Rising Cost of Wire Products
There are a number of factors which are now impacting on the cost of most wire based products coming into Australia from China in particular – the ultimate effect is to increase the landed cost of the products when they arrive into our country. Specifically the main 2 issues are:-
- The falling $AUD relative to the $USD, the currency which is used by Chinese manufacturers to price their goods to Australian buyers – in the last 12 months the $USD has dropped by nearly 20% against the $USD meaning the cost to buy and ship products from China to Australia has increased by this 20% change in the value of the Australian currency;
- The (probably) overdue move by the Chinese national government to crack down on air pollution – the levels of which have increased significantly in recent times. The factories which use coal to run their galvanising plants are now being forced to shut down or install expensive new pollution reduction equipment. This has significantly increased the cost of galvanising and almost doubled the production times for orders as the huge demand for galvanising is channelled through fewer legal suppliers. Prices for wire products from China have increased by nearly 30% in $USD terms in the last 6-9 months and we expect this factor to keep increasing costs for some time to come.
The Fencing Store’s wire fencing related products are all affected by the above 2 major cost factors – meaning that $AUD landed costs have risen by over 40% since about April 2013. We have been forced to raise our selling prices as new shipments arrive to cope with this rising costs but we have not passed on the full increases in order to continue to provide our customers with the best value offers we possibly can.
It is not easy to change suppliers in China – to say another region less affected by the pollution reduction and factory closures. Pretty well all the wire products coming from China are made in the Hebei province located not far from Beijing – the capital city is one of the worst affected areas in China for air pollution.