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  Chinese LED Package Price Surge at Record Rate  
 

Early in May, Luxlite, Epistar's sole distributor in China, has sent out an announcement of price adjustment, listing a number of reasons for price increase, including continuingly increased raw materials and manpower costs.

 

Chinese LED chips manufacturers San’an Opto and HC Semitek followed suit Epistar’s lead in raising LED chip prices, which was considered as an early sign of recovery from the heated price war since 2014. Major LED package manufacturers including Smalite, Honglitronic, Xuyu Optoelectronics, and SAMSUNG have announced to raise price this week.

 

More and more oversea buyers have felt the rising resistance from Chinese manufacturers against the endless bargaining of low price. With costs of raw materials like circuit board, gold thread continuing rising sharply, many LED companies have to turn away from price war strategy in order to survive in the fierce industry competition. According to a report last week from Ofweek.com: in Q4 2016 so far, PVC price has raised 60%, plastic price raised 30%, aluminum price raised 30%, paper packaging price raised 80%, shipment cost raised 33.6%...the trend is expected to continue. What are some main drivers behind this price hike?

 

Increased Freight Cost Due to Tighter Regulation Enforcement

From September 21st, 2016 onwards, a new standard for over-limit highway transport vehicles has been in effect. In the past, logistic companies tend to over load trucks to keep transportation cost down. With the implementation of the new standard, local traffic police strictly monitors and checks all cargo trucks on the road. Heavy penalties are in place for logistic companies that violate the rules. Raw material prices are fiercely affected by the increase in transportation costs.



 
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