The source of the new high trade surplus-plastic products

by:Ennas      2021-12-17

Oil prices continue to hit new lows. The resin material market went down. So are the prices of plastic products also falling?   According to today’s New York Times article, China’s plastics manufacturers have drastically lowered their prices, and most of the benefits of raw material procurement have contributed to consumers, of course, including both domestic and export markets. The report cited comments from Wuxi Redhot Industries Company, a plastic container manufacturer in Wuxi, saying that the domestic market is fiercely competitive, coupled with long-term overcapacity, and manufacturers are struggling to compete on prices.   In other words, after price cuts, Chinese export products have gained a larger share of the global market, while at the same time the prices of imported raw materials have plummeted, thus forming a new high in the trade surplus.   There are also indications in the domestic market. On November 27, the Fuzhou Evening News reported that many supermarkets and comprehensive stores in Fuzhou launched promotional activities for plastic products. The prices of many plastic basins and fresh-keeping boxes were only about two-thirds of the previous ones. The author of the report interviewed the person in charge of a plastic products factory in Fuzhou. The latter said that the material cost of plastic products is the bulk, accounting for 70% to 85% of the total cost. The labor cost accounts for 5% to 20%, and the cost of design and research and development accounts for 10% to 30%.   The plastics industry insider said that the spot prices of almost all raw materials are going down this year. Plastic prices have been falling along with oil prices, and procurement costs have fallen by 13%. The spot price of purified terephthalic acid dropped by 40%, and the price of polyethylene dropped by 17.6%. Under this influence, the total product cost has also been reduced by 5% to 20%.   But the price of raw materials is not a key factor in the cost of all plastic products.   According to a report from the Shenzhen News Network on November 7, the impact of labor costs on the industry is far greater than that of raw materials. The increase in labor and the difficulty in recruiting have a huge impact on the toy industry. The report cited Xue Xiaowei, director of Guanzhe Baode Toys Factory, saying that ABS, PVC and other materials have an impact on the toy industry by 1-2%.   The report also quoted Yang Daoping, the person in charge of Duoyuan Plastic Products Co., Ltd., saying that the supply and demand relationship determines the price, and it has little to do with the decline of crude oil. The fluctuation of crude oil will not directly reflect the end of PVC products. In this regard, I think what needs to be realized is that a large part of domestic PVC production capacity depends on coal chemical industry, not crude oil. The long-term overcapacity in the PVC industry has caused a relatively stable price downturn.   This company that produces inflatable toys said that from 2008 to 2014, the international market was the worst this year. 'Toy companies still have to take the high-end route to receive orders from cutting-edge customers.' I particularly agree with this point. The price cuts of export products cannot alleviate the slowdown of the domestic economy for a long time. Only real upgrades can have hope.
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