Under the Tide of Rising Prices of Raw Materials, How will the Home Appliance Industry be Affected?

For the home appliance industry, the Spring Festival (Chinese New Year) has always been a traditional promotion cycle, but this year’s situation is somewhat special. Just now entering the new year, many home appliance manufacturers collectively issued a statement to increase the price of their home appliance products.

In fact, this is also helpless. Beginning in the second quarter of last year, the prices of many raw materials in the upper reaches of the home appliance industry chain have continued to rise, putting a lot of pressure on the prices of home appliances manufacturers’ finished products.

After entering 2021, the pressure on the production end will be transmitted to the end of the sale, so home appliance manufacturers also one after another, the prices of products have been adjusted upwards to ease the pressure on raw material costs.

However, this situation may continue to last sometime.

Take the most representative copper price for home appliance raw materials as an example.

On February 25, transaction information in many places showed that the spot copper price had exceeded 70,000 RMB(around 10,850USD), reaching 70,260 RMB/ton(around 10,890USD).

Data from Shanghai Nonferrous Metals.com shows that copper prices have soared by 17% since February, the largest monthly increase since November 2016.

At the beginning of 2020, the price of copper has risen by 50%, setting a record high in nearly nine and a half years since September 2011.

In the home appliance industry, white electrical products such as air conditioners and refrigerators are highly dependent on copper materials, and it is basically difficult to find suitable substitutes for materials such as copper wires and copper tubes.

Therefore, after the price increase of copper materials, white electrical products have been the most affected, and the reaction on the market is that white electrical manufacturers have to take the lead in adjusting their white electrical products upward price adjustments.

The latest copper price data shows that the price increase of copper materials is still continuing, and has set a new record in the past, which makes the future trend of its price even more uncertain.

According to this momentum development, the price of copper materials is still on the rise. Although there is still a possibility of a callback in the future, it is not optimistic for now.

For home appliance manufacturers, they must continue to face rising cost pressure.

From this point, the entire home appliance industry will continue to be under pressure.

Although most of the home appliance manufacturers during the Chinese New Year promotion period carried out a wave of price cuts, the unexpected price hikes this year due to the increase in raw materials made the manufacturers feel “very hurt”.

For this reason, home appliance manufacturers also need to adjust sales strategies and other aspects. Alleviate the operating pressure caused by the price increase of raw materials.

According to media reports, the electrical appliance manufacturer Changhong Meiling has stated that it will actively respond to the pressure brought by the increase in upstream raw material costs and rising logistics costs.

Vantage, the leading kitchen appliance manufacturer, also claimed that in the face of cost-side pressure, the company and its suppliers implement a raw material price linkage mechanism, and share the cost of raw material price increases with suppliers.

So how will the home appliance industry be affected by the rising tide of raw material prices?

Industry experts believe that the increase in the price of raw materials will indeed put manufacturers under considerable pressure, but from the current market environment, the overall industry is still in the upgrading stage, especially white electrical appliances represented by refrigerators, washing machines, and air conditioners.

The upgrade trend is even more obvious. Manufacturers can make more use of the characteristics of this stage to continue to make efforts to innovate and upgrade home appliance products, and to promote product upgrades through technological innovation, so as to promote the increase in sales and overcome the difficulty of rising raw material prices.

Adhering to the orientation of innovation and upgrading, manufacturers will also have unique advantages when raw material prices return to normal levels in the future.

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