Factors such as inflation, the imbalance between supply and demand, environmental protection and rising transport costs are the main reasons for the recent increase in commodity prices. And, as a result, the increase in the price of hardware in China. How can this affect your hardware business?
Why the price of hardware in China increase?
Raw material plays a very important role in increasing the price of China’s hardware in the industrial sector. A fact that has aroused widespread concern. But this is not the only determining factor. In addition, environmental protection restrictions and the current situation of the currency as well as inflation must be considered.
Key factors in rising commodity prices
The price of copper has increased in recent years. The cumulative increase in non-ferrous metals is approximately 50%. Judging by current market conditions, the price of other materials will continue to rise in the future.
Basic raw materials for the production of a particular product: raw materials in natural forms, such as wood, iron ore and crude oil; and raw materials that have undergone some basic processing, such as fuel or packaging of semi-finished products, suffer from an increase in price due to:
Production and supply factors
As a result of the current COVID-19 pandemic, production capacity as well as demand for raw materials is limited. Today, production capacity has partially recovered. What happens is that when the demand for raw materials exceeds the supply, there is an increase in the price of the hardware.
The role of environmental technicians
Environmental protection inspections are becoming more stringent. Some commodity supply companies face production restrictions, suspensions, rectifications and closures. Many raw materials are scarce, and prices therefore rise.
Increased transportation costs
Transportation costs have increased, resulting in an increase in commodity prices.
Widespread increase in the prices of manufactured goods
The market is a whole. When the price of source materials rises, so does that of industrial products. And add to that the increase in wages. The long-term price increase will raise higher wage demands to counteract the increase in the cost of living caused by the price increase, including hardware.
Prices in upstream and downstream industrial chains will rise
In a complete industrial chain, when the price of source materials increases, it will influence the upstream and downstream industrial chain. The corresponding prices for logistics, services, technology, loading and unloading and employment costs will increase accordingly.
How the current situation influences the price increase in hardware
The impact of monetary policy is another aspect to consider. Central banks in several countries have implemented monetary easing policies to resolve the liquidity crisis in their currencies. If more currency is issued, it will become more popular in several fields, including raw materials. Which will lead to price increases.
The U.S. Senate recently approved a $1.9 trillion economic bailout plan. U.S. President Biden’s economic stimulus was approved by 50-49 votes in the Senate. Rising prices caused by inflation will continue to rise. Firstly, because the materials are rising exponentially. And secondly, because the price increase can cause some materials to be scarce which will make the delivery period longer.
We can therefore say that it is inevitable that product prices will not rise. If you want the price increase of hardware in China to affect your imports as little as possible, you have the best team. At IBMH we are always aware of any aspect that may affect the businesses of all our customers. Having China’s Strategic Furniture and Construction Hardware and Accessories Management will be the best decision you can make for your business. Contact us today!