China Suppliers Need To Raising Magnet Price and Why？
Chinese factories have been very busy lately because there are so many orders from their foreign customers, some of which are scheduled directly until mid-2021. Usually, China factories should make a lot of money during this period, but this time it is not the case. Therefore Chinese suppliers want to increase the price of their products. Magnet price is one of them. You may be wondering why? This article analyzes the reasons from the following four aspects.
1. Exchange rate:
The exchange rate fell from 7.0 to 6.5 in three months, eating up nearly 8% of profits. This makes many companies almost no profit.
Assuming an order of 1 million US dollars, if the factory signs the contract in August and delivers the goods in November, the profit of the factory will shrink by RMB 500,000, which is equivalent to work in vain.
2. Raw materials:
Exchange rate in 2020
The prices of raw materials have skyrocketed recently. The increase this time is characterized by a wide rang and fast speed. First is the clothing fabric, then chemical raw materials, wood, and metal.
The price increase of raw materials has a great impact on factory, and a lot of profits are eaten up in this way.
You may say that if the price of raw materials increases, the factory can also increase product prices for customers. But the truth is usually foreign trade contracts, especially large-volume orders, are signed a few months in advance. If the price is fixed, it is impossible to raise it immediately.
3. Customer:
Due to the double pressure of exchange rate and raw material, the factory have to increase price for new order.
Pr-Nd raw material price for neodymium magnet in Nov 2020
Usually customers will ask for lower price as soon as the price of materials drops. But when the price of materials rises, it is difficult for the factory to increase prices. No matter how good the friendship is, the price increase will make regular customers unhappy or cause customer loss.
4. Logistics:
The explosion of foreign trade orders has led to a recent shortage of shipping containers. No warehouse space, resulting in a large number of goods stranded in the factory, which ultimately affects the recovery of factory payments. If the situation is serious, it may lead to a break in the capital chain.
Finally, if you want to ask how long this situation will last? Foreign trade people say at least a few months. Because every year before the Spring Festival is the peak of shipments. Now the peak period has not yet arrived, but the situation is already very bad. If the goods cannot be delivered on time, foreign inventory will decrease and demand will increase again.
How Is The Current Production Situation In The Magnet Industry?
China Magnets Source Material Ltd. has rich experience in producing permanent magnets. As magnet price increase, at present, the factory’s large-volume blank material orders are scheduled to February 2021. For new orders with a small quantity, we can only take orders based on the existing stock blanks, given that new materials with small quantities will no longer be produced currently. Due to the long delivery time of materials and the upcoming Spring Festival holiday, the magnet lead time will be longer. If you has an rare earth magnet order, please arrange the purchase in advance.
