New Year, New Price Increases
January Supply Chain Updates
The cost of base metals have been steadily climbing for months. This effects not only the cost for cable and conduit, but most everything we stock.
If the US dollar stays weak, it organically costs more to buy materials. If the supply chain stays strangled, it costs more due to demand. If the Pandemic drags on, things cost more due to COVID shutdowns. Combine all three dynamics and price increases become inevitable.
New kinks in the Supply Chain – October-November Edition
As the US continues to wait for a COVID Stimulus plan to be released, so does the EU. And with every new report of a highly functioning vaccine that gets reported, metals have been spiking. The market always responds well to positive outlooks.
The vast majority of products in our industry touch both Copper and Steel. And as such, the value (and replacement costs) of those goods are at near recent record highs.
CU hit its 2 year high yesterday, topping out at $3.2395. This is the highest its been since June 2018.
As you can see below, Copper has soared back to life nearly every week since the initial COVID shutdowns.
We have gone from a 1 year valley of $1.97 per pound. to a 1 year peak of $3.24 per pound.
Steel is no slouch either. CRC, Cold Rolled Coiled, is the base for our metallic raceway, and the metal that most effects our finished pipe price.
The below chart shows that is was being purchased for $700 US per ton over the summer. It is currently at $942 and climbing. This has lead to record prices being asked for finished goods in our market.
Nearly all “like” manufacturers are asking for the same higher costs these days. Forcing everyone to raise prices for product effected by these base metal increases.
In addition to price increases, we are still seeing some abnormalities in our supply chain as shown below:
As we wrap up August, certain products are becoming harder to source and a lot of price increases are looming. Here are the details:
Coronavirus Impact on Supply Chain July Update
As most supply availability stabilizes, many prices are rising.
Supply Chain Challenges as Coronavirus Continues
Our current struggle seems to be getting goods from Mexico and India. Mostly fittings, as of now.
Both countries started coming out of their lockdowns in June. And, just like the US, both of them saw a huge surge in cases.
Our previous update was based on the assumption that things would slowly be coming back online by the end of summer. Now, it appears factories and docks will still continue to split shift and run at reduced capacity, to once more try to slow the spread of COVID-19.
The sky is not falling, we are still sourcing >95% of what we need without issues, but <5% still carries a prolonged lead time of months on end.
Below are current new stats for Covid-19 cases, as of right now, for these two countries.
On the flip side of all this, is an increase in the value of goods. Many price increase letters have been sent, and many price files were updated recently to reflect those higher stock costs. The new pricing is due to both the increase cost of transportation (in very high demand) as well as COVID-19 related cleaning and split work shifts, to help keep workers safe.
These are not huge fluctuations in cost, less than 5% in most cases, but still an increase on a lot of what we buy and sell.
The biggest jump has come in the cost of copper and copper-related goods.
As you can see below, we are riding a wave of copper value pricing. We are nearly back to the highs of Q4 2019.
China has recovered faster, and started consuming metals again. That caused a spike in pricing. But also, there is less copper coming online from the mines.
The top two copper producing nations, Chile and Peru, are just now being hit by the Coronavirus. As those cases continue to climb, those countries will start to pull back on production as the rest of the world has, as they are forced to limit their workforce.
It is important to note, unlike finished goods, there will not be a shortage of copper, even if many of the largest mines shut down. We have drawn enough copper from the earth to last for years, and it is easily recycled. Instead of a shortage, you will just see a continued rise in cost per pound instead.