The Impact of the Price Increases in Raw Materials such as Aluminum and Copper

From a market operation perspective, raw material(LED aluminum profile, LED tube housing) price fluctuations are the result of a combination of factors, including market supply and demand, macroeconomic policies, and the global economic situation. They cannot be easily manipulated by any single entity or group. While large enterprises and financial institutions exist in the market, their actions are conducted within market rules and legal frameworks, and are subject to strict regulatory oversight. Furthermore, the global raw material market is vast and complex, involving numerous producers, consumers, and traders; manipulating prices on such a large scale is virtually impossible.

The Impact of Rising Raw Material Prices on the Economy and Ordinary People's Lives

Impact on the Production Sector

Export Companies Suffer Losses: Taking an export company as an example, the basic process involves purchasing 5 million yuan worth of raw materials + 500,000 yuan in manufacturing and processing fees + 500,000 yuan in miscellaneous expenses + export sales of 1 million US dollars (denominated in US dollars) + receipt of payment (US dollars converted to RMB). Assuming an exchange rate of 1:7 at the time of contract signing, the sale of goods yields 7 million RMB, resulting in a profit of approximately 1 million RMB after deducting costs. However, if the US uses its financial hegemony to relatively appreciate the RMB, with the exchange rate becoming 1:6.5, $1 million would only be worth 6.5 million RMB, resulting in a loss of 500,000 RMB in profit for businesses. Simultaneously, the excessive issuance of currency by the US leads to rising prices of basic raw materials, significantly increasing production costs for businesses. Production may result in losses, while not producing faces contract defaults. Many export-oriented companies are forced to produce despite the losses, trapped in a predicament of operating at a loss.

Downstream and midstream enterprises face profit pressure: The price transmission mechanism means that downstream businesses and consumers experience price increases later, but are often the most vulnerable to being reaped by rising prices. The sharp increase in raw material costs squeezes the profits of midstream and downstream production enterprises.

Impact on consumer goods: Commodity price increases: Due to the significant rise in various raw material costs, end products such as refrigerators, televisions, automobiles, motors, and small appliances have no choice but to raise prices. Giant companies like Haier and Midea have directly or indirectly announced price increases, with ordinary consumers ultimately bearing the cost.

Increased pressure to survive: The sharp rise in material prices has squeezed the profits of midstream and downstream production enterprises, making it difficult for workers' wages to rise, while prices have increased significantly. People's income has not increased significantly, which has increased the survival pressure of ordinary people and further exacerbated the gap between the rich and the poor.

JE is a factory specializing in the production of LED tube housing, LED tri-proof light housing, LED aluminum profile for LED strips, LED linear light diffuser, PC tube for LED light, and so on, for more tube housings, please refer to:

https://www.jeledprofile.com

For more details, please contact: sales@jeledprofile.com

Tel/Whatsapp/Wechat: 0086 13427851163