Raw Material Price Crisis

Beginning in the second half of last year, a raw material price increase crisis triggered by excess liquidity and supply-side structural changes began to sweep the country.

Since June last year, domestic commodities have continued to rise. According to CCTV Financial Report: Copper rose by 38%, paper rose by 50%, plastic rose by 35%, aluminum rose by 37%, iron rose by 30%, glass rose by 30%, zinc alloy rose by 48%, and stainless steel rose by 48%. Soaring 45%, IC rose 100%. Entering the end of February, the prices of raw materials were completely out of control, and they jumped wildly by 20% and 30%. Some specialty papers even jumped by RMB3,000/ton at a time!

The overall price increase of industrial raw materials such as plastics, textile materials, copper, energy, electronic components, industrial base paper and other industrial raw materials, it completely disrupted the production plans of terminal brand manufacturers. Many production lines were forced to press the pause button, and various bulk commodities went up wildly.  Raw materials are priced at one price per day, causing companies to be unable to control costs, and production and operations are in chaos. For the current domestic consumption demand is severely insufficient, and the company’s high debts in China’s manufacturing industry are fatal. Some large and medium-sized enterprises are forced to balance risks through the futures market or hoarding raw materials. However, the rapid rise and fall of prices have caused heavy losses for the enterprises, and some have even quickly plunged their business operations into trouble.