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Volatile Commodity Prices: What Raw Materials are Impacted & Why

AUGUST 16, 2021

 

by Art Remick, Buyer; Kristen Stewart, Logistics Administrator; Paula Price, Supply Chain Manager; Jenn Vaughn, Manufacturing Manager


Manufacturing supply chains are no stranger to sudden changes and intricate complexities, which is why they require strategic planning and flexibility. Volatile commodity prices can often be a challenge supply chain managers must overcome; however, the prices of raw materials are reaching unprecedented levels.

 

Some of the most lucrative raw materials to manufacturers are experiencing a steep climb in price. Let’s break it down.

Aluminum

 

The price per pound of aluminum is up 27% since January and 57% year-over-year (YoY).

Copper

Although copper prices fell in July, they are still up 23% since January and 59% higher YoY.

 

Copper is generally unrivalled as an electrical and thermal conductor, while also being durable and easy to work with. Its vast array of uses in heavy industry, construction and manufacturing makes it a reliable indicator for trends in the global economy.

Lead

 

With high demand and a tight supply, the price of lead per pound is up 30% YoY.

Steel

 

Domestic hot and cold rolled steel prices continue to climb to record highs, both up 70% from six months ago.

 

Hot rolled and cold rolled steel are up 265% and 193% YoY, respectively.

 

Some analysts predict a drop in price could occur in the next quarter, while others believe the surge will continue through year end.

 

So, what is driving these price increases?

 

The COVID-19 pandemic created the largest, most uncontrollable supply chain bottleneck of all, and once operations could re-open, pent up demand flooded supply chains from the top down. The strong customer demand continues to contribute to the pre-existing bottlenecks. Add in the increased competition for raw materials and electronic components and manufacturing supply chains are in the center of an extremely volatile market.

 

Through all these challenges and uncertainties, Mitsubishi Electric is leveraging strong strategic partnerships and on-hand inventory to fulfill our customers’ needs, ensuring their business doesn’t go dark.

 

Edited by Nicole KristofDigital Marketing Specialist


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