Packaging / Advertising & Office

At the beginning of August, the upstream raw materials rose again. However, the scissors gap between PPI and CPI once again hit a new high since the data! The cost transmission from upstream to downstream has basically failed, and the mid- and downstream industries are still suffering!

Upstream is inflation,

Downstream is deflation,

A wailing midstream!

PPI and CPI scissors gap hit a new high

On August 9, the National Bureau of Statistics website announced that in July 2021, the national consumer prices rose by 1.0% year-on-year. Among them, the price of food, tobacco and alcohol dropped by 1.8%, the price of clothing dropped by 0.4%, the price of general daily necessities rose by 0.5%, and the price of consumer durables dropped by 0.3%. On average from January to July, national consumer prices rose by 0.6% over the same period last year.

In July 2021, the national ex-factory prices for industrial producers rose by 9.0% year-on-year and 0.5% month-on-month; among them, the prices of extractive industries rose by 38.7%, the prices of raw materials industries rose by 17.9%, and the prices of processing industries rose by 7.5%. On average from January to July, the ex-factory prices for industrial producers rose by 5.7% over the same period last year, and the purchasing prices for industrial producers rose by 7.9%.

Among the 40 major industrial sectors surveyed, 32 saw price increases, an increase of 2 over the previous month; 8 declined, a decrease of 2. Among the major industries, ferrous metal mining and dressing, which rose by more than 20% in price, rose by 54.6%; oil and natural gas mining, which rose by 48.0%; coal mining and washing, which rose by 45.7%; oil, coal and other fuels Industry, up 35.4%; ferrous metal smelting and rolling processing industry, up 33.0%; non-ferrous metal smelting and rolling processing industry, up 23.5%; chemical raw materials and chemical products manufacturing, up 21.3%; chemical fiber manufacturing, up 20.9% . The eight industries mentioned above affect the PPI increase by approximately 7.5 percentage points, which is more than 80% of the total increase.

The difference between PPI and CPI in July was 8%. The PPI was increasing month-on-month, but the CPI was decreasing. The Chinese economy is facing extreme conditions with a fever and cold hands and feet. This situation is truly abnormal.

Upstream price hikes surge

Although the country has implemented various policies to make the price increase of bulk commodities more flexible, the increase in energy and electricity prices has further pushed up the costs of the chemical, paper, printing and dyeing industries. Pressing the gourd to float, a variety of raw materials rose again at the beginning of August.

[Chemical raw materials rise again]

The global extreme weather is superimposed on the escalation of the epidemic, and the production of factories in many countries has been suspended due to force majeure, and the rise of raw materials has resumed! There was even an increase of 4500 yuan/ton!

On July 26, Mitsubishi Chemical announced that it would increase the price of bisphenol A (BPA) from August 20, by 20 yen/kg (about 1176 yuan/ton) or more. On the same day, Mitsubishi Chemical also announced that it will increase the prices of acetone, methyl isobutyl ketone (MIBK) and diacetone alcohol (DAA) from August 20. Among them, the increase of acetone is more than 19 yen/kg (about 1117 yuan/ton), and the increase of MIBK and DAA is more than 24 yen/kg (about 1411 yuan/ton).

[Industrial base paper is raised across the board]

In early August, affected by the rise in coal and electricity prices, tile paper, cardboard paper, white cardboard, and corrugated cardboard rose across the board in early August.

Last week, the waste paper price index was raised, Monday's index was 2479 yuan/ton, and Friday was 2499 yuan/ton, about 20 yuan/ton.

Last week, Shanying, Nine Dragons and other major containerboard and corrugated paper manufacturers raised 200 yuan/ton. White cardboard manufacturers such as APP Bohui announced an increase of 50-200 yuan/ton. At the beginning of August, the market price of whiteboard paper increased significantly by 100 yuan/ton. Driven by the price increase of leading paper companies, the paper mills in various regions generally rose by 50 yuan/ton in early August, and some 100 yuan/ton.

[The price increase of other industrial raw materials]

According to data from the business agency, the cotton market rose sharply in July. On the 1st, the price of 3128B lint was around 16,138 yuan/ton, and on the 31st, the price was around 17,756 yuan/ton, an increase of 10.03% and a year-on-year increase of 43.88%.

Nippon Paint: Starting from September 21, thinners will increase by 15-20%, solvent-based paints will increase by 10-15%, water-based paints and surface treatment agents will increase by 8-12%, and freight costs will increase by 10-30%.

PPG Industrial Coatings: Starting from August 5, the price of fluorocarbon coatings has increased by 25%. And remind customers to give a rolling 3-month order forecast based on the current raw material supply situation.

Raw material price increases are extremely difficult to transmit

According to reporters from Zhongyuan Business Daily, interviews with manufacturing companies in the food, daily necessities, and electronic products industries found that the erosion of profits caused by the increase in raw material prices has been felt strongly by various industries.

The Mid-Autumn Festival mooncake peak season has come, and the mooncake production line of Dongguan Huamei Food Co., Ltd. is running at full capacity, with a daily production capacity of 3.5 million pieces. "The cost of moon cakes this year is very high. The prices of raw materials such as lotus seeds, salted eggs, sugar, and oil are all rising, and the lotus seeds have risen by more than 30%. Packaging cartons and tin cans have also risen a lot, and iron cans have risen by about 23%. On the whole, the cost of producing a box of moon cakes by enterprises may rise by 15%." Zhou Hongchun, deputy general manager of Huamei Group, told reporters.

In Guangdong Roman Intelligent Technology Co., Ltd., which focuses on electric toothbrushes, Chairman Yan Youchun has received multiple price increase notices since February this year, involving almost all the materials required for the production of electric toothbrushes. "Take our best-selling'small fruit brush' as an example. IC electronic components have increased by 2 to 3 times, plastic materials and batteries have increased by 30% to 40%, and the profit of the product has almost disappeared."

For Dongguan Maisipu Electronics Co., Ltd., which provides switching power adapters for many well-known companies, the biggest pressure on raw material prices comes from semiconductors. "Semiconductor has risen several times, with an average increase of about 50%. It is expected to increase in the future." said Zhang Hesheng, deputy general manager of the company's sales.

The price increase of raw materials is extremely difficult to pass downward. Take home appliances as an example. In the first half of 2021, the nominal price of home appliances generally rose by 8.8% to 35%. The price of durable consumer goods only increased by 0.1% in June, but fell by 0.3% in July.

The mid- and downstream manufacturers complained!

"Raw material prices continue to rise and cost pressures are increasing. In the first half of this year, we are operating at a loss. In the past two months, the price of materials has increased again. Titanium dioxide, butyl resin, HDI have all gone up, and imported curing agents. It has the greatest impact on furniture paint. And now the raw materials are purchased in cash, but we have a 30-day billing period for downstream customers, and funds are generally very tight."

"Since the beginning of this year, the prices of raw materials, transportation, and rents have continued to rise, and profit margins have become less and less profitable. Small packaging factories like ours have limited funds and have no choice. It will be a matter of time before they shut down."

"In addition to coping with the increase in raw material prices, we now have to face environmental inspections. Under dual pressure, factories limit production and stop production, orders cannot be completed, money is lost, and workers are laid off. Who will pay for our losses? Who will feed us and the workers? Northwest Wind drank so much that he wanted to die."

"I dare not buy in large quantities nor dare to take orders in large quantities. The price of raw materials is one per day. If the order is received today, the price of raw materials may change tomorrow. In addition, the downstream customer settlement is not very timely, and our funds are very limited."

The above is the voice of the bosses of SMEs in the middle and downstream industries. Raw materials are soaring, and there are orders that are not daring to accept, causing some small and medium-sized enterprises that do not have the financial strength and product advantages to close down one after another, and the market is full of complaints.

What is worrying is that in the case of floods superimposed by the epidemic, once the PPI and CPI scissors gap cannot be eliminated in the short term, it will inevitably trigger a wave of closures in the middle and lower reaches of the industry, accelerate the reshuffle of the industry, and some people will be forced to lose their jobs, and the days ahead will be even worse. It's hard.