CMC Magnetics said that since the start of the second half business has picked up considerably and the company has orders to fulfill into the fourth quarter. Anticipating a 100% capacity utilization rate before the end of the year, CMC has increased its materials inventory to 45 days’ worth. In addition, it already settled the price for fourth-quarter petrochemical supply at the end of August.
Prodisc settles a new contract price once every six months. Since the company was optimistic for a busy market in the second half of 2001, it was more than willing to sign another six-month contract in August. Prodisc suppliers will not be able to raise prices on petrochemicals until March 2002.
Although first-tier CD-R disc manufacturers are largely unaffected, second and third-tier manufacturers may not be so lucky. With less capital to expend, small-scale companies can only place orders for a certain period – sometimes a week, sometimes a month – and do not have the capacity to store large amounts of materials. The rise in crude oil prices will almost definitely lead to higher costs for these companies. However, the cost/price difference is expected to last only for a short while.