Fuzhou Jing’an

Trend of rising prices for production raw materials

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2021-07-02

The implementation of a tight monetary policy has led to rigid procurement and settlement practices, placing immense cost and liquidity pressures on tire manufacturers. Key raw materials for tire production—such as natural rubber, synthetic rubber, steel wire, steel cord, various chemical additives, and coal—are repeatedly hitting record highs, while supply remains severely constrained. The average price of imported #20 standard rubber was $2,051 per ton in 2007; by early this year, it had risen to $2,200 per ton, reached $2,800 per ton by late April, and stood at $3,280 per ton as of June 18—more than a 49% increase compared with the beginning of the year. Domestic #5 rubber averaged 19,341 yuan per ton in 2007; by early this year, the price had climbed to 20,400 yuan per ton, surged to 23,000 yuan per ton by late April, and hit 28,000 yuan per ton by June 18—an increase of over 37% since the start of the year. Chlorinated butyl rubber averaged 48,800 yuan per ton in 2007 and at the beginning of 2008; by late April, its price had jumped to 79,000 yuan per ton, and by June 18 it had reached 100,000 yuan per ton—more than a 104% rise from the start of the year. Re‑tempered steel wire averaged 6,000 yuan per ton in 2007; by early this year, the price had increased to 6,700 yuan per ton, rose to 8,000 yuan per ton by late April, and stood at 10,500 yuan per ton by June 18—a more than 56% increase from the beginning of the year. By June 18, prices for various auxiliary materials had all risen by more than 30% compared with the start of the year. Overall, the current prices of raw and auxiliary materials represent a comprehensive increase of over 40% compared with the 2007 average, directly driving up tire production costs by more than 25%.

The implementation of a tight monetary policy has led to rigid procurement and settlement practices, placing substantial cost and liquidity pressures on a broad range of manufacturing enterprises. Key raw materials—such as natural rubber, synthetic rubber, steel wire, steel cord, various chemical auxiliaries, and coal—have repeatedly hit record highs, while supply remains severely constrained. In 2007, the average import price of #20 standard rubber was USD 2,051 per ton; by early this year, it had risen to USD 2,200 per ton, reached USD 2,800 per ton by late April, and stood at RMB 3,280 per ton as of June 18—an increase of over 49% compared with the beginning of the year. Domestic #5 rubber averaged RMB 19,341 per ton in 2007; by early this year, the price had climbed to RMB 20,400 per ton, surged to RMB 23,000 per ton by late April, and further rose to RMB 28,000 per ton by June 18—an increase of more than 37% since the start of the year. Chlorinated butyl rubber averaged RMB 48,800 per ton in 2007 and at the beginning of 2008; by late April, its price had jumped to RMB 79,000 per ton, and by June 18 it had reached RMB 100,000 per ton—an increase of over 104% compared with the beginning of the year. Tempered steel wire averaged RMB 6,000 per ton in 2007; by early this year, the price had risen to RMB 6,700 per ton, climbed to RMB 8,000 per ton by late April, and further increased to RMB 10,500 per ton by June 18—an escalation of more than 56% since the start of the year. By June 18, prices for various auxiliary materials had also risen by more than 30% compared with the beginning of the year. Overall, the current prices of raw and auxiliary materials represent an aggregate increase of over 40% compared with the 2007 average, directly driving up tire production costs by more than 25%.

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