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Retail Prices For Lighting Fixtures & Bulbs Set to Jump

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Service Lamp Corp announced that retail lighting prices are going up across the board for fixtures and certain types of bulbs. Lighting fixture price increases will be 5% to 7% for virtually all products. But fluorescent bulbs and other light bulbs containing rare earth oxides will jump 15%-25%.

Fixture Price Increases

Cooper, Hubbell and Juno lighting companies announced lighting fixture price increases in March 2011. Lightolier, the largest fixture manufacturer in the Philips group, announced increases to take effect in September. All manufacturers cite the prices of raw materials, packaging and transportation as major price drivers.

Hubbell Lighting called out specific drivers in their announcement like steel, up 53%, aluminum, up 65%, and copper, 110%. The relative content of these materials will increase the typical retail fixture by $3.00. Ironically, fluorescent lamps going into the fixture, typically only 15% of the fixture price will increase by $2.25 to start.

Why the disparity between fixture price increase and lamp price increase? The short answer is China.

Rare Earth Elements and Lighting

China began to export and mine rare earth elements in a big way during the 1980’s. Their advantage of cheap labor and zero environmental costs enabled them to by pricing that drove competing mines out of business and capture 97% of the global market. Recently China has drastically reduced the amount of rare earth elements exported and raising prices by as much as 3,500%. Lanthanum Oxide, for example, sold for $4.88 a kilogram in 2009 and for $173 in January 2011. The price inside China is only $24.07 today.

What do rare earth elements have to do with lighting? They are processed into the white stuff you see coating the inside of fluorescent bulbs. The rare earth oxides combine to sweeten phosphors that generate fluorescent light and especially light that gives excellent color rendering needed to display merchandise.

Philips is sponsoring a webinar on rare earth oxides that is open to the public. You can register for this program free of charge every Tuesday during August.

If you don’t have time to attend you can download an informative brochure on the subject from the Philips website. http://www.usa.lighting.philips.com/lightcommunity/trends/phosphor/

Will the Shortage Last?

One of the main points in the Philips presentation is that the lighting industry has no control short-term availability of products using rare earth oxides including fluorescent, LEDs and other bulbs. The long term outlook is different.

There is a little of rare earth elements in everything we use according to a National Geographic article. http://ngm.nationalgeographic.com/2011/06/rare-earth-elements/folger-text If you wonder why the price of Prius and other hybrid cars are going up it is because they use as much as 20 pounds of rare earths in their batteries. Wind turbines might need as much as 500 pounds in their magnets according to National Geographic. The irony here is that our efforts to reduce dependency on OPEC fossil fuel have resulted in being dependent on China for rare earth elements.

The availability of rare earth elements is a strategic issue because rare earths are used in everything high tech from computers to nuclear weapons. The US Department of Energy report, “2010 Critical Materials Strategy Summary” says that “five rare earth metals (dysprosium, neodymium, terbium, europium and yttrium) and indium are assessed as most critical. In this report, “criticality” is a measure that combines importance to the clean energy economy, and risk of supply disruption.” Elements used in lighting are lanthanum, cerium, terbium, europium and yttrium including 3 of the 5 elements on the DOE critical list.

Regaining a Supply-Demand Balance

China may have stumbled by cutting supply and raising price too much. Quicker than they made it impossible to be in the rare earth mining and processing business they made it financially attractive by withholding critical elements. By proving to be an unreliable trading partner they will lose their sole source status forever. Companies are scrambling to get into production.

Molycorp’s Mountain Pass mine In California went out of production in 2002. It is now planing to produce twice 20,000-ton production rate it previously reached. The Lynas Corp mine in Western Australia is scheduled to go into production in two years. The ore will be processed in Malaysia at a new plant now under construction.

Stans Energy Corp, a Canadian company, is developing rear earth mines in Canada and recently bought a company in Kyrgyzstan that provided 80% of the Soviet Union’s rare earth needs. Toyota Tsusho Corp (think Prius) is building a rare earth processing plant in India and plans on shipping 3,000 to 4,000 tons a year to Japan by 2012. The plant will manufacture rare earths from by-products of extracting uranium for India’s nuclear plants.

China set Japan off by stopping all exports of rare earths to Japan. Japan explored the sea floor for sourcing solutions. They discovered deposits of rare earth elements in the seabed are roughly ten times the reserves previously known on land. You see rare earths aren’t really rare after all.

There are 17 rare earth elements present in the Earth’s crust. Rarely are they present in economically recoverable quantities. When they are present they are mixed together but need to be sorted into piles of like elements. Another characteristic is they are classed as heavy and light. The U.S. and Australian mines I mentioned produce predominately light rare earths. The India, Kyrgyzstan and deep sea operations might bring the heavy components. We need both heavy and light elements for lighting products.

The same agency that wrote the report “2010 Critical Materials Strategy Summary” requires increased performance of fluorescent lighting products by June 2012. How to achieve that? By using more rare earth elements in the bulbs. DOE ignored industry objections that increased demand required by their regulations would cause a shortage of rare earth elements.

The rare earth element supply issue is just another event that keeps selling light bulbs and fixtures from being a boring job. There is always something to keep us on our toes, up on the wheel and on high alert.

About Service Lamp & Monte Lee: Monte Lee is a National Account Manager for Service Lamp Corporation, a distributor of lighting products such as fixtures, bulbs, plus lighting consulting and design services for retailers. Inquiries on any aspect of furniture store lighting can be sent to Monte care if FURNITURE WORLD Magazine at mlee@furninfo.com, or call Service Lamp at 800-222-5267. See all of Monte Lee’s articles on store lighting posted to the www.furninfo.com website

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