Philips Raising Price of CFLs by 25% Because of Rare Earth Oxide Restrictions

Terbium oxide is used in green phosphors in fluorescent lamps.

In a letter sent to customers, Philips announced it is raising the price of CFLs by an average of 25% effective Aug. 15, 2011. The company was originally only going to raise the price by 10% by Sept. 1, but because of the "result of the impact on rare earth oxides and the extraordinary circumstances in the lighting industry," Philips has revised the increase. Other suppliers have also announced hefty price increases, including GE and Sylvania.

Linear fluorescent lamps (TL), compact fluorescent integrated (CFLi) and compact fluorescent non-integrated (CFLni) are all included in the increase. "All other products will remain at current levels resulting from the previous price increase effective on May 16, 2010. Please note the August 15th increase is over and above the increase effective on May 16, 2011," the letter read.

The Chinese government and its recent restrictions on rare earth element exports have caused the problem. Rare earth oxides are a critical component in the making of the phosphors used in linear and compact fluorescent lamps. China controls more than 95% of the global market for these rare earth oxides. The Chinese government has imposed taxes for environmental clean-up and imposed limitations on the amount of oxides available for export. The combination of limited production and imposed taxes to mine and produce these elements has led to unprecedented cost increases that started in January of this year.

Philips said that orders will be accepted and shipped based on current price schedules and availability up until Aug. 12, 2011. These orders shall not exceed 15% above the previous 90 day monthly average purchase history. The Aug. 15, 2011 increase will be factored into stock, end-user pricing programs, and Special Pricing Authorizations (SPA’s). Updated price schedules and price agreements will be available in an electronic format on or before Aug. 5, 2011