In the last weeks there has been a lot of talk about the lack of raw materials, that is leading to high price increases and delivery delays in all the production industries, including the furniture one. During the post-pandemic recovery, raw materials are really difficult to find, delivery times tripled and prices increased from 10% to 50%. The shortage of raw materials is affecting the wood industry, with panels and semi-finished products, but also metallurgy and the supply of metals, such as cobalt, copper, lithium, or plastic materials, such as PVC or polypropylene.
This is an intolerable and difficult condition for manufacturing companies and supply chains, including our company Brugnotto Group, that sees the price of all the types of panels, semi-finished products and wood to increase. As Alvisio Senatori, President of Confartigianato Legno e Arredo AN - PU, pointed out in a recent interview, the situation is really serious. Companies have serious difficulties in finding MDF and chipboard. Therefore, they «already point out delivery times of 2 or 3 months and inform that selling prices are not defined».
The complex situation of the shortage of raw materials worldwide can be understood taking into account the sudden acceleration of the futures in the United States. On the basis of estimates, prices have increased by 49% in three weeks since April 2021, reaching values that have exceeded double those of last year in the same period, and reaching one thousand dollars per board foot. As reported by Corriere della Sera, the prices of construction wood and of other raw materials rised in Europe too. They increased by 60-70% compared to last year's negotiations. In addition, the price of laminated wood - one of the most used material in the furniture industry- increased from 400 to 700 euro per m³.
There is a concatenation of different causes and effects. Furthermore, government agencies could neither foresee the problem nor manage it properly. Let's try to make some order in this difficult context.
China has already taken the first steps to secure the availability of other materials too. The Chinese government and the main Chinese companies own the largest metal mines in Congo. The metals, including cobalt, lithium and copper, are then processed and transformed within the Chinese factories. These raw materials have limited availability and are necessary for the green process that is taking place all over the world. For example, lithium is used to produce electric car batteries, while cobalt is essential for the production of iron. As reported by Il Sole 24, battery production in China would have increased by 300% in 2021 compared to the same period of the previous year. In addition, China has signed an agreement with Congo until 2033 to extract these precious metals.
Natural events, logistical costs and Chinese government activities have lead to this complex situation. In October 2020, the EU launched the European Raw Material Alliance (ERMA). The Alliance for raw materials aims to facilitate internal activities, namely developing companies that recycle materials, favoring internal extractions and reviewing European legislation. One of the most important requests is to eliminate duties by 25%, which are linked to the exceeding of steel import limits from non-EU countries. Eliminating the duties would be necessary in the short term. Boosting European reindustrialisation should also be made, which woudl short the supply chains of commodities. Therefore we rely on the intervention of the European Union. We are aware that the global scenarios are changing considerably and we believe that this is only the beginning!