The sharp increases in oil and commodity prices, together with the Ukrainian crisis, are compounding the challenges faced by industries, with the prospect of poor performance looming due to an increase in costs and expenses, high freight rates, and continued global economic uncertainty.
According to the Korea Mine Rehabilitation and Mineral Resources Corporation on Tuesday, the price of nickel skyrocketed by 31% year-on-year, from 18,000 dollars to 23,650 dollars per ton as of Monday, as a result of rising demand for batteries for electric vehicles. The lithium price has soared from 9,000 dollars to 55,000 dollars for the same period due to the supply issue caused by lackluster performance in the mining sector.
“Supply is not meeting demand amid rising commodity prices,” said a battery industry insider. “It is not a poor profitability due to rising costs of production that we are worrying about. It remains unclear whether factories can operate due to resource scarcity.”
The global oil price increase is literally having an industry-wide impact. The surge in oil prices serves as a direct reason for an increase in cost of production in the chemical industry that uses crude oil as raw material. A surge in freight costs due to shipping container shortage caused by the COVID-19 pandemic has begun in earnest since last year, and it is setting off alarm bells across industries spanning semiconductors, automobiles, and electronics.
The Hyundai Merchant Marine (HMM), a South Korea-based global shipping and logistics company, saw a record high operating profit of 7.3 trillion won last year, an increase of 650% year-on-year, and this is a defining example of rising logistics costs. Concerns are mounting over a further increase in logistics and freight costs with ever-increasing margin of increase in the price of oil since the beginning of the new year.
Hyung-Seok Seo email@example.com · Choong-Hyun Song firstname.lastname@example.org