In February, the industrial producer price index (PPI) increased by 7.8%, triggering concerns about whether the PPI would pass on to CPI and increase worries about inflationary pressures. The journalist of “Economic Information Daily” reported that the market relations among steel, coal and other commodity have improved in recent years. Prices rose significantly, which probably promotes the further rise of PPI in the short term. Experts said that the rising price of upstream raw material has put pressure on the operating of  the middle and downstream enterprises, but the chance that future prices of industrial products have a further rise is not very much, or even a phased callback would happen, the pressure on transmission from PPI to the CPI is limited.

Institutional data show that from 13rd to 17th in March, the prices of 50% of commodity have risen, and those of 39.66% of commodity have dropped. the number of products whose prices have increased by 30% compared with that last week. This week, the market price increased by 0.09%, which has been the first time for the average rise per week of prices to turn positive since late February. It is understood that since September last year, the market supply and demand relation of coal, iron and steel has got some improvement. The price bottomed out, which becomes the important reason that PPI realizes the transformation from negative to positive and rides it all the way.

Experts said that with the release of favorable factors like policy , macroeconomic goals and so on. Nonferrous metals and steel plate are showing explosive rise, boosting the entire commodity market. The market is still in a large market cycle, and the tone of bull market haven’t changed. The investment of billion railways and highways, the government constantly energize the market by cutting tax and a series of other favorable factors. The uncertainties of market will soon dissipate, and commodities would usher a new round of rise.

The constant rise of the price of upstream raw material has triggered the twofold concerns, one is that cost pressures on the middle and downstream enterprises continue to be heavy, the other is PPI rose or transform to the CPI, which leads to the rising inflationary pressures.

“The persistent rise of cost leads to that terminal doesn’t accept the price, and has a further influence on its demand of raw materials.” Analysts said that the prices of upstream steel rise too fast,  which results in the downstream terminals can’t undertake it.

The same phenomenon can also be seen in the coal industry. Analysts said that after the year, the supply of coal showed the trend to be slightly short in the short term because the strength of restoring production is enough. production efforts is not large, slightly short supply of coal supply tight. Coal prices continue to rise, and they are so high that the downstream procurers can’t undertake it. They should slow the steps on procurement under control. Under the background of high coal prices, downstream power plant, the condition of production and operation is not optimistic.

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