Even though commodities prices have come way down over the last quarter, we are not seeing representative pricing reductions from our Chinese partners. For example, copper is down more than 50% from it's peak earlier this year. However, we are having trouble getting cost reductions on items made principally from copper.
Factories are pointing to labor costs and the exchange rate as major problems. The new labor law is being noted as having a large impact on labor costs.
Even freight hasn't come down with the decline in oil prices. When we quoted freight just yesterday the forwarders were still including the same fuel surcharges they were a few months ago when oil was well over $100 per barrel.
It appears it will take some more time for commodity prices to flow through to manufacturing and service prices. The economic slowdown should also encourage prices to come down a bit.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment