Ferric oxide is an important basic inorganic chemical raw material, mainly used in the production of coatings, building materials, rubber and plastics and other nearly 100 kinds of downstream inorganic intermediates and special chemicals. Open years, iron oxide production mainly raw materials on the market: sulfate, ferrous sulfate, nitrate, liquid alkali, metal tin raise market prices generally rise, other auxiliary materials, freight also follow up, leading to the enterprise purchase cost has brought iron oxide production and marketing before some pressure, at the end of the chemical industry a new round of price increases has begun!

　　-- The current "rising tide" of the chemical industry has increased by nearly 50% :

　　Make pigment, coating enterprise feeling "pressure mountain", one price rises letter after another hit, broke the market "calm". Rise in price! Rise in price! Rise in price! More than 50 kinds of raw materials show a rise, up nearly 50%, for many chemical enterprises, "rise" has become the key word of 2021, chemical raw materials, all kinds of auxiliary materials and freight increases, is a common problem faced by the whole industry.

　　This time the price of chemical raw materials, metal materials and so on is to some extent "regression". Last year, due to the impact of the epidemic, crude oil prices fell sharply, and related chemical derivatives also fell. Now the real economy is gradually recovering, crude oil prices are rising, and the market demand for related raw materials is gradually recovering, which will inevitably drive up the price of raw materials, but the current increase is too large. Before the start of this round of price rises, many enterprises did not expect such a surge in chemical raw materials and metal materials after the Spring Festival. Because they had no stock in the early stage, there was less low-cost inventory in the market. If they want to start work, they must buy new raw materials, which is also a major reason for the price to continue to rise.

　　The rise of upstream raw materials is almost tripod peak level in recent years, the downstream has "can not hold"! Unprecedented cost pressures! Under the current trend of chemical products "rising tide", the industry branch gives an early warning of the price rise of raw materials.

　　Ii. "Economic Risks and crises" facing the chemical industry at present:

　　1, the impact of the enterprise

　　This round of rising raw material prices, production and operation of enterprises have a certain impact, but also let enterprises under pressure. Small and medium-sized enterprises have been hit harder than large enterprises. Large enterprises can strengthen cost management, or with the help of cost-saving technological progress, to cushion the adverse impact of rising raw material costs, while small and medium-sized enterprises are difficult to do in cost management and technological progress. Small and medium-sized enterprises to resolve the pressure of raw material prices, not only need their own active action, but also need the government and financial institutions to provide help.

　　Price adjustment can only be a short-term measure, small and medium-sized enterprises must actively, strengthen their own market supply and demand and price changes forecast and early warning, timely grasp the price trend, tap the potential of internal cost savings, cost savings as far as possible. And from the design point of view, looking for alternative low-cost raw materials. We should explore and promote product upgrading to cope with the pressure of rising costs through deep processing and high-value application. There is competition among competitors, but more importantly, we should cooperate and stay together. Industrial upgrading should be carried out in time to meet the needs of environmental protection and safety; To develop new products based on market demand; Implement a multi-product strategy in order to withstand market risks.

　　This paper on the two sessions this year "carbon peak" "carbon neutral" for environmental protection check will have more stringent requirements, one of the chemical industry has become a bear the brunt of the affected, carbon emissions will be reversed transmission transformation and upgrading of domestic chemical enterprises, and will bring about a green revolution, the chemical industry is facing a big reshuffle, under the strong pull of the current, there are still bullish expectations chemical products.

　　2, price surge hit, a number of chemical enterprises collective price

　　Recently, with the third wave of the outbreak in Europe, leading to Germany, Poland, Hungary and other countries lockdown! More than ten kinds of chemical raw materials are in serious shortage, the chemical industry can be said to be "a wave of rising waves." The supply cost of raw materials and the price of auxiliary materials rose sharply, triggering a series of chain reactions in the industrial chain. Pigment raw materials such as titanium dioxide and resin are attracting "fierce" price rises, including many foreign and domestic enterprises.

　　At present, nearly 100 chemical enterprises are stopping for maintenance or plan to stop for maintenance this year. Some of these enterprises have partial maintenance of devices, and some have total maintenance, and the cycle is generally long, basically between 10 to 50 days.

　　According to incomplete statistics, the near future more than a dozen coating enterprises successively sent a letter, announced in April began to rise product prices. Part of the enterprise pigment coating products up 40%, or according to different categories. Recalculate costs and quotations for customers with small long-term orders, and pay first and arrange production for customers with serious overruns. And it is worth noting that some enterprises in March issued the price increase letter marked on the execution time is not "immediately effective" but in April or May, which is in line with the previous pigment coating enterprises "upstream although the rapid rise, but we have to slowly rise, slowly with" practice. The prices of raw materials such as resin, titanium dioxide, pigment, additives, fillers, packaging materials, freight and other production materials and auxiliary materials have skyrocketed. All kinds of big price rises emerge in an endless stream, the price rises in the second quarter of the fanfare to inform customers, in order to reduce the cost of high pressure.

　According to statistics, since the beginning of the year, the whole chemical raw material market has experienced a storm from the "price rise", causing a flurry of agitation in the market, it makes a person look stunned. Due to the volatile chemical market, future trends are difficult to predict. But the problem of supply shortage has been there, more enterprises are expected to follow up, the first half of the year is still a bullish forecast.

　　3, chemical raw materials skyrocketed, do not need to stock up

　　After the Spring Festival of this year, raw materials rose, so that the whole industry chain manufacturers, channel business, retailers are facing the confusion on the operation. The biggest confusion comes mainly from the need to stock up.

　　If we take advantage of rising prices to stock up, will there be a downward trend like last year?

　　The biggest problem is that for some industries, the current market demand is not large, not the sales season. For example, air conditioning products in the home appliance industry, generally in June to July will appear in the sales peak.

　　For the troubles caused by the rise of raw materials to producers and operators, we can analyze from the following aspects:

　　Raw materials have become a trend, the possibility of short-term decline is small, but will tend to be stable,

　　Whether international, domestic economic environment changes, raw materials have become the current trend. In particular, industrial raw materials rose by a larger margin. Judging from the current market data, it is not the situation that has been rising in early March. It's going up and down a little bit. What is clear is that more cases have risen than fallen. Therefore, it is unrealistic to think that raw materials will fall in the short term.

　　As the market demand changes, according to the different circumstances of each industry, the state of some industrial raw materials macro control. The recent period of raw materials in the short term will tend to be relatively stable. It's not going to be as big an increase as it was in early March, and it's not going to be as big a drop as expected. Relative stability is the characteristic of raw material prices in the next phase.

　　Faced with the rising price of raw materials, producers and operators will have two different operational considerations.

　　Every time the price of raw materials rises, producers and operators will consider the following two aspects from the perspective of production and operation:

　　(1). The use of raw materials will continue to rise, and you can make more profits

　　When raw materials rise, almost all manufacturers will ask the producers and operators in the channel to prepare the goods as soon as possible. The current manufacturer guiding train of thought is "stock is to earn". Think if compare hesitate at present, more later purchase cost will be higher.

　　Producers and operators also want to keep more stock at present, and the price continues to rise. In the case of future market demand, the sales profit will increase. This is the raw material rise, some producers and operators of the idea.

　　2. Raw materials are now rising, and there is a risk of losses if there is a decline in the future

　　There are still some producers and operators will think that after the current price rises, they will take a large number of stocking behavior, and once the price falls sharply in the future, they will certainly run the risk of inventory losses. This last year some industry operators are deeply experienced.

　　From the current situation in the market and the experience of last year, most producers and operators in some industries are worried about the risks of stocking up large quantities of goods.

　　4. In the face of rising raw materials, it is necessary to prepare goods in advance, and producers and operators need to take comprehensive consideration

　　As for whether producers and operators need to prepare goods in advance, in the face of special raw material price changes this year, they need to consider comprehensively from the following aspects:

　(1) Market demand is the first consideration

　　Whether to stock goods in advance, regardless of whether to consider the factors of raw material prices, producers and operators should first consider the problem of market demand. That is, the industry they operate, whether there is market demand at the current time node. That is, according to the annual sales practices, whether the sales season.

　　In view of the special situation of raw material rising this year, we believe that producers and operators should make the estimated sales demand in the next three months according to their own industry. Then make a reasonable inventory. Why do you need to forecast sales in three months?

　　(1). Market competition needs

　　Some operators think that their input cost rises, the rising tide will also give their customers or customers floating prices. But in practice, this business strategy is not feasible. Because of the peer competitors, some ahead of time, there will be obvious price advantage.

　　(2). Stabilize customer needs

　　To make the sales forecast of three months and prepare the goods reasonably in advance is also to stabilize the needs of our customers. If they did not stock up in advance, when there is real sales demand, their supply price rises, and some of their competitors, because of stock up in advance, the price is stable. This will cause their own customers to lose. Therefore, from the point of view of stabilizing customers, it is necessary to make sales assessment in advance and prepare goods reasonably in advance.

　　(3). Watch your inventory 'red line' despite rising raw materials

　　Every operator will have their own normal operation of inventory planning, reasonable inventory management, the most important is to own inventory "red line". Is to set the minimum inventory of some products, the maximum inventory.

　　Market changes, especially in the case of large price changes, must not exceed their inventory red line.

　　In the current market situation, try not to have the psychology of "speculation". Instead, the focus should be on how to avoid the risk of inventory. This is the raw material prices, and should maintain a more rational behavior.

　　(2) Do not speculate, mainly to avoid risks

　　The current market situation, as producers and operators should be able to feel, demand is very weak. That is, it is hard to see a big increase in sales. Therefore, try to avoid the "speculative" psychology of the previous better market conditions. Still should consider how to avoid management risk to give priority to fully.

　　(3) The inventory red line should not increase by more than 10%

　For some industry enterprises, it can be predicted that the next three months will usher in the sales season, the current appropriate advance stocking is necessary. But we recommend no more than 10% of the inventory red line.

　　(4). Strive for supply chain channels to share the stocking pressure

　　In the face of the rise of raw materials, for some enterprises in the industry, we believe that manufacturers and channel providers should strive for joint stock of channel customers to share the pressure of continuous rise of raw materials.

　　As the manufacturer is the first to face the pressure of the rise of all kinds of raw materials. This requires reasonable requirements for customers in the channel to place orders in advance. Strive for customers in the channel, place orders in advance, pay part of the advance payment in advance.

　　As a channel supplier to support manufacturers to do a good job of reasonable inventory, but also need to reasonably require their own channel retailers, do a reasonable advance stock work.

　　Therefore, the rise in raw material prices also reflects the competition between the supply chains of various enterprises.

　　In the face of this raw material rise, operators whether to advance the confusion of stock, industry insiders to 3 aspects of the proposal, for reference only. One is the market demand situation, is the first factor to consider. Second, despite the rise in raw materials, we must guard our inventory "red line". Third, supply chain channels share the pressure of stocking.

　　At the end of March, the market is really not "calm", the chemical market is being attacked inside and outside! The Suez Canal was blocked, disrupting shipments; Environmental protection production, production interruption! The price increase letter will officially hit the market in April, and some raw materials are limited and out of stock! Global shortage! Environmental protection inspection, 40% enterprises stop production! The third round of price hikes is coming!

　　5, the external environment worries, and internal environmental inspection is more and more strict.

　　During this year's two sessions, "carbon peak" and "carbon neutrality" were included for the first time in the government work report, aiming to peak carbon emissions by 2030 and achieve carbon neutrality by 2060.

　　In this context, the domestic chemical industry is bound to face a green revolution. And this year the most real experience is: environmental protection inspection is more and more strict! With the arrival of environmental inspectors, some local companies have halted production ahead of schedule, further tightening spot supplies. "Environmental protection production halt + major factory concentrated overhaul + crude oil supply damage", the raw material market or demand, in addition, in April will be the beginning of the giant joint price increase will be formally implemented.

　　"Shutdown wave" has come. Affected by the epidemic, since the end of last year, the chip shortage has continued to affect the production of automobile enterprises, the supply chain is tight, and many industries are facing the "shutdown crisis".

　　In addition, the supply of home appliances, industrial, manufacturing, mobile phone digital and other industries are also facing a crisis of production. The shutdown has affected more than a dozen industries, including automobiles, electronics, chemicals and some manufacturing. In addition to the impact of the epidemic, the shortage of raw materials caused by stopping for maintenance and force majeure is also an important factor. For the whole industry chain, the impact of lack of supply is huge, after all, "even a housewife can not make bricks without rice", raw materials once supply or shortage, it means that enterprises can not carry out normal production and operation, cost expenditure will be difficult to load, temporarily suspend production has become a last resort.

　　6, pigment coating enterprises face out of stock

　　It is reported that white paint upstream including titanium dioxide, filler and other raw materials skyrocketing impact, raw material supply is tight, coating supply is greatly impacted. Nippon, Dulux and other architectural paint companies appear white paint out of stock, and has lasted for a period of time. Paint, automotive paint and other industries also encountered a "supply crisis," on the verge of running out of stock.

　　According to incomplete statistics, the near future more than a dozen coating enterprises successively sent a letter, announced in April began to rise product prices. Part of the enterprise coating products up 40% across the line, or according to different categories, up to 5000 yuan/ton. Recalculate costs and quotations for customers with small long-term orders, and pay first and arrange production for customers with serious overruns. And it is worth noting that some enterprises in March issued the price increase letter marked on the execution time is not "immediately effective" but in April or May execution, which is in line with the previous coating enterprise "upstream although although the rapid rise, but we have to slowly rise, slowly with"

　　7, the need for reasonable inventory

　　Remind you, always pay attention to the rise and fall of raw materials and inventory situation, combined with their own needs reasonable stock, timely adjustment in the market under the situation to maintain the profits of the enterprise. Many small and medium-sized enterprises said that they would keep up with the rise, and strive to sweep away the long-term loss of the haze, raw material prices continue to stay high, the market stock is also rapidly consumed, downstream customers in the case of increased demand will hoard more inventory to normal production and operation. When the orders of large factories surge and the production is full, most of them will take measures of limited sales and price increase, which can only accelerate the rise of prices. The only thing downstream enterprises can do is to hurry up to stock up and avoid the risk of price increase in the future.

　　Recently, it seems that many industrial chains have joined the queue of price rises, whether it is multiple categories of chemical products, or bulk industrial products, multiple industrial chains have an upward trend. Based on the current situation, the chemical industry and many other industries will continue to rise, it is difficult to fall in the short term.

　　Iii. Information negotiation and communication with customers

　　Member of association to remind the ferric oxide industry based on the independent situation, strengthen information communication with customers, according to the facts to chemical raw materials, metal sheet, auxiliary materials and freight market price fluctuations inform the customer of the change, adjust the price negotiations to resolve together each operating risk, construction standard and orderly ferric oxide market environment.

　　At the same time, please all member units must strictly implement the relevant national and industry standards and norms, on the premise of maintaining the market and the basic profits of the industry to provide customers with quality services, to ensure the healthy and orderly development of iron oxide industry.

　　Association will closely monitor the market prices of raw materials, and according to the actual situation in a timely manner to each enterprise market price change information, the enterprise can timely adjust management strategy, according to the market situation is in line with legal and rational, practical and the principle of friendly negotiation and cooperation unit, improve the pricing mechanism as far as possible, so as not to cause a new round of market turmoil.

Iron oxide Branch Office of China Coating Industry Association
  April 5, 2021