Raw materials skyrocket downstream industry zero profit

The rising raw material prices are constantly squeezing the profits of large and small production companies. Cao Rong is one of the "victims." On the 20th of October, she told the Huaxia Times reporter in an interview that the recent increase in raw material prices made her feel frustrated.

In the past few years she and her husband founded their own engraving machine factory. However, the recent increase in costs has caused her to feel unprecedented pressure.

"Guideway", the main component of this engraving machine, has recently risen by more than 1,300 yuan. Enterprises can't rush to increase prices, and profit reductions follow.

Not only Cao Rong, the manager of Beijing Fengxing Weiye Technology Company, which specializes in rail sales, told reporters that many mechanical companies are facing the same difficulties. As an important part of the machine tool, guide rails are used by almost all companies that produce machine tools. The sharp increase in rail prices this year has caused the machinery industry to be hurt.

Beyond rails, the price of raw materials in a wider range has risen, and companies in different positions in the industry chain are experiencing the same difficulties.

According to the data from the Ministry of Commerce, from October 11 to 17, the prices of various types of production materials such as mineral products, rubber, non-ferrous metals, chemical products, agricultural resources, energy, building materials, light industrial raw materials, steel prices, etc. are all available in major production materials. rise.

In the first three quarters, the import prices of raw materials rose sharply. According to data from the Ministry of Industry and Information Technology, crude oil, iron ore, and copper all increased by more than 40%, among which the price increase of aluminum products reached 87.3%.

With raw materials soaring, Cao Rong and other small and medium-sized enterprises in the middle and lower reaches of the industrial chain did not dare to raise their prices rashly. Many corporate profits were significantly reduced, and some highly competitive industries even faced unprofitable embarrassment.

Raw material prices are crazy

Cao Rong's experience was also staged in the rubber downstream industry. It is not only small and medium-sized enterprises that are threatened. The industry's leading companies and listed companies are also in a difficult position.

Recently, domestic large-scale tire companies, such as triangular tires and Aeolus tires, have announced price increases, and the price increase ranged from 5% to 8%. At this point, this year the tire industry has accrued 12%.

However, this is far from making up for the loss of upstream raw material prices. Mao Jianping, an analyst at Haitong Futures Rubber, told reporters that since 2009, natural rubber has completed a 300% price increase, and the downstream industry has had to passively increase prices.

"You can describe the current situation in this way. If we do not increase prices, we have already reached a point where we can't live." Said a high-level tire engineer.

The tire industry is not the only downstream industry affected. Under the combined influence of crude oil and rubber prices, the cost of shoe materials for producing rubber soles has greatly increased, and downstream shoe manufacturers have to face the pressure of price increases.

“Originally, the rubber sole price of about 8 yuan per pair of shoes has now risen to nearly 15 yuan. On average, every pair of shoes, rubber soles have consumed 70% of the cost.” A person in charge of a shoe company in Jinjiang told the reporter If they do not increase prices, they will find it difficult to maintain them.

Tire and shoe materials are just a microcosm of raw material prices. As international commodities continue to rise, most companies are under pressure from soaring raw material prices.

September PMI data showed that following the significant increase in the previous purchase price index, the purchase price index for this month rose sharply again by 4.8 percentage points, and all the 20 sub-sectors were above 50%. Among them, the index for textile industry, agricultural and sideline food processing industry and food manufacturing industry is over 70%, and the index for consumer goods industry is above 60%.

In this regard, Huatai Securities (601,688) analysis pointed out that the purchase price index rose sharply, and it may affect the profitability of enterprises. In fact, reporters learned from companies that the rise in raw material prices has largely affected the profitability of enterprises, and some companies even have zero profits.

Zero profit

"This is a lot older!" This is the first response of the manager of a cable factory in Beijing who is responsible for the sales of raw materials.

The wire and cable industry is the largest supporting industry in the electrical industry. It has been hailed as the "blood vessel" and "nervous" of the national economy. However, these enterprises are facing zero profits.

The main raw materials for cables are copper and aluminum. Since the beginning of this year, copper prices have risen by more than 40%, and aluminum prices have risen by 87%. However, because the cable industry is mostly small and medium-sized enterprises, and there is a phenomenon of overcapacity and disorderly competition, companies are not willing to raise prices easily in the face of rising raw material prices. Therefore, despite the price increase in cables, corporate profits have fallen significantly. "Many factories, you do not sell him to sell, it is difficult to increase prices." Manager Ge told reporters.

In this situation, companies are paralyzed: in order to maintain the operation of the company and to raise workers, they must produce, but the rising prices of raw materials have made the company unprofitable. Manager Ge told reporters that companies are basically doing their jobs and supporting workers.

The same applies to small and medium shoe companies that are also affected by raw materials. The person in charge of the shoe-making business told the reporter that it is difficult to raise export prices. Small- and medium-sized enterprises in a meager state can only finely decompose each process on the assembly line and reduce the loss of raw materials caused by poor processes.

Although the competition is fierce, it is very difficult for raw material prices to be transmitted to end-consumer products. Companies that are unable to withstand the pressure will still try to find price increases. Cao Rong told reporters that they will instill in their customers a logic of price increases. If other manufacturers raise prices, she will choose to increase a little.

Ci Jianfang, chief economist of CITIC Securities (600030), pointed out that in the global environment of maintaining accommodative monetary policies, some commodity prices have soared recently, which may pose a pressure on China's price situation. Judging from the PPI trend of industrial production, the ex-factory price of industrial products in September rose by 4.3% year-on-year, and rose by 0.6% from the previous period. Although it is in a downtrend channel, due to the upward trend in the prices of external bulk commodities, the downward trend of PPI will slow down, and at the same time, there will be an increase in the chain ratio. Many institutions may forecast a new round of increase in PPI under the rise in raw material prices.