Since March of this year, inflation has risen sharply in all industrialized countries, particularly in the United States, where it reached 4.24% in April, the highest annual trend since 2008. One has to go back to the early 1990s to see inflation reach such a level. While the general rise in prices in Europe has not yet reached this pace, there is a clearly identified risk, according to Eurostat's statistical series, that inflation will accelerate in the coming weeks, due to the sharp rise in commodity prices that has recently been observed. For instance, energy prices have risen by 13%, on an annualized basis, over a single month.

Inevitably, higher energy prices will be reflected in production costs and consumer prices. Unfortunately, for our industry, the rise in raw material prices does not only concern energy. It affects all the raw materials that are essential for producing agricultural equipment.

This is particularly true of the price of steel, which has more than doubled in one year, from 550 euros per ton to 1,250 euros per ton. In our industry, steel, depending on the type of equipment, represents 30 to 40% of the average production cost. The prices of all products derived from petroleum chemistry are also rising. This is the case for ST plastic, used by our industry, whose prices have risen by 70% in six months.

Non-ferrous metals such as aluminium and copper are also greatly affected by this general price increase. Since April 2020, the price of aluminium has increased by 50%.

The table below illustrates the price variations of the main raw materials used by our industry in its manufacturing processes, between September 2020 and June 2021.

Source: Statista.com (The prices indicated above are those of their quotation on the stock exchanges. Depending on their supply contracts, companies may temporarily pay a different price. This does not affect the inflationary trend)

This table shows a clear upward inflationary trend for all key materials over these last 9 months, noticeably for foundry products (+90%), Copper (+63%) and natural rubber (+36%). To this picture, we should add the deep crisis in electronic components that has affected all industries since March. Although production has returned to pre-pandemic levels, a surge in demand for electric vehicles, household appliances and cell phones has created a supply shortage, resulting in increased costs throughout the value chain and, in some cases, production delays.