The principal raw material used by the PRC operating entities is steel. Hongli Shandong, the variable interest entity (VIE), purchased raw materials totaling approximately $4.4 million, $2.5 million, and $3.6 million during the fiscal years ended December 31, 2025, 2024, and 2023, respectively, from their top four suppliers. These purchases accounted for 45%, 35%, and 48% of total raw material purchases in those years. Although the PRC operating entities are not dependent on their current suppliers and may find replacements, interruptions from major suppliers could adversely affect operations and profitability. Increases in raw material costs may not be fully passed on to customers, which could reduce earnings. Production is also subject to risks from equipment failures and catastrophic events that could disrupt operations.
Hongli Group Inc's Comment on Supply Chain
The principal raw material used by the PRC operating entities is steel. Hongli Shandong, the variable interest entity (VIE), purchased raw materials totaling approximately $4.4 million, $2.5 million, and $3.6 million during the fiscal years ended December 31, 2025, 2024, and 2023, respectively, from their top four suppliers. These purchases accounted for 45%, 35%, and 48% of total raw material purchases in those years. Although the PRC operating entities are not dependent on their current suppliers and may find replacements, interruptions from major suppliers could adversely affect operations and profitability. Increases in raw material costs may not be fully passed on to customers, which could reduce earnings. Production is also subject to risks from equipment failures and catastrophic events that could disrupt operations.
Sources:
Hongli Group Inc's official press releases and regulatory filings; CSIMarket.com's supply-chain research; and the financial filings and press releases of other companies cited in this report.
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