Caterpillar Inc. (NYSE:CAT) the largest designer and manufacturer of earth-moving equipment, has decided to increase its prices by 2%. “Caterpillar has talked about the potential for seeing some higher costs in the raw material side,” said Morningstar analyst Adam Fleck in an interview. The price of steel, which makes up most of CAT’s raw material costs, has remained relatively flat. However the rise in Caterpillar’s prices could be in anticipation of higher steel prices. CAT has seen strong demand picking up from China as the need for mining, construction, and agricultural equipment increases.
“China is driving the demand for Caterpillar’s products,” said Andy “Raw” Kibbens. “At least in the short term, if steel prices remain flat, a 2% increase in prices for Caterpillar means 2% more money for them.”
Since the beginning of the year, the demand for Caterpillar’s equipment has surged. Its stock price is up 37.25% year to date.
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