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Fluorescent Lamp
Volatility - II Update As a
follow-up to our original statement on the Volatility in Lamp Prices, FSG
strives to keep you informed of the changes within the Industry as they
occur. We have received notice that
another general industry price increase is scheduled to go into effect in
early November (see links on site). Much
more information has been released since our July letter. The biggest development is China’s
reduction in the amount of Rare Earth Metals/Oxides available for
export. Reasons have ranged from
controlling world-wide market, market manipulation, to pollution
control. Regardless of the real cause,
every lamp manufacturer is facing Substantial Raw Material Increases and
Scarcity of Product in the short-term.
These
developments present good news, bad news scenario. The good news is these increases are
limited to the Fluorescent Product Family. Incandescent, Halogen, and HID
have been excluded from the November increase. The bad news is the scarce availability of
Rare Earth Phosphors means prices will continue to escalate into 2012. Non-China sources for Rare Earth Phosphors
are starting up around the globe but cannot get on-line fast enough to keep
up with market demand. The
major manufacturers are all diligently seeking alternative sources and
products to counteract these inflationary pressures. We are encouraged by the introduction of
fluorescent products with no/much less Rare Earth Phosphors that are close to
release. These products will be
expensive relative to June 2011 levels, but lower than November 2011 levels. FSG
continues to educate and communicate the latest developments to our Account
Representatives. These individuals
continue to be your best source for the latest information and alternatives
during these volatile times. We value
your business and understand the difficulties this situation presents to your
business. We will
continue to publish the most relevant documents on our website, so please
check back often for the latest information. |
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Fluorescent Lamp
Volatility - I Lamp Manufacturer Price Increase - July 1,
2011 We value our role as your lighting supplier and believe it is important
to inform you of industry events that will affect your business. Todays
lighting market is faced with tremendous volatility due to the scarcity of
Rare Earth Oxides and the hyperinflation associated with those elements. Rare Earth Oxides are a critical component in the making of
the phosphors used in linear and compact fluorescent lamps. China controls
the over 95% of the global market for these Rare Earth Oxides. The Chinese
Government has imposed taxes for environmental clean-up and imposed limitations
on the amount of oxides available for export. The combination of limited
production and imposed taxes to mine and produce these elements has led to
unprecedented cost increases that started in January of this year. Another complicating factor is that varying phosphor mixes at
the individual product level affect the amount of increase for that product
differently. It is not a flat increase across all products, but rather a
variance by each product depending on lamp color, lamp tube diameter, and lamp
wattage. As a result, every major lamp manufacturer (GE, OSI, Philips,
TCP, Maxlite, etc.) has announced scheduled price increases that will begin
on July 5th and will likely continue at monthly intervals for the foreseeable
future through 2012. The manufacturers have stated they will do all they can
to manage and control the price increases by tying them only to the
inflationary pressure associated with the rare earth elements. FSG is committed to helping our customers best navigate these
volatile times. We are investing in more inventory to ensure that you are not
affected by the scarcity and we will only be passing on the percentage cost
increase on a SKU by SKU basis as they occur. We have also equipped your account representative with all of
the industry data regarding this matter and they will be your best resource
for staying current on the situation, as well as how to best manage your
lighting products to minimize the impact to your business As always we value your business and will do all we can to
continue to earn it during these challenging times. What is the Rare Earth Oxide Crisis that is
effecting lamp pricing? |
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