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Web Exclusive | June 2017

Commodity price inflation to impact cost of low-voltage electrical equipment

A recovery in Asian demand and supply constraints in the global market has sparked an increase in price of commodities like copper, pushing manufacturers to increase cost of low-voltage electrical equipment. Electrical equipment such as circuit breakers, switching and control and metering products are used extensively in industrial, commercial and residential segments, with a significant chunk used in the power sector. 

Manufacturers have been under pressure to increase product cost due to a continued upward pressure on their input and manufacturing costs. Copper prices have been on the boil because of stoppages at the world's two largest mines — a 43-day long workers' strike at BHP Billiton's Escondida mine in Chile and export licensing issues at Freeport-McMoRan's Grasberg mine in Indonesia, impacting global product levels significantly. Simultaneously, there has been an uptick in demand for the red metal in China due to an ongoing infrastructure push.

Commenting on the price increase, Sunil Misra, Director General, IEEMA, said, “We have been tracking the commodities space closely, given the direct relationship between the capital good industry and raw material prices. Over the last 2-3 quarters there has been a distinct trend of CAGR of important raw material like Copper, Aluminium, Steel etc. as well as the USD exchange rates, which clearly impacts the cost of manufacturing, and businesses need to reflect this change in their strategy as they step into the new quarter.”

According to Shrinivas Chebbi, President – Building Business, Partner Projects & Eco-Buildings Business Unit, Schneider Electric India, “At Schneider Electric we deliver the best value to our customers and it is a relationship of abiding trust which we share with them. The volatile cost of commodities in the international market has made us re-examine the product costs and align them better to keep the value of our products as is.”

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