Raw materials: scarcity and increased demand
The world is changing. In many areas we benefit from new technologies, advanced digitalization and completely new models of life. However, the current global political situation and various crises also mean a change that has an impact on price developments.
From September 1, 2022, we will increase the lighting prices slightly.
We have been offering our customers consistent prices for almost ten years. From the very beginning, we set ourselves the goal of keeping it sustainable and stable, even in turbulent markets. At the same time, we focus on quality – and this must be possible in every price segment. Now we are forced to adjust our prices. The main reasons are the increase in raw material prices, increased transportation costs and ensuring the availability of goods. We would like to make the change as transparent as possible for you. And explain the background to you in three articles. We’ll start with the current raw material situation.
Pandemic and increased demand
Raw material prices have been rising continuously for three years. We as a company are severely affected by this. Polycarbonate, aluminum and electronic components are particularly relevant for perdix products. These raw materials are currently in short supply. Not because they no longer exist – but because of the ongoing crises. We have always worked very closely with all raw material suppliers to obtain good conditions for large quantities. This is no longer possible due to the quantity alone.
Our main range consists of commercial lighting. We offer these in different sizes and shapes. For example, aluminum and cold-rolled steel (SPCC) are used for LED boards. For LED sources, perdix mainly uses high-quality polycarbonate or PMMA PC material.
The average price of aluminum rose sharply in 2021. This year, the average price of the metal was already $2’550 per ton. In the first three months of 2022, the price of aluminum continued to rise steadily, reaching an average of $2’700 per ton.
The fall in steel prices had a negative impact on the sales of the world’s leading companies. Monthly crude steel production in 2020 fluctuated due to the health crisis. However, after a strong fourth quarter of 2020, forecasts for 2021 are optimistic: global demand for crude steel is forecast to increase by around 70 million tonnes.
DC-DC power management ICs
The situation is also not optimistic for the DC-DC power management ICs. MPS’ MP24894 DC-DC power management IC, which we use for almost all of our constant current drivers, is rarely available. We produce our prepDAL®, prepCUT® and prepON® ballasts, which are used for our downlights and spots, in Shanghai. There is also a lack of MCU IC chips there. Due to the pandemic situation, work and production were stopped and material and operating costs rose. At the same time, demand for electronic components of cars, computers and surveillance cameras has risen sharply. Our original MCU IC suppliers such as ST, NXP and On Semiconductor rarely produce the material, some of them have stopped producing new goods. There was another lockdown in Shanghai in 2022, and now even the IC chips from Nuvoton, HDSC and MindMotion are in short supply on the market.
What about the alternatives? MOSFET and other components such as circuit boards or transformers are difficult to obtain. The supply of MOSFETs on the market is not sufficient. Circuit boards are not a major problem for supply, but the price is almost twice as high as last year.
What can perdix do – an outlook
Of course, we cannot be sure how material costs will change in the next few months. Due to the current shortage trend, we believe that costs will remain constant until the end of 2022. We continue to explore alternative solutions and brands. These include, for example, Nuvoton, MindMotion or HDSC (Huada Semiconductor).
Perdix was able to deal comparatively well with the restrictions and price increases for plastic products, steel and aluminum products thanks to good, long-standing relationships with suppliers. Perdix was able to compensate for the lack of availability of key components such as semiconductors for the high-end drivers much better than its competitors and is equipped for 2023. In addition, it is predicted that the annual production volume of plastic will continue to increase in the following decades and will amount to around 590 million tons by 2050. This would be an increase of more than 30 percent compared to 2025.
According to estimates, the price of tin will peak at $41’000 per ton in 2022. That would be a significant increase compared to the 2021 tin price – which was $32’384 per ton.
In 2021, the average annual market price for copper was $9’322 per ton. This means an increase of 50 percent compared to the previous year. The average Comex price in 2021 was estimated at about 280’29 US cents per pound.
This is what the change means for you
The good news: The usual perdix quality of our products does not suffer from the lack of raw materials. However, we can no longer maintain the current prices and are adjusting them to a moderate extent to the current market situation. Our promise to you: If costs go down, we will adjust the prices downwards again.
In the second article we explain the connection between the price change and the increased transport costs.
Here you will find current studies and statistics on current raw material prices and their changes over the last few years: