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Analysis this round of rising raw material prices Reason

Apr. 15, 2021

The price of raw materials has been rising wildly since February. Many factories conducted the first round of large-scale price adjustments in early March. 

    At present, due to the analysis of the factors of this round of rising raw material prices: 

   1.Affected by production capacity, some raw materials have insufficient production capacity , The supply and demand gap is large, and the supply shocks have caused prices to rise, mainly due to the increase in the prices of metal products such as steel;

    2. The environmental protection policy continues to increase, and the overall market supply is tight, which is expected to drive up the price of raw materials;

    3.  China's global resource acquisition capacity It is still insufficient. Affected by the epidemic, major overseas mines (iron ore, copper mine, etc.) have reduced production. As the domestic epidemic gradually stabilizes, market demand has begun to recover, causing supply to fall short of demand. The prices of raw materials have skyrocketed, and upstream companies have made money, while downstream companies are divided into two situations. One is the primary processing manufacturing industry, whose products have no technical content, such as cutlery and tableware companies, which have no basis for bargaining, and price increases. Insufficient, forced to bear the pressure brought by this surge. For some large manufacturers, on the one hand, the added output value is high, and the material cost is relatively small. On the other hand, the cost can be passed on to customers. Brand manufacturers such as air conditioners and TVs have begun to adjust prices. In order to reduce costs and increase profits, companies have to adjust the prices of their products. However, many companies have expressed that the price increase is hindered. Even if the price increase is raised with downstream customers, the customer does not necessarily buy it. Not only does it not recognize the new price, but also asks for continued price reduction. Some companies said that even if they have sent a price increase letter to their customers, it will take a lot of energy to negotiate with customers to implement it. #

  4. An important reason for the increase in raw material prices is the large-scale monetary policy of the Federal Reserve and central banks in Europe and the United States. Most of the raw materials this time are bulk commodities on the international futures market. This price increase is actually a currency devaluation in disguise.#hydraulic fitting#zhuji hydraulic fitting factory.

      At present, the price of raw materials is still rising. Our company thinks that the price of raw materials will continue to rise for a long time. Most factories may soon carry out the second round of price increases, so customers who have orders need to plan ahead as soon as possible. , Arrange the order in advance as much as possible

   In addition, most of the factories are very busy due to the price increase, so please plan and prepare in advance for orders.

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