Supply Chain Issues & The Heat Treatment Industry
I don’t believe I am overstating it when I make the unconditional statement that the global heat treatment industry is seeing unprecedented challenges and changes these days. We all know the root cause, disruptions caused by the COVID 19 pandemic and we see on a daily basis how it has effected the worldwide supply chain. There can be no better example of this than the auto industry and the “chip” shortage which has caused a dramatic slowdown in vehicle production (“The Monty Heat Treat News” has covered this topic in the past, an article entitled “Automotive Slow Down to Significantly Hurt Captive & Commercial Heat Treaters” can be found at Automotive Slow Down to Significantly Hurt Captive & Commercial Heat Treaters | The Monty).
So what are these supply chain issues and how have they challenged the industry in terms of pricing and deliveries? Over the course of the next few weeks “The Monty Heat Treat News” is going to look at some of these issues and with the help of a number of industry suppliers we are going to see what we can expect in terms of price increases and longer deliveries. Subjects we will be looking at include;
- commodity pricing
- shipping costs
- delivery times
- labor challenges
- energy pricing
Nickel Pricing; We start off with a commodity which has historically always effected the bottom line of heat treaters and furnace builders-nickel. All high temperature alloy components used in furnaces have some % of nickel, this can be as high as 72% in some types of Inconel material (alloy supplier Cronite offers a chart showing the composition of various materials used in heat treating heat_treatment.pdf (cronite-group.com). Currently spot nickel prices stand at slightly over $9.00 USD/pound which by historical levels is not tremendously high, however as can be seen in the chart below this represents a price increase of over 30% in the past year (interestingly enough nickel pricing peaked back in 2007 at levels almost twice what they currently are. Pricing came back to earth during the 2009 recession).
So while pricing has always been rather volatile it has been steadily climbing during the Pandemic and with warehouse stock inventories steadily decreasing over the past year there is no reason to think pricing will go anywhere but up.
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