Home > International News > 2016 Rising costs of raw materials in LED

2016 Rising costs of raw materials in LED

The need for more energy efficient lighting and high-performance lighting technologies have lately increased the demand for certain materials considered to be critical in LED industry.

This demand has led to an increase in raw material costs, which has, in turn, resulted in an upsurge of price increase throughout the LED lighting industry.

Rising costs of raw materials in LED

The sharp increase in prices of aluminum, gold wire, copper, PVC, PCB substrates, paper packaging, and shipment costs has been experienced throughout the year 2016. With the sharp rise of the raw materials, many LED companies have held off from the price war strategy and have directed their focus on surviving in the highly competitive LED industry. The high rise of raw materials in LED has been driven by factors such as:

Increase in Freight Cost

The tighter regulation enforcement has triggered the increase in the freight cost. A new standard for over-limit highway transport vehicles was enforced towards the end of 2016. Before this new rule was enacted, companies would overload trucks to keep down the cost of transportation. Since the implementation of this standard, traffic police have been rigorously checking and monitoring all cargo trucks and heavily penalizing those found violating this rule. This resulted in an increase in transportation costs which has negatively impacted the prices of raw materials in the LED industry.

The ocean freight rate also increased in December 2016. CMA CGM the giant French shipper and other major shippers announced an increase in their services to and from Europe. The increase in ocean freight cost will definitely increase the cost of raw materials in the LED industry.

The price hike in the carton

Many carton enterprises in China have hiked the price of cartons due to the increase caused by the high prices of corrugated boards and packaging paper. The rise in carton prices affected many other enterprises that use cartons for packaging purposes. Enterprises such as LED industries have negatively been hit by this rise due to the increase in prices by industries manufacturing and supplying LED packaging boxes.

Increase in Labor Cost

The enormous pool of cheap labor in China has been a critical driver of the country’s economy. This is now changing, as labor throughout the country is no longer cheap. This shift has enormous implications for industries in China and the rest of the world, especially the LED industry. The rise in the cost of labor has affected almost all manufacturing industries in China.

The prediction report of the Pudong Innovation Research Institute which was released in November 2016 indicated that the labor costs of China would increase by nearly 10%. Companies have been forced to increase their wages to attract the fewer young people who are willing to work on the assembly line.  A regular worker’s daily wage rose from 230-240 yuan to 260-280 yuan, and a senior skilled worker’s daily wage rose to 300 yuan.

Rising costs of raw materials in LED has also been caused by the depreciation of China’s currency, which has pushed up the costs of raw material in the LED industry.

 
 

Aside from contributing to heat dissipation, the rear cover also protects the internal parts of the LED panel fixture. Therefore, you should make sure it’s made from the best materials e.g. 1060 aluminum.

These are just a few of the most important components of an LED light panel for sale. Finding a fixture that has the best of these components means finding the best panels on the market.

Share this story!

Leave a Comment

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Scroll to Top

Request A Quote

Need something helped in a short time? We’ve got a plan for you.