Chinese companies are under pressure from rising commodity prices

According to official data agencies, soaring commodity prices are putting pressure on Chinese companies, although the country’s larger industrial sector has rebounded from the early effects of the coronavirus pandemic.

According to data released by the National Bureau of Statistics on Thursday, the profits of large industrial companies in April increased by 57% year-on-year. The industry has benefited from the pandemic and has a low base in 2020. Profits increased by 92% in March.

According to the National Bureau of Statistics, despite the wide-ranging economic situation, the data highlights the “uneven” growth in the performance of Chinese companies Recovery in the past year. The National Bureau of Statistics added that rising raw material prices have increased the profits of miners and other producers, but they will also further increase the cost of downstream businesses in the supply chain.

Zhu Hong, an official of the National Bureau of Statistics, said: “The profitability of some consumer goods industries has not yet returned to the level before the pandemic.” “In addition to the high prices of bulk commodities, this has increased the pressure on the production and operation of mid- and downstream industries.”

The Chinese government has expressed growing concerns about rising commodity prices, partly due to the country’s rapid industrial recovery and hopes for global economic growth this year.

In China, factory gate prices are driven by commodity prices. Jumped 6.8% last month, This is the fastest speed in three years. However, the consumer price inflation rate is still below 1%.

The State Council meeting chaired by China’s Premier Li Keqiang said last week that measures should be taken to prevent these costs from turning into consumer prices.

The country’s economic planning agency issued a warning on Monday about “excessive speculation” and stated that it will severely crack down on commodities and monopoly, which will help promote Iron ore prices fell by 7% After hitting Set a new high This month.

Data from the National Bureau of Statistics show that compared with the same period last year, from January to April this year, profits from non-ferrous metal smelting operations increased by 484%, and mining profits doubled.

In China’s recovery, consumption lags behind the strength of the industrial sector. China’s GDP growth returned to pre-pandemic levels at the end of last year. For those companies facing higher costs and consumer confidence, this is a challenge, and these companies have not fully recovered.

Larry Hu, chief China economist at Macquarie, said: “For them, the problem is that it is often difficult to pass cost pressures to consumers.”