U.S. lighting manufacturers raise prices one after another, Chinese LED manufacturers are facing downward pressure
After Acuity Brands and Eaton raised the price of lighting products, another US manufacturer, Venture, also announced a price increase. The supplier of HID lamps and electronic ballasts has recently said that the price of traditional technology will increase by 8%, while LED light sources will not increase prices temporarily.
In a joint letter from the president Dan Phalen and Mark D'Antonio, vice president of sales, he pointed out that the company’s price increase was due to “increasing costs of materials and parts, transportation, packaging, and wages, as well as the cumulative effect of benefits including health care. ".
“As our industry continues to experience rapid technological advances and changes, we are seeing a decline in the demand for traditional technology (HID) lighting products, which creates further cost pressures on traditional technologies.”
“While we continue to actively increase productivity and reduce costs, we cannot offset these cost increases, so we announced that the prices of our traditional HID lamps and ballast products have generally risen.”
Venture said that the prices of these products will increase by 8% on average on July 16. Previously quoted items will be honored according to the initial terms and conditions.
In the past ten years, Venture has been greatly impacted by the LED revolution. The company's success is based on metal halide lamps or HID lamps, which are very popular in retail, commercial and industrial applications. However, with the LED can provide higher light efficiency, they have lost ground quickly.
Venture said that the United States Eaton issued a similar statement on Thursday, May 17, announcing that it would increase its price by an average of 6%. The company stated that due to the continuous increase in the cost of metal materials, raw materials, freight and parts, Eaton’s lighting department will increase its tradition. The price of lighting products and high-end LED and control products. Prior to this, on May 11, Acuity Brands, a well-known lighting equipment manufacturer in the United States, issued a statement that prices would increase by an average of 6%, targeting all traditional lighting products and some LED products of the Acuity Brands brand.
Eaton and Acuity's 6% increase is roughly the same, which is significant, with the two brands take the initiative to give mid-sized manufacturers a signal of a substantial increase.
Over the years, lighting equipment prices have been declining. In the next few weeks, lighting manufacturers will regain profitability, and other brands will follow suit.
In addition, people are also concerned about Europe and other markets to see who will lead the price increase.
Many observers described these initiatives as a late-adjustment to the continued decline in prices, seeking to maintain profitability in volatile markets.
Unlike the U.S. market, LED chip makers in mainland China continue to expand production capacity. In 2018, the oversupply problem in the LED industry is still the focus of attention. According to industry sources, half of the second quarter has passed, and many end customers are reluctant to place long-term orders. The new wave of downward pressure on the LED market is just around the corner.
Sanan Optoelectronics and Huacan Optoelectronics have performed well. The inventory in the first quarter rose rapidly. Sanan’s first quarter revenue was RMB 1.945 billion, and the inventory amount reached RMB 2.225 billion, compared to 2017. The amount of inventory in the same period of the year was only 1.057 billion yuan, and about 1.8 billion yuan in the fourth quarter of 2017. Sanan increased its inventory by more than 400 million yuan in one quarter.
Huacan Optoelectronics' inventory amount also showed a quarterly boost. In the first quarter of 2018, the revenue was RMB 710 million, but the inventory amounted to RMB 789 million, which was higher than the RMB 685 million in the previous quarter. In the same period of 2017, 506 million yuan was significantly higher.
As for Jingdian, there is similar situation. Although the profit performance was maintained in the first quarter, the single-quarter revenue was NT$5.15 billion, which was a decrease of about 10% compared to the same period in 2017, while the inventory amount reached 5.422 billion yuan. The inventory level has been high since the first quarter of 2016.
In the face of the significant increase in new capacity of LED plants, the demand for terminals has failed to grow rapidly, and it is urgent to find a solution that returns to a balance between supply and demand.