Notice of price increase!

The price of such a thing has hit a 10-year high!

The decoration company is afraid to take orders!

what happened?

Will it still rise?

  Since the beginning of this year, the prices of domestic commodities such as energy, metals, and chemicals have all risen sharply.

Take plastics as an example. At present, compared with the same period last year, the price of various plastic raw materials has increased by about 20% to 30%. Among them, polyvinyl chloride (PVC), which is widely used in building materials and industrial products, has once reached the price. Historical high in the past ten years.

So, what is the reason for the increase in plastic prices, and how does it affect related trade? 

High plastic prices fluctuate, trading companies control risks and reduce inventories

  At a plastic raw material warehouse in Hangzhou, Zhejiang Province, trader Chai Tiesong is checking their inventory. He told reporters that the plastic raw materials they operate mainly include polypropylene (PP), polyethylene (PE), and polychloride. Ethylene (PVC), etc., the current total inventory of these three varieties is about 30,000 tons, which is equivalent to their sales volume of about a week, and this is also their low inventory level in the same period in recent years. 

  According to traders, the reason for lowering inventory is due to the recent price fluctuations. In January this year, the price of polyethylene (PE) was close to 8,000 yuan/ton, and in March the price rose to 9,200 yuan/ton; polypropylene (PP) ) From 8,000 yuan/ton in January to 9,600 yuan/ton in March; the price of polyvinyl chloride (PVC) also rose from around 7,900 yuan/ton in January to around 9,200 yuan/ton in March.

In April, although the prices of these varieties have fallen to a certain extent, they are still at a high level.

  Plastic prices fluctuate at a high level, which brings certain pressures to trading companies in terms of risk control and capital costs.

It is understood that petroleum is an important basic raw material for plastics, and the price of plastics is closely related to the price of crude oil.

From January to March this year, due to the dual impact of supply and demand, the price of crude oil continued to rise, which drove the increase in the price of plastic raw materials.

In addition, the overall demand for plastics is improving, which also supports prices. 

  Chen Fangyi, manager of the research and investment department of Zhejiang Mingri Holding Group Co., Ltd.: The United States has been affected by the cold wave this year, so some polyolefin plants in the United States have also been affected by the interruption, and the supply is also decreasing, including some places in Europe. The supply of raw materials is relatively small, so after overseas prices have risen first, domestic prices have also risen accordingly.

Raw material price increases, manufacturers under pressure, orders increased by 30% but lost 2 million

  Not only are traders affected by the increase in plastic prices, but some companies in the middle and lower reaches of the industry chain are also facing pressure from rising costs.

Many production companies suffered losses in the first quarter, and even the more they worked, the more they lost money.

  Walking into a manufacturer of PVC profiles in Huzhou City, Zhejiang Province, the production workshop is busy. The person in charge told the reporter that their company mainly produces door and window frames for construction and PVC tiles for houses, and 70% of their products are used. Regarding exports, due to the sharp rise in raw materials this year, although their company’s orders increased by 30% in the first quarter, their profits were not as good as before. 

  Shen Yueer, deputy general manager of Huazhijie Plastic Building Materials Co., Ltd.: We lost about 2 million yuan in the first quarter. We must increase prices for downstream customers at least 3 to 4 times in order to slowly reach the profit point we want, because we have Customers, let them have a process of acceptance.

  Shen Yueer introduced that from January this year to now, their product prices have been raised twice, but the increase is far less than the increase in raw material prices, which also caused the company's loss in the first quarter. At the end of this month, they plan to raise product prices again. 

  In addition to these plastic products manufacturers, some decoration companies are also under the pressure of rising costs. In a decoration company in Huzhou City, Zhejiang Province, the person in charge told reporters that after the Spring Festival this year, he received more than a dozen price increases notices.

Not only some plastic products, but also steel, wires, cement, etc., have risen to varying degrees. 

  Hu Jianwei introduced that the dozen or so orders he received before the Spring Festival this year were all at a loss. It will take time for the increase in the price of raw materials to be transmitted to the consumer. However, due to the uncertainty of raw material prices, he dare not easily sign new orders. 

  Hu Jianwei, the person in charge of Huzhou City Tingmei Decoration Co., Ltd.: Because of the increase in raw materials, we are afraid to contract labor and materials, because we can't figure out its increase, so our current model is to do a good job in design. Let customers purchase by themselves, so that our risk will be much smaller.

Multiple factors have contributed to the volatility of commodity prices without a long-term rise

  Raw material prices continue to rise, squeezing the profits of downstream companies. So what are the reasons for this round of rising commodity prices, and what trend will it show in the future?

  Since the beginning of this year, the prices of domestic commodities have shown a volatile increase, and energy, metals, and chemicals have basically shown double-digit increases.

Pulp, polyvinyl chloride (PVC), crude oil, and hot-rolled sheets rose by more than 20%, while soda ash, rebar, glass, copper, fuel oil, aluminum and other products rose by 16%-20%. 

  At present, the global economy is recovering at an accelerating rate. The good economic trend has provided a good demand environment for bulk commodities. At the same time, due to differences in the development and control of the epidemic in different countries, the recovery of the manufacturing industry is not sufficient, which has resulted in manufacturing. The reality of insufficient industrial production capacity has stimulated the rise of commodity prices to a certain extent. 

  Liu Xinwei, a senior researcher at Zhuo Chuang Information Research Institute: For terminal manufacturing companies, the increase in raw material prices will increase the production costs of the entire manufacturing industry. The price transmission of home appliances, machinery and other products to consumers is very limited, so companies need to strengthen Research and judge the trend of bulk commodities, and combine the existing financial tools to do a good job of hedging to stabilize production and operation profits.

  Industry insiders pointed out that 2021 is still a big year for domestic production capacity. In the second half of the year, all basic raw material manufacturers have plans to start production, which is good for supply, and commodity prices may rise or be unsustainable. 

  Meng Wei, spokesperson of the National Development and Reform Commission: Generally speaking, this is the result of the interweaving of multiple factors such as the gradual recovery of the global economy, short-term adjustments in the relationship between supply and demand, ample liquidity, and investment speculation. It has the characteristics of restoration and stage.

At the same time, we have also seen that the recovery of the world economy is still unstable, and there is no overall or trending change at both ends of the supply and demand of bulk commodities, so prices do not have the basis for long-term increases.

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  Source: CCTV Finance (ID: cctvyscj)

  Producer: Ke Chengyun