The hottest tragedy is the surge in raw materials

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"Tragedy"! Raw materials soared! Downstream enterprises "strike"

"tragedy"! Raw materials soared! Downstream enterprises "strike"

May 26th, 2021

recently, an enterprise in Foshan, Guangdong Province issued a "holiday notice", saying that due to the continuous rise of raw materials, the customer notified the suspension of delivery. After research, it was decided that there would be a 10 day holiday from May 26th to June 4th. The specific working hours should be subject to the notice

in the middle of the year, the "holiday notice" suddenly appeared in the use of electronic universal testing machine and the working principle of deformation measurement. For workers, it may mean the suspension of stable income. For enterprises, it also means the suspension of operation. Enterprises are facing crisis, tight cash flow, unable to make ends meet, etc. So what exactly caused them to be "forced" to take a holiday? What industries have experienced similar "helplessness"

the upstream rose once every three days, and the paper mills stopped production one after another, preferring to give up rather than sell

recently, the base paper of multiple bases of Nine Dragons Paper Industry, the leader of the packaging paper industry, has been raised by 200 yuan/ton again, which is the fourth price increase since May, and the average price of paint has risen once every three days. Since this month, the price of Nine Dragons products has increased by 250-450 yuan/ton. With the news of the rise in the price of Nine Dragons base paper, the cardboard market has also ushered in a new round of price increases, many of which are the second round of price increases. The main reason for the price rise is the global rise in the prices of pulp, logistics and energy in the upstream of papermaking, which directly increases the production costs of enterprises

since May, major domestic cultural paper enterprises and traders have issued several price increase letters, of which the price of cultural paper has generally increased by 200 yuan/3. According to the stress (strain) cycle times when the sample breaks, it can be divided into: low cycle fatigue test, high cycle fatigue test tons, and the price of white cardboard has increased by 1000 yuan/ton. On May 24, the paper sector led the two cities, with Qingshan Paper, Yibin Paper and Yueyang forest paper rising by the daily limit, and Chenming paper, Shanying international, Guanhao high tech and Zhongshun jierou also rose one after another. At the same time, "paper mills have stopped production" also rushed to Weibo hot search, arousing heated discussion

since March, the supply gap caused by the reduction of long fiber raw materials and imported paper has begun to appear, and the price of pulp raw materials has risen, resulting in the upside down of pulp and paper prices. Many paper-making enterprises have announced the shutdown for maintenance. Shandong Sun Group announced that it would optimize and adjust the industrial paper and copper paper machine in April; Shandong Huatai Paper Co., Ltd. issued a notice that it plans to stop production and maintain the copper paper machine in early May; Chenming paper decided to shut down the cultural paper machine for 10 days in mid to early May

the manager of a paperboard company in Hebei said that the fourth round of price pressure has not been fully digested, and the fifth round of base paper price rise has hit rapidly. The soaring raw materials have forced enterprises to raise product prices. The business manager of a paper mill in Shandong said: "(paper mills) are losing money selling, the price of raw materials remains high, and the paper produced is losing money per ton. Some factories prefer to have a holiday rather than produce."

copper prices soared by 40000 yuan, a new high in recent 15 years! Enterprises dare not purchase

metallic copper is a variety with strong linkage with the international market. From March last year to May this year, the domestic copper price soared from about 35000 yuan per ton to 75000 yuan per ton. The person in charge of an enterprise said that because the copper price has reached a high point in the past 15 years, enterprises dare not purchase raw materials. In the whole workshop, except for finished cables, raw copper can hardly be seen. At present, enterprises have reduced production capacity and reduced the risks brought by high price copper

orders are the purchase prices set in the early stage. At present, the copper price has risen too fast, and the production cost has increased by at least 50%. Because contracts have been signed in the early stage, it is very difficult for enterprises to adjust prices with end customers. At present, the person in charge of the enterprise is busy discussing the floating pricing mechanism with downstream customers every day. Since May this year, copper processing enterprises have reduced production, in sharp contrast to the production scene in full swing in the same period of previous years. Production was forced to slow down, and shipments fell significantly, resulting in a high inventory of finished products

the cost exceeds the gross profit, and the foundry enterprises cannot continue to produce

due to the continuous rise of upstream raw materials, the orders of downstream enterprises are difficult to make profits or even losses, and the willingness of many enterprises to accept orders is significantly reduced. In addition, due to the sharp fluctuations in the prices of raw materials, some industries have frequent defaults. In such a dilemma, some industries began to hold together for warmth

the person in charge of a metal foundry in Shenzhen said that under the pressure of soaring raw material prices, some enterprises have suspended production, "some factories have given employees holidays." Guangdong Hyundai Foundry Co., Ltd. issued a notice of suspension of production and supply. The notice mentioned that due to the "lethal" rise in the price of raw materials in the foundry industry and the extremely tight supply, the cost of foundry materials has far exceeded the gross profit of the enterprise, and the enterprise has reached a situation where it can't afford to lose money

orders increased by 30% but lost 2million. Decoration companies dare not accept new orders

not only are traders affected by the rise in plastic prices, but some enterprises in the middle and lower reaches of the industrial chain are also facing the pressure of rising costs. Many manufacturing enterprises fell into losses in the first quarter, and even the more they did, the more they lost. Some decoration companies are also under the pressure of rising costs

a decoration company in Huzhou City, Zhejiang Province said that after the Spring Festival this year, he received more than a dozen price increases. Not only some plastic products, but also steel, wires, cement and so on have increased to varying degrees. He received more than a dozen orders before the Spring Festival this year, which were in a state of loss. It will take time for the rise in raw material prices to be transmitted to the consumer. However, due to the uncertainty of raw material prices, he did not dare to sign new orders easily. A decoration company in Zhejiang said, "the rise of raw materials has made us afraid to contract labor and materials, because we really can't figure out its rise, so our current model is to do a good job in the design scheme, and then let customers purchase by themselves, so our risk will be much smaller."

Limited sales, no orders, home decoration companies take the initiative to "reduce production"

due to the weak cost control ability, it is difficult to digest the pressure caused by the rise of raw materials alone. Some small and medium-sized enterprises in the home decoration industry can only sell in limited quantities, and customers want 1000 goods, but only send 100 goods. "The price of raw materials soared, and the orders that have been received have basically lost money. Now we are carrying them hard, and we dare not accept new orders."

the boss of a decoration company said that the decoration company he operated was a small and medium-sized enterprise, and the material cost accounted for 50%-60% of the operating cost. When the price of raw materials increased by 10%-20%, the net profit was basically gone

timber soared by 6000 yuan! The wood processing plant can't operate and has no choice but to transfer

from last year to now, the price of black walnut board has increased by 30% to 50%, the super grade has increased by more than 6000, the general grade has increased by 4000, and the price of super grade red oak has also increased a lot, from the original 51thousand cubic meters to 7000. Many furniture factories can't respond to this round of price rise at all. They are all jumping price rises. If they don't buy today, they will rise by more than 1000. Then turn around and see that the price has risen again

this round of rising raw material prices, raw and auxiliary materials such as logs and paints are rising sharply. Enterprises have improved production processes and controlled some production costs, but they cannot offset the pressure of rising costs. There are many more orders this year than last year, but the price of raw materials has risen, and the more orders, the more money you lose. At present, there is no way, and you have to sustain the loss. Due to the impact of this round of price increases, most material preparation plants have been unable to operate and are now being transferred

there is a serious shortage of raw materials and a sharp rise. The electronics industry is closed and employees are dismissed.

recently, two announcements about stopping operations have been widely circulated in the electronics industry:

a Shenzhen Technology Co., Ltd. has no control valve company. The announcement shows that due to the increase in cost pressure, the decline in industry profits, the deterioration of the foreign trade market and the impact of the COVID-19, the enterprise has suffered a huge negative impact and has been moving forward with heavy loads. Despite various measures taken, it has not been able to reverse the business difficulties and make the business unsustainable. The enterprise decided to stop operating on April 29, 2021 and dismiss all employees from April 30

an employee notification letter issued by a Dongguan Power Supply Co., Ltd. said that after the Spring Festival, the cost of materials rose sharply, some chips were seriously out of stock, the ordering cycle was lengthened, and the cost of products rose sharply. Customers stopped placing orders because they had no profits. In addition, important materials were changed from monthly settlement to cash purchase, and the capital chain was broken. The enterprise decided to stop operation on April 30 and terminate the labor contract relationship with all employees

from the current domestic chip market situation, the shortage problem has reached the limit. From the perspective of St MCU, which is the most serious shortage and speculation this time, the increase has been as high as dozens of times, but the downstream demand is strong, there are very few chips flowing into the market, and the prices in the spot market are different every day

shortage and rising prices have affected the downstream market, market demand in some areas has been weak, end customers have delayed projects or stopped receiving orders, and even small and medium-sized electronic manufacturers have stopped operating. There are already some downstream electronic factories that will no longer increase their efforts to store goods; St MCU, the most heavily speculated, also has domestic traders starting to release goods

according to an employee of an electronic factory, because the price rise of chips and PCBs is too high, the increase has exceeded the profit, and the terminal has to stop receiving orders or postpone the delivery of the project. Another industry insider also said that a large number of low-end and medium-end manufacturers have experienced a sharp rise in chip prices, and the purchase cost is higher than the selling price, so the enterprises cannot support it, and the market demand will be weak instead. There are many kinds of downstream uremic toxins manufacturers are no longer stocking on a large scale, which may be the helpless move of manufacturers with low added value to cope with the soaring materials and unable to transfer the costs to downstream enterprises

many enterprises said that last year, affected by the epidemic, they only started production for nine months, and they struggled through it. At the beginning of this year, the price of raw materials rose, and they also gritted their teeth and insisted. However, the current situation is "out of control". Raw material enterprises are making a lot of money, but the midstream industry is very difficult, which is simply a "tragedy". Large enterprises can barely maintain their low-level hoarding of raw materials by virtue of their financial advantages, while small factories that rely on the purchase of spot raw materials for production are limited by capital and scale, resulting in a shortage of funds, raw materials and customer loss. Under the dual pressure of rising costs and insufficient orders, the operation is difficult to sustain. At the same time, it is also facing a huge crisis, even the risk of being eliminated

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