ECONOMY

Price hikes hurting exporters

price-hikes-hurting-exporters

Exporting companies are increasingly facing a dilemma between containing their losses by passing increases in production costs due to steeper prices for raw materials onto their customers, or absorbing the hikes themselves so as not to damage the competitiveness of their products.

Some have already taken losses, as they are purchasing raw materials at very high rates right now but had also signed contracts with their clients securing their final products at lower prices a few months ago. The wave of hikes sweeping global markets has also affected Greece, with inflationary pressures undermining the recovery of the economy and threatening consumers’ wallets.

According to data collected recently by the Athens Chamber of Commerce and Industry on a range of raw materials that are vital for the manufacturing sector, international price hikes range from 5.12% to 91.40%. For instance, wood has gone up 52.3% in the period from end-May 2020 to end-May this year, and aluminium has seen a 26.54% y-o-y hike. The biggest jump (91.4%) was in lithium, due to demand for batteries.

There have also been significant hikes in the rates in the primary sector, such as corn (up 35.64%), coffee (26.59%), sugar (12.07%) and poultry (16.64%).

On top of that, container freight rates have also soared by as much as six times higher, and are unlikely to revert to normal levels before this fall. The biggest problem in final goods imports concerns the enterprises active in the sector of spare parts and technology products: Having a container shipped costs more than $10,000 today, when just a year earlier the rate was well below $2,000.

“The increase in the cost of basic raw materials may even affect exporting sectors that do not appear to suffer an impact: Strawberries are exported without any manufacturing, but peaches require tins to be exported and the cost of tin production and purchase has grown significantly,” notes Christina Sakellaridi, the president of the Panhellenic Exporters’ Association.

Entrepreneurs are also expressing concerns that the market may not revert to normal before next winter.