Prices surge swept the country, the industry is facing lethal test entity

In 2016, housing prices rose madly, and coal, steel, and papermaking industries were all the rage. After the housing price was released, transportation, chemical raw materials, electronic components, and packaging and printing began to soar. Under an "up, up, up," the frenzy, Chinese industry has been boiling.

Business is difficult to do, the last two months is the traditional peak season, I thought we can make some money for the Chinese New Year. Who knows raw materials soaring, all kinds of accessories are also higher than the price increase, transportation costs rise, labor wages have to rise, even WeChat Alipay also Fees, and feel pressure on Shanda.... But seeing no improvement in exports and domestic demand, brand owners are desperately squeezing upstream suppliers for price wars. This is a desperate rhythm!

In this boiling economic environment, how many companies can survive this fatal 2016?

Energy, raw materials, freight, and manufactured goods have risen in turns

In September 2016, the negative growth of the PPI, which lasted for four and a half years, finally reversed, marking the official opening of an overall price increase in China's industrial sector. In fact, starting from the beginning of the year, the bulk of raw materials such as coal, iron ore, and papermaking began to rise, and they were transmitted to the entire industry several months later.

The first turn of the PPI after four and a half years

Affected by de-capacity and other factors, coal and steel maniac

Affected by factors such as industrial capacity removal and inventory deregulation, domestic coking coal and thermal coal have risen by over 150% and 100% respectively since the end of last year. As of October 21, the comprehensive steel price index was 79.00 points, an increase of 19.17 points year-on-year, an increase of 22.63 points from the beginning of the year. The prices of key steel products such as high-grade, tertiary rebar, and hot-rolled coils rose by 27.4%, 27.9%, and 44.9% year-on-year.

Chemical raw materials skyrocket, will affect the downstream industry

In the past six months, the upstream chemical raw materials began to soar. TDI soared from 10,000 yuan/ton at the beginning of the year to 50,000 yuan/ton; domestic rutile titanium dioxide rose from 9300 yuan/ton at the beginning of the year to 14,000 yuan/ton, and people in the industry also firmly believe that it continues to rise; neopentyl glycol has been increased by 6000 yuan. Yuan/ton rose to 13,800 yuan/ton. Compared with the beginning of the year, there are quite a few varieties with more than 50% increase in market price, and many varieties have doubled or even doubled, such as butadiene rubber, acetone, propylene, butadiene, and butadiene rubber.

Paper industry: The concentration of production capacity, pollution control, and the paper industry lead to soaring prices

From the end of 2014, raw paper prices began to rebound strongly in Jedi. Since then, the winds of price increases have become increasingly fierce, and in the spring of 2015, Niuka has risen three times. In 2016, there has been a six-pronged rise in white cards. All kinds of price increase letters are generally flying to the downstream packaging and printing industry. Especially since 2016, the packaging base paper has been rising every month, and the price increase rate is as high as RMB 300/ton each time. Recently, even the very depressed cultural paper market has begun to soar.

Furniture industry: Sponge, wood, and transportation costs increase sharply

TDI has risen to a level of 50,000 yuan per ton since the beginning of the year, compared with more than 10,000 yuan per ton; the average price of soft foam polyether at the beginning of the year was 8,300 yuan/ton, and by October, the market has sharply increased to 14,300 yuan. / Ton or so, the cumulative increase of about 72%. Due to the sharp increase in raw material prices, the sponge price has now almost doubled. Affected by the continuous surge in prices of sponges and the new policies of timber and logistics transportation, the furniture industry has also started to increase prices.

Rising freight rates affect all walks of life

On September 21, the state issued the "most stringent rule over the order," and freight costs rose. Logistics in some regions rose from 6 yuan per item to 10 yuan per piece. Transportation costs per ton of building materials rose by 100 yuan, feed transportation costs rose by more than 35%, chemical raw materials rose staggeringly, and coal prices rose by 10 yuan per ton..... .

After the skyrocketing raw materials, the intermediate industries began to retaliate

After obstinately digesting the pressure from the previous rounds of raw paper madness, the packaging and printing industry could no longer hold on. From October, it began to show retaliatory rises. The first 10% increase has been fully implemented and the follow-up upward pressure remains enormous. . In addition, glass prices rose by 15%, circuit board price increases by 10%, and component prices rose by 5%. Industrial product prices are brewing in all sectors.

Price increase is not an improvement in economic fundamentals or is not sustainable

After a comprehensive analysis of the rise in all directions of industrial products , I am really not happy. In general, these increases are passive increases caused by various cost increases, environmental governance, monetary policy, exchange rate fluctuations, macro-control, and even industry monopolies. Domestic and foreign market demand, consumer price index, corporate profitability, industrial growth, etc. did not significantly improve. Obviously, this price increase is not due to the improvement of economic fundamentals, but also unsustainable.

This is really an eventful event

Taking the paper industry as an example, although the packaging and printing market has been sluggish, due to various factors such as sewage charges, environmental protection, production cuts and production restrictions, and rising freight rates, the papermaking industry with relatively concentrated production capacity has successfully pushed up paper through the use of bait-heating methods. price. With the recent devaluation of the renminbi, energy costs, labor costs, and macro-tax burdens have risen further. The pace of raw paper price hikes in the future cannot be stopped at all. The soaring of chemical materials such as TDI is similar to that of the paper industry.

The rise in coal-carbon steel prices, on the one hand, has led to the country’s capacity reduction, which has caused tight supply of coal in some regions. On the other hand, the skyrocketing property market and the country’s continued increase in investment in the iron and steel base have also stimulated market demand. The recent increase in highway transportation costs caused by excessive transportation costs, the devaluation of the renminbi, and the market's speculation on coal and iron ore have also played a role in fueling the crisis.

The increase in the prices of industrial products such as packaging, printing, PCB, LED, and components in the intermediate links is entirely a result of the continued sharp decline in prices in previous years. The cost of raw materials and other factors of production has risen, and many companies have been forced to “not die”. The case of helplessness.

Of course, there are also speculations that speculators use market surveillance for negligence. For example, TDI skyrocketed by 4.5 times when the upstream material only rose by 40%. For example, the price of crude oil rose from 35-40 US dollars / barrel to the range of 45-50 US dollars / barrel, but the propylene, butadiene, butadiene rubber rose wildly.

Eco-economic Boiling, Physical Industry Suffers Deadly 2016

We say that there is nothing more important than stability in terms of the natural ecological environment and the economic and ecological environment. For China, the world’s second-largest economy with low efficiency, high debt, environmental deterioration, and structural problems, any major adjustment may cause tremendous damage to the ecological environment.

A scientist did an experiment and poured 27 kilograms of dry ice into a small swimming pool. As a result, the whole pool was completely boiled in less than a minute. This was a great stimulus to the ecological environment. However, China’s printing money, 4 trillion economic stimulus, interest rate cuts, salary increase, environmental governance, artificial bull market, capacity reduction, deregulation of the property market, and people’s entrepreneurship all over the years are not strong incentives.

27 kilograms of dry ice instantly boils the pool

After a period of strong stimulation, the ecological environment of the Chinese economy has been boiling. The current wave of price increases may be an external manifestation of economic development. The final outcome will inevitably lead to a new wave of bankruptcy in the entity industry.

In my opinion, in the coming year, there will be a large number of bankruptcies in the following industries:

In early October, the Chinese government launched the most stringent real estate control policies. From the current situation, it is difficult for the real estate industry to have a large market in the coming year. Therefore, in addition to a large number of small and medium-sized housing enterprises, intermediary agencies, home ownership companies will collapse, Jiantao Sanitary, hardware and building materials, household appliances, kitchen and kitchen, furniture, steel, cement and other industries closely linked with real estate or suffered heavy losses. For some time in the future, major reshuffles in these industries will be inevitable.

　　 In previous years, the packaging printing, daily chemical, textile and clothing, toys, food, beverages, beer, retail, catering and other industries experienced the blind competition and caused a vicious competition to keep prices down . With various costs soaring and domestic and foreign market demand stagnating, some companies with insufficient funds, sharply reduced orders, lack of innovation, and high debt will be the first to fall.

One year is more difficult than one year

For the rest of this year's traditional peak season for the physical industry in November and December, I am not very optimistic. Because the global economy is in the doldrums, China’s strategy of delaying the outbreak of the economic crisis has made the situation increasingly uncontrollable.

Source: Packaging Zone (ID: s8p_cn), Author: Bake