AC, fridge sales drop on rising metal prices

Prices of air conditioners and refrigerators are expected to shoot up even as summer temperatures soar in major cities.

Rising costs of copper and steel are impacting the consumer durable industry. Copper prices have increased from $5,000 to $7,500 a tonne, while steel prices have increased by Rs 2,500 per tonne in a matter of three months.

Ajay Bajaj, business group head, ACs, LG Electronics, says the impact of rising input costs of copper and steel will adversely impact their business. "As copper and steel prices have surged by seven to eight per cent, we are forced to pass on the increase to the consumer for the second time this year. A price hike is imminent." The first price hike happened in January this year when LG hiked prices by five per cent.

This time around, LG is planning to increase their prices by 10 per cent for both window and split airconditioners. For refrigerators too, the firm will hike their prices by 3 per cent for frost free and 1.5 per cent for direct cool refrigerators in the coming weeks.

Steel and copper comprise about 50 per cent of the raw material costs for ACs and refrigerators. With relatively slim margins in the industry, consumer durable companies are going to pass on rising input costs to end consumers.