1

A quote from a news report titled "Expert: Shale gas won't lower PE prices in 2014":

The fact that oil sets the global PE pellet price is one reason why PE prices continue to escalate, he added. Other reasons include supplier consolidation and discipline, inventory and exports and PE no longer being a commodity.

I don't fully understand the sense that the words "consolidation and discipline" carry here. It seems to be a set phrase, "consolidation and discipline", so "consolidation" is unlikely to mean "merging of several companies into one entity". Or maybe I'm wrong.

Googling for "consolidation and discipline" brings up uses referring to policies implemented by one or other country, not within companies; it seems to combine with one other word, "fiscal": "fiscal consolidation and discipline".

I guess that it means "the supplier companies are less careless in using their funds". Am I right?

3

Consolidation here probably means mergers, though it might mean that individual suppliers are “consolidating” manufacturing operations: closing less efficient plants and make more use of more efficient ones.

In that context, discipline probably means price discipline—suppliers with access to cheaper shale gas are holding prices to the line set by oil costs and declining to be drawn into pricing wars.

It may even be that the author is hinting at collusion between suppliers to keep prices high. As this is illegal, no publisher would allow an author to say that expressly without very strong positive evidence.

| improve this answer | |
  • 1
    I agree that there's a subtle implication of collusion in the term "supplier discipline" in this context, since it's mentioned as a cause of higher prices. Most other interpretations of that phrase (e.g. suppliers practicing good cost control discipline) would lead to lower prices, not higher. – godel9 Jan 12 '14 at 15:20

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.