on tinplate prices. Coatings are applied to tinplate for various reasons. The coating manufacturers have also consolidated and are having difficulty keeping up with demand. At the moment, we do not see these metal closure prices declining before at least mid-year 2009. We were also told to expect additional price increases this spring.
Our price increase: We have looked for lower costs from other suppliers with no success. This leaves us with no alternative but to raise our own prices to our customers for all orders that will ship after Friday, January 2, 2009. The actual increases vary by item and supplier. Please contact your Sales Person or Customer Service Representative at Richards/Memphis for specific prices.
Save by ordering now: To help you during this change, we will accept purchase orders in December at the current prices. These orders must (1) be shipped by Friday, January 2, 2009, and (2) be limited to approximately the quantities of each metal closure that you purchase this time of year. All orders for shipment after January 2 or later must ship at the new prices. We may have to limit supplies to insure that we have stock for all customers.
Holiday shipping schedule: Please see the following link for our Holiday Shipping Schedule. Please order early to avoid shipping delays the last week of the year.
Early outlook for 2009 prices: The three major North American suppliers of glass bottles and jars have already put into effect price increases of 9% to 15%, and the two remaining North American suppliers are expected to follow with similar price increases in the next few weeks. This affects less than 3% of our glass sales. Our major suppliers are located in Taiwan, China and Europe. We expect price increases of about 5% from those manufacturers this winter. Resin costs for plastic bottles and jars and plastic bottle caps and jar lids are drifting, so those prices should stabilize or decline a little this spring, but they are volatile.
We recommend that you do not contract with your customers to ship products to them at fixed prices for several months. The risk of continued inflation and price increases is very high
Like you, we are surprised and shocked by the large price increases that continue even during this economic downturn. We will do all to help you handle those increases.
The Richards Memphis Sales Team
