Fun with Data – Raw Materials
While headlines over shortages in the CE component space continue to draw eyeballs and companies cite rising raw material prices as one of the reasons for weaker than expected profits heading into 3Q, we go back to check on a few of the more important raw materials used in CE products to see how prices have changed over the last few months. Consistency is certainly not common to prices for many of the more important CE basic materials, with some seeing rapid drops from early 2021 highs after peaking in May, while others continue a steady climb toward new highs, with copper, among the most widely used, down from its May peak but still up since January, and steel, also off its May high but also still up for the year.
3Q, the seasonal build period for CE devices would typically be the quarter in which production gears up and raw material inventories are replenished toward strong holiday demand, and while we are still in an ‘unprecedented’ environment, we expect 3Q to be a bit less frenetic, with weaker demand from TVs and smartphones pushing a bit less on CE raw material prices. Consumer Electronics production does generate significant demand for some materials, particularly Indium and some rare earths, and while copper is a key raw material for most CE products, there are other drivers that could offset any weakness in CE demand. While current CE device inventory builds in raw material prices that were seen in May and June, some of that pressure might ease a bit in 3Q and give CE brands a bit of margin breathing room that will be needed to attract consumers at current higher device prices. Will it be enough to make a difference or will blended inventory pricing mitigate any raw material price reductions? The Magic 8 Ball says’ “Reply Hazy. Try Again Later”, say, in 30 days.
3Q, the seasonal build period for CE devices would typically be the quarter in which production gears up and raw material inventories are replenished toward strong holiday demand, and while we are still in an ‘unprecedented’ environment, we expect 3Q to be a bit less frenetic, with weaker demand from TVs and smartphones pushing a bit less on CE raw material prices. Consumer Electronics production does generate significant demand for some materials, particularly Indium and some rare earths, and while copper is a key raw material for most CE products, there are other drivers that could offset any weakness in CE demand. While current CE device inventory builds in raw material prices that were seen in May and June, some of that pressure might ease a bit in 3Q and give CE brands a bit of margin breathing room that will be needed to attract consumers at current higher device prices. Will it be enough to make a difference or will blended inventory pricing mitigate any raw material price reductions? The Magic 8 Ball says’ “Reply Hazy. Try Again Later”, say, in 30 days.
Magic 8 Ball - Source: britannica.com
Palladium Price - Source: Kitco
Gold Price - Source: Kitco
Copper Spot Price - Source: Kitco
Aluminum Spot Price - Source: Kitco
Indium Spot Price - Source: Trading Economics
Steel (Rebar) Price - Source: Trading Economics
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