Before the economic crisis, raw material prices knew only one direction: upwards. The sky seemed to be the limit. Now the situation has changed. No one seems to know in which direction raw material prices will go. They go up and down with irregularity and without any discernible pattern.
Companies have a hard time correctly judging the risk of strongly fluctuating raw material costs. If they pass on increasing costs only minimally, delayed or too conservatively, or if increasing raw material costs coincide with decreasing sales prices, a margin squeeze is inevitable. Highly fluctuating raw material costs and ineffective price management can greatly endanger a company's success....