Some Industry Insight
Some Industry Insight
Some industry Q & A with our companys president
I can only speak for our industry, although most industries have a similar story to tell. By the spring of 2021, the steel valve supply chain, from the iron mines to the end user, was running dry. Every part of the supply chain had shutdowns and reduced capacities at some point during 2020. In 2021 consumers started to demand more finished products, those voids in the pipeline worked their way back to the foundries that melt the metal.
99% of the products that we inventory ourselves are in stock and ready to ship.
Barring any unforeseen world events, our inventory levels will continue to improve over the next few months. Since we deal directly with our factories, we can get products ordered and delivered relatively quickly. However the USA market in general is still low on many items, so we are selling out of some products faster than we anticipated. It is not uncommon to hear from customers I will take whatever you have in stock.
They are catching up too, most items we look for are in stock in the USA somewhere. It is taking us a few days longer to get products from outside warehouses packed and shipped due to their ongoing worker shortages.
The biggest increases we have been seeing are logistics related. Every transport vehicle uses fuel, which is still near record highs. Those costs are passed to us by the freight carriers. Our factory costs have also increased, reflecting the shortage of raw materials in the global markets. It is a classic supply and demand scenario; demand is stronger than supply right now.
We use an expeditor in China to manage our exports, they have been sending our products to ports which are operating normally, so we have been able to avoid major shipping delays.
I have not seen a list of items being considered for a reduction in duty. Personally I dont think steel valves will be on the list, they do not have a measurable impact in the USAs current inflation. But even if the tariffs were lifted today, there are billions of dollars in inventory in warehouses for which the increased duties were already paid, so it will take a long time for those products to be replaced with lower cost products.
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