company news about The Raw Materials' Price Increases

Raw Materials'​ Price Increases

" Summer, your price is too higher than last year ", that is our old customers told me much time every day. From November 2020 year, the ocean freight price is increasing crazy, and some of the raw materials price had increased from that time, in the 2021 year, this is the inevitable result. Why say that?

The reasons with two sides, on the one hand, because of the scarcity and reduced production capacity caused by the epidemic, on the other hand, it is also the consequence of the depreciation of the dollar.

Many raw materials, in the international market itself, is the need to use the United States dollar for delivery, the depreciation of the United States dollar indirectly affected the price of raw materials.

Including oil and a lot of futures, only the dollar is allowed to trade, so a weaker dollar means a higher price for these things.

Ten years ago, the dollar was at its lowest because of the subprime crisis, the problems in the United States, and then the United States was printing money, and then it was lending money, and then it was at its highest level, and now the new crown epidemic is causing problems in the United States economy, and it’s re-entering the region.

So this year Q1 America is printing money, and it’s doing the same thing, the Fed is printing money, it’s printing money, it’s lending money, it’s going to the top of the range.

Whether it is PP or ABS and so on, all prices are basically going up, and for PP this material, you will find the trend chart on the right is also going up.

So you can feel it just by looking at this trend, whether it’s plastic products or metal products, it’s all going up. So, the raw materials involved in all aspects of us, most of which are based on last year’s data, it’s all going up.

The plastic price trends will affect many products. For Geehe Comm, our package cost will be higher than last year.

If you do products related to the Non-ferrous metal, such as power board, power cord, and so on, then this kind of products, which use a lot of copper;

Or you do the product is a bathroom type of shower faucet, and so on, which is also the core components of copper.

That is to say, in the international market, if the price of copper raw materials, it means that you must sell the products will rise, FOB prices must go up.

Manufacturers are dealing with substantial price increases for input materials — from aluminum to wooden pallets — and are facing shortages in some areas, according to The Institute for Supply Management's January manufacturing report released Monday. It was the eighth straight month of price increases.

"We had zero of our companies report price decreases — zero," ISM Manufacturing Business Survey Committee Chair Timothy Fiore said on Monday. "And the month before then, December, we had 2.6% report lower prices."
ISM expects raw materials to increase 2.9% through 2021, according to its forecast for the year, Fiore said.

Dive Insight:

The price increases manufacturers face are cascading through the supply chain and beginning to show up for the end consumer, Fiore said.

"You see it now. You go to the grocery store, everything's more expensive. No matter where you go, pretty much everything's more expensive," he said.

But the promise of a vaccine and bringing the pandemic under control means suppliers could potentially bring in more employees to factories without having to worry about social distancing, which could increase productivity rates.

Right now, price increases don't appear to be slowing down manufacturing demand as new orders continued to increase while their customers' inventories continued to be reported as too low.

As prices continue their upward climb, manufacturers are still dealing with the two supply chain headwinds plaguing the industry throughout the pandemic: slowing supplier deliveries and labor availability.

"Huge logistics challenges, especially in getting product through ports and in getting containers," said one ISM survey respondent in the machinery industry. "We are seeing significant cost increases in logistics and raw materials."

Another respondent in the food, beverage, and tobacco products space said labor availability was its main concern right now.

"They want the people, it's just they can't find them, that's the problem," Fiore said. "And you can't take a waitress or a bellboy and put them on a production line ... it's a different type
of work."

China has a serious inflation problem，not only raw materials' price goes up, the other industry, including real estate, daily necessities, foods, etc.

So now the trend is the same all over the world, we pay the trends, but pay more attention to the customers. Because all customers and suppliers face the same situation in 2021 year. Geehe wants to service the customers from many sides, such as quality, certificates, production equipment, delivery time, OEM capacity, payment terms, etc. The trading is changing every day, we are also changing.