Important reasons affecting order delivery and prices this year

Important reasons affecting order delivery and prices this year

RMB appreciation

 

 

Since the beginning of this year, the renminbi has overcome a series of risks and has consistently ranked first among Asian currencies, and there is little sign that it will soon decline. The continuous growth of exports, the surge in bond inflows, and attractive returns from arbitrage transactions indicate that the renminbi will appreciate further.
Scotiabank’s foreign exchange strategist Gao Qi said that if further progress is made in the Sino-US negotiations, the RMB exchange rate against the US dollar may climb to 6.20, which is the level before the devaluation of the RMB in 2015.
Although China’s economic growth slowed during the quarter, exports remained strong. Shipments in September soared to a new monthly record.

 

 

Raw material price increase

 

Behind the appreciation of the renminbi, commodity prices are also skyrocketing, and the manufacturing industry is miserable; behind the high shipments, it is the production of Chinese factories regardless of cost.
According to data released by the National Bureau of Statistics, PPI in September this year increased by 10.7% year-on-year. PPI is the average price at which companies buy raw materials, such as copper, coal, iron ore, and so on. This means that the factory spent 10.7% more on raw materials in September this year than in September last year.
The main raw material of electronic components is copper. In 2019 before the epidemic, the price of copper remained between 45,000 yuan and 51,000 yuan per ton, and the trend was relatively stable.
However, starting from November 2020, copper prices have been rising, reaching a new high of 78,000 yuan per ton in May 2021, an increase of more than 80% year-on-year. Now it has been fluctuating at a high level in the range of 66,000 yuan to 76,000 yuan.
The headache is that the price of raw materials is rising fiercely, but the price of electronic components has not been able to increase simultaneously.

 

Large factories have curtailed power, and production capacity has fallen sharply

 

 

Perhaps you have noticed that the recent “dual control of energy consumption” policy of the Chinese government has had a certain impact on the production capacity of some manufacturing companies, and the delivery of orders in some industries has to be delayed.

In addition, the China Ministry of Ecology and Environment has issued the draft of “2021-2022 Autumn and Winter Action Plan for Air Pollution Management” in September. This autumn and winter (from October 1, 2021 to March 31, 2022), the production capacity in some industries may be further restricted.

 

 

To mitigate the impact of these restrictions, we recommend that you place an order as soon as possible. We will arrange production in advance to ensure that your order can be delivered on time.

If you have any questions, please contact us and we will respond to you as soon as possible.

 

 

 


Post time: Dec-02-2021