Silver and its uses

Silver is a precious metal and chemical element. It was discovered more than 6000 years ago and has been used over the centuries in various fields. This metal is generally found in a combined state; usually with copper or lead mineralization. It also an industrial commodity used in photography and electronics and is used for bullion, coins, and jewelry. Silver occurs in native form, combined with sulfur, arsenic, antimony, or chlorine and in ores including argentite (Ag2S) and horn silver (AgCl). The principal sources of silver are copper, copper-nickel, gold, lead and lead-zinc ores obtained from Canada, Cobalt, Ontario, Mexico (historically Batopilas), Peru, Australia and the United States .  Silver cannot be created but occurs naturally. The various sources of silver are mine production, government – central bank reserves (also known as above ground supply of silver) and recycled scrap. Any delay, interruption or reduction in any of the supply sources leads to big market price hikes, as the demand for silver bullion surpasses its supply.   The largest component of silver supply is the mine production accounting for nearly 72% of the silver supply. Government sales are done to stabilize silver prices in crisis situations like war or natural disasters. 

The alloys of silver have many commercial uses such as:

1. Sterling silver (92.5% silver, with copper or other metals) is used for silverware and jewelry.
2. Silver is used in photography, dental compounds, solder, brazing, electrical contacts, batteries, mirrors, and printed circuits.
3. Freshly deposited silver is the best known reflector of visible light, but it rapidly tarnishes and loses its reflectance.
4. Silver fulminate (Ag2C2N2O2) is a powerful explosive.
5. Silver iodide is used in cloud seeding to produce rain.
6. Silver chloride can be made transparent and is also used as cement for glass.
7. Silver nitrate, or lunar caustic, is used extensively in photography.
8. Silver is germicidal and may be used to kill many lower organisms without harm to higher organisms.
9. Silver has also been used as coinage in many countries, for Eg. The Silver Standard in the Unites States in the 1700’s.
   
   

COMPETITIVE INTELLIGENCE!

Competitive intelligence is a systematic and ethical program for gathering, analyzing, and managing external information that can be implemented as your company’s plans, decisions, and operations. But competitive intelligence can also be expressed as Industrial Espionage. Industrial espionage is essentially a form of commercial intelligence gathering, usually, but not exclusively, on the part of industry competitors. With global competition intensifying, finding out about rivals’ products and processes has become big business – and competitive intelligence gathering is increasingly seen as an important and largely acceptable form of market research. Now engaging an industry partner is highly beneficial. Intelligence partners are engaged to provide requirement specific information regarding the industry and competitors. Even random pieces of information can be fed into a competitive intelligence process. News that a competitor's distributor is renting a new warehouse can mean that shipments to the region may be going up possibly as a prelude to a sales promotion .

More than getting information from various intelligence compaines it is important that it is used and this is what Beroe does. Beroe acts as an extension of the client's procurement team by providing actionable and customized research.

EMERGING MARKETS

The U.S. Department of Commerce estimates that over 75% of the expected growth in world trade over the next two decades will come from the more than 130 developing and low cost countries. Big emerging markets share a number of important traits
a. Have a significant population
b. Are all physically large
c. Represent considerable markets for a wide range of products
d. Have strong rates of growth or the potential for significant growth
e. Are of major political importance within their regions
f. Are “regional economic drivers”
g. Will engender further expansions in neighboring markets as they grow
Because many of these countries lack modern infrastructure, much of the expected growth will be in the industrial sectors.
Some of the emerging markets are China, India, South Korea, Vietnam in Asia Pacific, Argentina, Brazil, Mexico, Venezuela, Colombia in Latin America, Poland, Turkey, Romania in Europe and South Africa in Africa.

Beroe has a presence in many of the emerging markets world wide and we will act as your procurement arm from ground zero.

GLOBAL ETHANOL INDUSTRY

Across the world, USA is the largest ethanol producing country with a contribution of 39% to the global production. Brazil comes second, with a contribution of 31% to global production. However, despite Brazil’s second position, its ethanol industry is more prosperous than US corn-based ethanol industry due to appropriate, cheaper, and efficient feedstock (sugarcane) selection. The basic cause for the ailing condition of the US ethanol industry during 2008 was the skyrocketing corn price that touched USD 7 per bushel, which drastically reduced producers’ profitability even after the incentives and subsidies provided by the US Government. US charges import tariff of around 40-55% on Brazilian ethanol to make Brazilian's ethanol price competitive with US ethanol, which indicates the incompetence and ineffectiveness of the US ethanol industry. The price of corn is expected to drop by almost 14.5% from the baseline level and the loss of demand subsidies would cause the price of ethanol to drop by 18.6%. The fuel price is expected to increase by 0.2%; domestic ethanol production would drop by 11.5%; ethanol imports would increase by 28.1%; total gasoline supply would increase by 0.5%; and total fuel demand would remain almost unchanged from baseline levels. On average, 82% of ethanol plants would be operating in this scenario. The average net welfare gain from removing all ethanol policies would be USD 5.8 billion. The expected producer surplus of the biggest winner, gasoline suppliers, would increase by USD 5.05 billion. Average government revenue would increase by USD 4.9 billion. Corn growers and ethanol producers would lose USD 9.4 billion and USD 2.65 billion in average producer surplus, respectively.

ILLEGAL WOOD TRADE BAN IN THE US

The U.S. House of Representatives passed landmark legislation to address the global illegal logging crisis. The law would make the United States the first country in the world to prohibit the import, sale, or trade in illegally-harvested wood and wood products.
The law made changes in the wildlife trafficking regulations, the Lacey Act, to include timber, wood products and other plants. The Environmental Investigation Agency (EIA), the leading environmental organization providing expertise to policy makers on illegal logging and associated international trade, estimates that 10% of annual wood product imports into the U.S. - worth some $3.8 billion dollars - are derived from illegally logged timber.
EIA claims that Vietnam is a hub for processing Asia’s illegal wood logs, much of which is imported to the United States as furniture. Vietnam exported 2.4 billion USD worth of wooden products last year. The agencies estimate that 500,000 cubic meters of logs move illegally from Laos to Vietnam every year. Large volumes of timber from Laos also go to China’s burgeoning wood-processing industry, researchers say. The ‘Vietnam Wood and Forestry Association’ have sent a document to EIA denying the report findings and have requested the author make corrections and publish an apology.
China is considering various measures to reduce logging of their own forests, while import’s wood from neighboring countries for growing wood-processing industries in China.
According to the World Wildlife Fund (WWF), China’s demand for imported industrial wood — timber, paper and pulp — will grow by at least 33 percent within the next five years, from the current 94 million cubic meters to 125 million cubic meters.
I believe that going forward ,international pressure will force Asian countries to be ethical in restricting illegal usage of natural resources, at least to the extent of exports to International markets. Growing awareness will encourage more certified wood usage, but limited wood supply will affect wood and wood product prices. Even the EU would extend its environmental support soon just as the US did. Imports of illegal wood products from regions like china and Vietnam will affect these regions as the percentage of illegal wood consumption is very high. China is already surrounded by several issues with respect to environment, labor, subsidies etc., these will affect china going forward as it is the leading manufacturer of paper and furniture products. A rise in timber prices has prompted some wood-producing countries, such as Indonesia, to clamp down on illegal logging.

MISCH METAL MARKET OVERVIEW

From the late 1990s to the present, there have been significant changes in both supply and demand for individual rare earths. In the past year, prices for all elements except for europium (used in phosphors) have increased. Rechargeable NiMH batteries are the battery of choice for hybrid vehicles and the Global demand for hybrid-electric vehicles (HEVs) is expected to reach 3.9 million by 2015. If the number of NiMH batteries increased from the hybrid vehicles demand, then it could touch 20,000 metric tons of rare earth by the year 2010. Chinese Export Quota for Rare Earths has been reducing from 2004 in a considerable manner. For this Year, it has been cut by 22% by the government. This could create some imbalance in Global Rare Earths Market. Chinese consumption has risen from 40% to 36,000 metric tons REO (Rare Earths Oxide) in 2004 to 60% of 73,500 metric tons REO in 2007. This growth is due to a combination of production quotas, restrictions on foreign investment in the rare earths industry, export taxes and export quotas. In addition, China’s dominance over world supply which is currently 92% means it has significant influence on the future of the rare earth industry. Currently the substitution for Li ion batteries is NiMH batteries are minimal. Li batteries could replace NiMH batteries in future; this may bring down the demand for rare earths from this segment. Toyota’s Prius is the largest selling brand of hybrid vehicles in the world. Toyota is expected to produce 1 million hybrid vehicles in 2010. Moreover the total hybrid vehicles by the year 2012 are predicted to be around 3 million.

WHY PROCUREMENT INTELLIGENCE!

“Most World Class Organizations have realized that procurement is a key component for sustainable business success.” James Yates, COO of Cutting Edge Commerce.
Only 1 in 10 procurement professionals can extract critical information.
Managing spend across the supply chain would require expertise with understanding supplier strategies, competitor analysis and more importantly ,customized (Companies today need a service that collects business and market intelligence from multiple data sources across the world and delivers only relevant and customized information) real-time and confidential information in order to ensure sustainability. Market intelligence with emerging sourcing, planning, procurement, monitoring, and analytics have become extremely crucial in effective cost control.
The emergence of procurement intelligence providers can be primarily attributed to a critical gap that had been discovered, lack of good quality research as a result of data overload. Procurement executives spend approximately 45- 50% of their time on data analysis. A procurement intelligence provider’s role hence is crucial in the sense that they provide customized research that can be instantly integrated in to the organizations strategic plans. Procurement intelligence therefore— provides a “single point of truth” for all procurement-related data, analysis and intelligence.

BEROE SOURCE

Beroe Source provides a virtual sourcing approach whereby you can use our local resources in the various LCC’s to execute your sourcing plans, thereby expanding your sourcing footprint, with no compromise on quality and control. Today, most organizations have set-up International Procurement Offices (IPO’s) in China, and sometimes in India as well. These organizations have spent a considerable amount of time and effort in setting up these IPO’s and training resources over there.However, costs have started escalating quite rapidly in these two regions, and companies have become interested in exploring other potential sourcing regions, such as Vietnam, Eastern Europe and Latin America.However, it is clear that it does not make sense for companies to set up IPO’s in each of these regions as the window of opportunity (when costs are competitive) is likely to be fairly short.

MAGNESIUM ANTI DUMPING DUTIES

The U.S. Commerce Department is considering raising antidumping duties on magnesium from two Russian producers. Commerce issued a preliminary ruling on May 3rd, 2008, that VSMPO-Avisma Corp. and Solikamsk Magnesium Works exported magnesium to the United States at less than fair value from April 1, 2006, through March 31, 2007. The government agency has proposed anti-dumping duties of 17.7 percent for VSMPO-Avisma and 21.7 percent for Solikamsk. The products covered by the investigation include primary and secondary pure and alloy magnesium metal, regardless of chemistry, raw material source, form, shape or size.Leading the anti-dumping charge has been Salt Lake City-based U.S. Magnesium Corp., the only domestic producer of primary metal. The company, along with two unions, first requested an investigation into imports from Russia and China in 2004, and in April the following year Commerce imposed anti-dumping duties of 21.71 percent on VSMPO- Avisma and 18.65 percent on Solikamsk. If imposed, the duties could have an impact on U.S. magnesium prices and its one of the reasons why the U.S. has some of the highest magnesium costs in the world, but currently there is little of magnesium coming out of Russia and the situation is expected to be same especially if higher anti-dumping duties go into effect in September. In 2007, VSMPO-Avisma petitioned to revise its method for reporting the cost of production. As a result of those arguments and market conditions, the anti-dumping duties were slashed to 0.41 percent for VSMPO-Avisma and 3.77 percent for Solikamsk.
Now, U.S. Magnesium has requested that the duties be reviewed for a third time. And based on its preliminary investigation, the Commerce Department is recommending that the duties be bumped back up to 17.7 percent and 21.7 percent

One of the reasons for the increase is that, with respect to VSMPO-Avisma, Commerce determined that it attempted to calculate its cost of production by treating magnesium as a by-product, distorting the true cost of producing magnesium. Commerce recalculated its cost of production by treating magnesium and chlorine as co-products.
U.S. Magnesium supports Commerce’s preliminary rejection of VSMPO-Avisma’s attempt to treat magnesium as a by-product and it also believes that Commerce properly determined that VSMPO-Avisma is selling in the U.S. market at prices below VSMPO-Avisma’s cost of production, in violation of U.S. trade law. U.S. Magnesium will continue participating fully in the review to ensure that Commerce reaches a correct final determination. Over the next several months all parties will have an opportunity to make arguments before the Commerce Department. A final ruling is expected by Sept. 2nd, 2008 if the preliminary results are adopted than U.S. Customs and Border Protection would be instructed to assess the new anti-dumping duties.