INFLATION IN OUR INDUSTRY

Months go by and uncertainty is still present. Businesses do not know whether to invest at this time as inflation is seriously affecting all parts of the planet.

But will this continue for much longer, and how long will we face this problem?

Thanks to one of the most reliable sources in the industry, American Rental Association, we were able to verify through their forecasts, that materials such as aluminum or steel, the strongest in our industry, will continue to increase in terms of price.

How is this possible?

The post-pandemic stage is not being at all simple. While it is true that it started off very well, other events are directly affecting many businesses in different sectors. The war between Russia and Ukraine continues to cause prices and shortages to rise, accompanied by demand that remains high and higher production costs.

Steel and its unpredictable rise

- Input costs continue to rise; materials such as ores or coal will exceed last year's extreme prices, where shortages are forecast soon.

- Prices in Europe, which directly affect the U.S., have already surpassed all-time records in 2021.

- This price increase causes a rapid rise in all costs for the United States.

- Other regions such as Asia feel less of an impact, but still cannot escape rising commodity prices.

Aluminum, from bad to worse.

- Sanctions against Russia continue to increase and there are concerns about supplies.

- The LME (London Metal Exchange) price has reached a spot price never seen before, close to $4,000/ton.

- Record prices above $4,200/tonne are possible if Russian production falters, which at this point is more than likely.

- US and EU Premium has also risen, indicating that regional markets are more vulnerable to these situations.

- Risk Premium has also risen.

- In addition, demand and supply risk support this price increase.

¿What should we do about this situation?

It is more than evident that this situation will continue in the same way for much longer. Inflation is driving up the price of materials, so if you continue to doubt whether investing today is a good idea, we recommend that you carefully re-read this article.

The opportunity cost is higher than ever, as prices have increased by more than 40%, and we have no doubt that they will continue to do so.

The demand in our industry is evidente, as thousands of events are held in the country month after month.

The investment can't go wrong. The money must be inside your business because, if not, the ease of depreciation at this time is very feasible.

If you have any doubts about it, visit the following links, from the most reliable sources in economic terms.

• https://www.nytimes.com/article/inflation-us-prices.html

• Walley, W. (2022). How economic issues and the supply chain are affecting the equipment rental market, ARA The Future of Rental.