What is the Price Index in the Index Builder?
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What is the Price Index in the Index Builder?
The Price Index shows how the cost of finished packaging material should have evolved based on the market price of the selected paper(board). It uses the Fastmarkets prices for those grades in the chosen region or country or based on where the paper mill is located. Fastmarkets price reporters have determined a proxy for regions/countries or grades that may not be covered by Fastmarkets price reporting.
Many supplier contracts are fixed to the price of raw material, therefore, Fastmarkets' index is fixed to the material price only as well, while keeping the % breakdown between material, converting and overhead/profit identical over the time period selected.
Each month calculates as a comparison to the original starting contract month; calculations are not cumulative changes. Converting and Profit/Overhead/Other costs are fixed values, therefore relative % share of finished product price may change.
