What's going on with commodities and supply chains?
Discussion
I'm seeing and hearing from lots of people that it's hard to find all sorts of things - right now on the Homes forum there's a guy saying that he can't get a shed for two months and wood is scarce.
However, while we don't seem to be in an overall commodities boom yet, there are plenty of reports about e.g. lack of computer chips or cement is 25% more expensive than in 2019.
I imagine "social distancing" has put a bit of a dent in factory output, at least from Western factories, but is that it?
Is it simply that supply chains were broken by the pandemic and are yet to normalise (especially the lack of any passenger flights meaning no air cargo) or is there a more complicated explanation?
Any other thoughts - posting in Finance as ultimately most stuff comes back to money!
However, while we don't seem to be in an overall commodities boom yet, there are plenty of reports about e.g. lack of computer chips or cement is 25% more expensive than in 2019.
I imagine "social distancing" has put a bit of a dent in factory output, at least from Western factories, but is that it?
Is it simply that supply chains were broken by the pandemic and are yet to normalise (especially the lack of any passenger flights meaning no air cargo) or is there a more complicated explanation?
Any other thoughts - posting in Finance as ultimately most stuff comes back to money!
A lot of it is shipped around the world. Immediately post COVID empty containers for the shipping industry were left out of place and clogging up ports in the wrong places, and nobody wanted to pick them up when they could be paid to ship cargo instead and/or the ships weren’t in the right place.
This had a significant knock on effect. The next thing will be the blocked canal in Egypt...
This had a significant knock on effect. The next thing will be the blocked canal in Egypt...
Well, there’s now a boat doing it’s best to block anything coming in via Suez and could be a week or two before it’s shifted so everything will have to wait or go the long way round...
People are doing a lot more in their homes whether that’s improvements or doing new hobbies that are home based which has led to much greater demands on suppliers who in turn are leaning on factories that may have reduced staff levels or reduced productivity due to social distancing and whatnot.
An example are motorhomes. A great majority are built on the Fiat Ducato base. Fiat closed their factory for a while during lockdown and when they reopened, started producing them at a reduced rate due to social distancing on the factory floor. Then they are eventually sent to the converters who themselves are operating at a reduced capacity due to SD and staff off sick. Couple this with an explosive demand for motorhomes throughout Europe and you can see where delays can occur.
People are doing a lot more in their homes whether that’s improvements or doing new hobbies that are home based which has led to much greater demands on suppliers who in turn are leaning on factories that may have reduced staff levels or reduced productivity due to social distancing and whatnot.
An example are motorhomes. A great majority are built on the Fiat Ducato base. Fiat closed their factory for a while during lockdown and when they reopened, started producing them at a reduced rate due to social distancing on the factory floor. Then they are eventually sent to the converters who themselves are operating at a reduced capacity due to SD and staff off sick. Couple this with an explosive demand for motorhomes throughout Europe and you can see where delays can occur.
georgefreeman918 said:
Speaking on the construction industry, we are seeing that availability (or lack of) is being driven by massive demand, following a catch up of pandemic shut downs and brexit delays. The perfect storm!
We are struggling to get sand and all types of aggregates. We put our prices up 30% last week...Interesting, so it sounds as though some of it is demand-led (more home improvements, with ~3 million people in the UK having had over a year off to rebuild their entire house I guess!) and some is dislocations continuing from the initial response to the pandemic.
Which would explain why commodities themselves haven't gone stratospheric in the way you might expect if it was an underlying across-the-board boom.
Although that demand is presumably feeding through to some extent.
Which would explain why commodities themselves haven't gone stratospheric in the way you might expect if it was an underlying across-the-board boom.
Although that demand is presumably feeding through to some extent.
Also appears to be quite an influence from price speculation which is having a real world effect, particularly copper.
Materials mined in Australia disrupted getting into China for use for political reasons - allocation of said materials.
Dollar weakness. RMB strength. Labour costs increased.
Then Covid after effects. And Brexit. (Took 6 weeks for a few pallets of mine to get through UK customs!!!!)
Electronic Component industry. Buggered at the moment and increases across the board.
Materials mined in Australia disrupted getting into China for use for political reasons - allocation of said materials.
Dollar weakness. RMB strength. Labour costs increased.
Then Covid after effects. And Brexit. (Took 6 weeks for a few pallets of mine to get through UK customs!!!!)
Electronic Component industry. Buggered at the moment and increases across the board.
Edited by PopsandBangs on Thursday 25th March 23:22
Edited by PopsandBangs on Thursday 25th March 23:23
The supply chain for a phone may now have over 50 different component suppliers, if even a few experience difficulties then the whole supply chain grinds to a halt.
I find it odd the government say that inflation has gone down when year on year prices in supermarkets have increased 6%.
I find it odd the government say that inflation has gone down when year on year prices in supermarkets have increased 6%.
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