Raw materials rise, Chinese exporters lose money.
Recently, steel, iron ore and other international commodity prices continue to rise, producers can only raise product prices to absorb the rise in raw material prices. China has exporters in the domestic supply manufacturers to raise prices at the same time, and foreigners signed the price of goods but it is difficult to synchronize the upward adjustment, only to “lose money to earn money”.
Reuters reported on May 12, recently, Zhejiang, a manufacturing security door enterprises to dealers around the verbal notice, due to steel prices and related raw material prices, manufacturers are overwhelmed, can only be absorbed through price increases, plans to increase the price of security doors from May 15, the increase ranges from hundreds of yuan.
Reportedly, the enterprise has been in March this year due to steel prices more than double the factory price increase.
Recently, an announcement circulated online of an electrical company in southern China to suspend taking orders said that, due to the metal raw materials, glass, foam, switches and other continuous substantial price increases, prices continue to go up, parts and components and the whole machine material costs rise too much, labor costs are getting higher, the company’s products in April-May are losing money manufacturing. After the study decided to suspend accepting orders from ODM customers since May 15, it is recommended that customers wait and see for two weeks, and then negotiate prices when the materials are slightly more stable.
Last year opened a company engaged in foreign trade business in Shenzhen young Xiao He said that the current rate of raw material prices too fast, the original profitable contracts, manufacturers are all due to the rise in raw material prices and increased pricing, but the price of goods signed with foreign investors can not be adjusted upward, coupled with a significant appreciation of the exchange rate of the yuan, “now can only lose money to make a shout, carry it, really can not carry Can only close.”
Two years ago engaged in audiobooks, Xiao Wang, also in the labor costs continue to rise and audiobooks market squeeze on both sides of the dilemma: “Do not do it unwillingly, continue to do it is too difficult, entrepreneurship is really too difficult.”
According to the report, in China’s domestic demand market is still weak in the general environment, these cases may only be many small and medium-sized enterprises in China in the rising costs of raw materials, labor and other operating environment, the market space is limited, facing the tip of the iceberg of life and death.
Recently, international commodity prices, such as steel and iron ore, have continued to rise, becoming an important driver of China’s Producer Price Index (PPI) growth rate jumping to a three-and-a-half-year high in April.
According to data released by the Communist Party’s Bureau of Statistics on May 11, the industrial producer price index (PPI) rose 6.8% year-on-year in April, the highest since October 2017 and above the Reuters poll median estimate of 6.5%.
Following the release of the data, CICC, a major Chinese investment bank, issued a research report saying that raw material price increases squeezed downstream profits.
The report said that upstream (ferrous, non-ferrous, energy and chemical) gross profits benefit when PPI is up year-on-year, while downstream manufacturing (textile, furniture manufacturing, computer), midstream capital goods (other manufacturing, instrumentation, metal products), and utilities (electric and thermal production and supply) gross profits are damaged. Wires and cables, batteries, electrical machinery, motors, household appliances, transportation, auto parts of the total input of raw materials accounted for 20-50%, subject to greater impact.
At least three major China power coal price index setting agencies suspended the release of relevant price indices due to the continued rise in raw material prices, as coal prices jumped 20% in a month during the traditionally slow demand season.