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From copper to plastics material rise
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Source:www.muchid.com               Date:2021.3.1


Raw materials are located in the upstream of the industrial chain, which is monopolistic competition and can increase prices; the downstream of the industrial chain is perfect competition and excessive competition. Whoever raises the price first will die, and the price increase is to send customers to others.

"Copper rose by 38%, plastics 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 45%! Arrange early for orders!" There is a factory owner in a friend The circle posted that.

The Red Star Capital Bureau has learned from many parties that since 2021, the prices of various raw materials, including copper and crude oil, have risen sharply, involving multiple industries such as plastic products, tires and household appliances.

Right now, the biggest problem for factory owners is: Are the prices of products rising along with raw materials? Or would you rather lose money than raise prices?

Some people think that if the price of raw materials rises, the products will naturally rise.

Some people also believe that raw materials are located in the upper reaches of the industrial chain, which is monopolistic competition and can increase prices; the downstream of the industrial chain is full competition and excessive competition. Whoever raises prices first will die, and price increases are sending customers to others.

Crude oil prices rise, plastics, rubber products and other industries raw materials have risen

"The price of plastics has been rising since the beginning of the year, and it may have risen by about 30% compared to the end of last year. There are many types of plastics, and each material has risen to varying degrees." Mr. Zhou from a plastic products company told Red Star Capital Bureau.

The Red Star Capital Bureau learned that since January this year, crude oil prices have continued to rise. From the perspective of NYMEX crude oil, its price in early January was less than US$50/barrel, and its price has now risen to US$61.66/barrel. It rose by about 23% in two months.

The rise in crude oil prices has put tremendous pressure on companies in industries that use crude oil downstream products as raw materials, such as plastic products and rubber products.

Taking PC plastic materials as an example, Mr. Zhou told the Red Star Capital Bureau that when he inquired the price a year ago, the price was 21,000/ton, and the price has risen to 24,000/ton after the next year. On February 26, its quotation has risen to 26,000/ton.

In other words, the current increase in this type of raw materials has reached about 23.8%, which is similar to the increase in NYMEX crude oil in the past two months.

Mr. Zhou’s upstream supplier is a polymer material company. The person in charge, Ms. Li, told the Red Star Capital Bureau, “When I came back to start work in the next year, I found that it has risen, and it has risen quite sharply. Different plastic materials have risen by about 3,000-6,000 yuan. /Ton, some have risen by more than 30%."

In addition to the plastic products industry, the rubber products industry has also been affected. According to the Economic Information Daily, several tire companies, including Zhengxin, Michelin, Giti Tire, Zhongce Rubber, and Sailun Tire, have announced that they will increase the prices of some products due to rising raw material prices.

The factory faces multiple-choice questions: Is the product price increase? Maintaining old customers at a loss?

After the price of raw materials has risen, the biggest problem faced by factory owners is: Does the product price increase with the price of raw materials? Still not increasing the price?

Some people believe that as the price of raw materials rises, the products will naturally rise, and it is reasonable to re-determine product pricing based on the increase in raw materials.

Some people also believe that raw materials are located in the upper reaches of the industrial chain, which is monopolistic competition and can increase prices; the downstream of the industrial chain is full competition and excessive competition. Whoever raises prices first will die, and price increases are sending customers to others.

"The quotations in the market are chaotic now. It is clear that all kinds of raw materials are increasing in price, but some people offer very low prices, so they don’t want to make profits." Mr. Zhou said, it may be because some factories have to ensure that workers have something to do. It may also be the consumption of raw material inventories.

Bai Sheng (a pseudonym) from Taizhou is what Mr. Zhou called "someone". He is the person in charge of a polymer materials company.

In order to maintain the old customers, Bai Sheng has not raised the quotations of the products. "If you lose money, you must lose money. Maintaining old customers. Wait for a while. Raw materials can never keep rising."

Mr. Zhou is different from Bai Sheng. He intends to slightly increase the price of products, but the increase is lower than the increase in the price of raw materials. "I plan to keep only 1% of the profit now. I am afraid that the customer will run away. I hope that he will continue to do it here. We are going to Take a wait and see, and watch the market quotations follow the trend."

According to Mr. Zhou, the contracts they sign with their customers generally state: If the price of raw materials rises, the unit price of the product will be recalculated, "We also need to maintain regular customers. Our prices are still very fair."

Prices of some metals will rise Will the prices of household appliances also rise?

In addition to crude oil, metals such as copper and aluminum are also important industrial raw materials. Goldman Sachs expects that the copper market will experience the biggest supply shortage in 10 years, and it raised its target copper price to US$10,500 per ton in 12 months. This number will be the highest level in history.

Centaline Securities pointed out that in February 2021, the prices of copper, aluminum, plastics and steel all increased. The upward trend of non-ferrous metals and other upstream cyclical sectors may continue. It is expected that the average market price of major home appliances will also fluctuate and rise in the short term.


 
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