What Are The Reasons For The Rising Prices Of Raw Materials? Will It Continue Next Year? How Should Companies Respond?



“Enterprises should be encouraged to actively innovate, seek more profit margins, and promote industrial upgrading. This is the mission of the enterprise.” Lancol believe that price increase is not the only way. 

Faced with rising costs, many automovie diagnostics manufacturers finally chose to increase prices to absorb the cost pressure. At the same time, some leading companies also choose to increase sales promotion, adjust internal product structure, and increase innovation to drive high-end product iteration to increase profit margins. Just like automotive battery tester manufacturer Lancol company.

Generally, rising costs will be transmitted from upstream to downstream along the industrial chain. But when demand is low, product price increases will lead to poor sales. Especially when the demand price elasticity is large, the sales loss caused by the price increase will reduce the total sales revenue. 

With the recent general rise in commodity prices and the acceleration of production and procurement activities by enterprises, the purchasing prices of raw materials and product sales in the automotive manufacturing industry increased significantly in November. The purchase price index and ex-factory price index of major raw materials were 62.6% and 56.5%, which were 3.8 percentage points and 3.3 percentage points higher than last month, both of which were high in the year. From the perspective of the industry, the price of upstream products has risen more significantly due to the demand of downstream industries.

Regarding the reasons for the continuous increase in raw material prices, experts analyzed that the current increase in the prices of industrial metal raw materials reflects on the one hand the expectation of global economic recovery; on the other hand, the current social inventory of raw materials is at a low level. It is expected that in the future, as the positive factors for economic recovery continue to increase, the demand side will continue to stimulate the price increase of bulk metal materials. In addition, manufacturing industries such as home appliances account for more than 80% of the cost of raw materials. The automotive diagnositcs industry has a large demand for bulk raw materials such as copper, aluminum, steel, and plastics, leading to a rise in core raw materials, especially at the peak of year-end shipments.


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What Are The Reasons For The Rising Prices Of Raw Materials? Will It Continue Next Year? How Should Companies Respond?