Inflation has increased the cost of just about all products including energy, food, housing, clothing, vehicles, electronics, etc. Prices on the main materials used in connectors increased 6.0% Year-Over-Year (YOY) in 2Q22 and increased 30.1% sequentially. Four items make up 75% of the raw material cost to produce a connector: gold, copper, steel, and plastics.
The following chart shows the YOY change in the cost of these materials over the last three years and the first two quarters of 2022.
The following table shows the Year-Over-Year change in 2Q22 for each material. Gold increased 7.1% YOY. Steel and thermoplastics increased 15.2% and 2.2%, respectively. Copper/brass decreased 0.5% offsetting the other three materials to some extent. The overall weighted increase was 2.5% for all materials in the second quarter.
As can be seen in the next table, average material costs are up 4.6% Year-to-Date (YTD) and 2.0% on a weighted basis.
On a Quarter-Over-Quarter (QOQ) basis, material costs increased significantly, up 30.1%. The weighted total cost for connectors on a sequential basis increased 44.1% weighted by material usage in connectors. Copper/brass was the main driver of this increase.
It is important to understand that the change in raw material costs will differ based on individual usage of these materials in connector production.
Note, we expect connector prices will continue to increase in 2022 because of cost pressures in direct and indirect labor, overhead, and transportation. Copper prices are expected to stabilize unless there is a significant pick up in the housing market, which is highly unlikely given the sharp increase in interest rates.