Exchange rates have varied impact of different commodities

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Cut paper prices (delivered) continue to decline according to the Pricetrak Group Trend Index (July 2006) for all South African companies benchmarked. So much for paper prices being driven by the Rand/Dollar exchange rate!

According to Alan Low, MD of Pricetrak, a more likely explanation is that there is greater competition between the paper merchants and distributors as customers focus on achieving and maintaining savings. (Consider the latest results of Paper Manufacturer Sappi - Editor's note)

According to Low, paper consumption is expected to continue to grow in many industries. He sites as an example financial institutions needing to comply with FICA regulations as a major demand driver.

On the other hand, new IT cartridge prices have tended to follow the Rand/Dollar exchange rate, as one can see from the above Pricetrak Group Trend report (July 2006).

Will this continue as the MFD (multi-function device) market heats up and printer distributors compete with traditional photocopy companies?

Low reasons that "Users have long realised that the consumable costs for printers have in the past made them uncompetitive and new printer cartridge technology continues to try to redress this. Users have also begun to adopt the remanufactured, compatible and refill industries that have become more reliable in recent years."

Will prices come down or cartridge productivity improve? Low is confident that there will be increasing pressures on printer and MFD manufacturers and distributors to keep cutting costs in the hotly-contested SA business market.

So have suppliers for these two commodities recently come knocking on your door for price increases?

Alan Low can be reached at alan@pricetrak.co.za or +27 84 890 0005

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