Price Fluctuations in Raw Materials
The costs of raw materials have seen a recent and somewhat unexpected rise in the past few years. We received several notifications from our outside vendors about updates on their selling prices and the reasons behind them that we want to share here, as well as on our Material Updates Page.
Here, we’ll summarize the bulk of the letters we’ve received from our vendors so far, but if you’d like to see the updates in more detail, you can also head to the Material Updates page of our website here.
SPM has received many updates from our outside plating vendors, shipping and delivery companies, and oil and other raw material suppliers about price changes. All are somewhat different in what specific changes they are enacting. However, they share a similar message–due to an unprecedented increase in costs for materials, shipping, and many other factors across the board, they have had to adjust their prices to accommodate the upsurge.
These changes don’t just apply to one or a few industries either. All manufacturers, service providers, raw materials, and part suppliers have incurred cost increases at unexpected rates. In short, everything has unexpectedly become more expensive over the last fiscal quarter. While SPM does not plan to change our prices any time soon, we want to keep you up-to-date on the recent changes and why they are happening.
What factors affect the prices of raw materials?
So why do the prices of various services, parts, and materials fluctuate? Supply and demand are probably the first things that come to mind. After all, if there is less product, its price is likely to go up, and if demand for a specific product is low, its price will go down.
There is rarely ever one thing that is behind the cause of price fluctuations. A vast number of different factors affect material and product prices. Usually, multiple factors affect the pricing of parts and raw materials. Some of these factors are:
Also referred to as ‘Acts of God, these are events that aren’t caused by direct human action. For example, major weather or geological events can cause problems obtaining and shipping materials and parts. Extreme weather hazards like hurricanes, blizzards, droughts, and many others can stall or stop the collection and shipping processes. Even less severe weather can be a problem–icy roads can interfere with shipping, storms can hinder or ground planes and much more.
Pandemics like the recent coronavirus pandemic are another example of a geological event or act of God. The COVID pandemic did not just halt the worldwide economic system but also impacted the availability of labor and other resources.
Cost/Availability of Labor
This is a prominent factor that might get overlooked from time to time. How much a part costs to produce, how much it costs to pay workers to collect and refine raw materials, and more is always an essential part of the end price of a service or product.
These are political, human-related events that have wide-ranging effects on the economy around the world. Events such as Brexit and the invasion of Ukraine by Russia can have huge impacts on the supply chain, the availability of certain raw materials, and overall shipping costs.
This factor refers to America’s overall political relationships with the countries from which companies source different raw materials. Prices can go up or down depending on our country’s relationship with other countries. For example, Russia’s invasion of Ukraine caused the trading of Nickel and other LME metals to halt.
This final and simple factor is relatively self-explanatory but often overlooked. The distance that parts, products, and materials travel–and how they travel–can be a significant factor in the final price. Fuel charges, transportation costs, and more will increase the further the products travel.
As prices fluctuate, we will do our best to keep you in the loop, and we will continue to update you whenever there are changes or interruptions.