Rising prices of raw materials used for electrical appliances like refrigerators, microwave ovens, motorcycles, and plumbing tools depict no clear signals of lower cost because the United States supply chain crisis shot up indefinitely. It resulted in an unprecedented metal price hike.
John Gillespie, the current commodity manager of Superior Essex Company, stated in one of his press conferences that he is clearly seeing the significant problems and issues that will accelerate in the country in the upcoming days due to the inflation surge. Superior Essex contributes to supplying a more substantial amount of metal wiring to electrical grids, stations and homes in the United States. John Gillespie said that with the ongoing shipping costs surge across the United States, shipping and logistics of aluminum and copper are highly affected.
Pandemic lockdown also caused a significant rise in the costs of rail freights and trucks to transport things across the state, which indirectly affected delivery timings and caused delays in transporting raw materials to the customers. Manufacturers and owners of production facilities are paying all-time high prices to buy copper, aluminum, neon, zinc and other essential raw metals that are needed for something as large as automobiles and as small as a simple electrical socket at home. The shipping cost of copper and aluminum in the United States is record high right now if we match the data to 2004 when raw materials prices were also fluctuating. Aluminum transport solely makes up 30% of the total metal price.
Ships and boats are stuck in one place for days and rail freights do not have enough working staff and team. Eventually, rail yards are overly crowded with people and raw materials because it also been stuck in about 2000 cars and trucks. The working team is limited and they have to extensively dig it out with man force, which takes longer than usual. The ongoing storm also imparts a ripple effect and customers are demanding raw material but unfortunately, the material is not even present there anymore.
Supply chain surge is all over the news bulletin and headlines these days stating that inflation surge is a rebound consequence of pandemic and key commodities prices are at record-highest right now which never happened in more than fifteen years. The reason for inflation is the limited supply of raw materials due to the ongoing pandemic. Federal and regional governments are trying to take immediate action on this matter but seems like things are out of their hands too. They are attempting to reduce the inflation surge and hoping that moderate hang-ups will help in smoothing out the stock market in the year 2021-2022.
According to Fast markets, the premium price range of copper jumped up to almost 10 cents per pound which is nearly 25% higher than what it used to be back in 2004. Consumers who used to buy copper via Comex in the Midwest of the United States are paying double the rates after the pandemic to buy copper for the same quantity.
The cost surge is even worse and economically unbearable for aluminium. Over 50% surge has been recorded in aluminum rates in the past three months. Customers are paying an additional amount of eight hundred dollars per metric ton and the raw material price of 4000 per ton. Customers who buy aluminum from the London Metal Exchange in the Midwest of the United States are facing a surge of almost 40-50% over premium prices of aluminum.
As the year 2021 tapered off, the overall pricing of industrial metals came down drastically but another wave of inflation was observed with the discovery of the omicron variant. This developed even more pressure on the already shambled supply chain. In late January, a record increase in the price of industrial metals was observed.
Production owners and metal traders released an official statement in which they said that aluminum and copper are now available; however raw metals are not in an adequate quantity and place to be utilized due to the limited functioning of trucks and rail freights. Canada is one of the largest aluminum suppliers and makes up almost 60% of the aluminum supply to the United States. For that very reason, truck drivers across Canada and US were motivated to get vaccinated and be more active at work but somehow this twisted the matters even more.
Jorge Vazquez, a managing director and researcher at Harbor Intelligence, said it is highly likely that shipping rates and logistics will come down to the standard pricing range by the last six months of this year. The apparent reason for this decline can be the dissipation of logistics gradually. Harbor Intelligence also said Federal Reserve would revise its monetary funding policy and increase interest rates.
Jay Richman, the founder of New Jersey-based E.W. Berger & Bros., said that his company and relevant product services have to wait almost three to four months to deliver their delayed orders in time. He also added that according to last year’s data, their orders were delayed about seven to eight weeks and before the pandemic, the waiting time was around one to two weeks.
In one of his latest press conferences, Richman said that his company receives copper in pieces. If the company asks for 700 pieces, they will only receive 70 pieces, sometimes even less than that. There is no betterment so far. Richman is one of those manufacturers who buy from domestic and local sellers like Amtrak. Richman’s company suffers from a downfall because of the inflation surge and lack of raw materials.