On April 20, Huang Libin, a spokesman for the Ministry of Industry and Information Technology and director of the Bureau of Operation and monitoring coordination, said at a news conference held by the Guoxin Office that the current round of commodity price increases has an impact on the manufacturing sector, but the impact is generally controllable, smelting enterprises and processing enterprises shall be encouraged to carry out futures hedging transactions.

Huang Libin said that since this year, the prices of major products in the steel, non-ferrous metals, petrochemical and other industries have continued the upward trend at the end of last year, commodity prices rose sharply may have the following reasons: First, the rising cost of raw materials to push up commodity prices. In the first two months of this year, the average price of imported iron ore and copper concentrates increased by 56.6% and 44% respectively, a considerable increase. Crude oil prices also posted their biggest gains over the same period, with Brent Crude and New York light crude both rising about 20 percent. Second, the downstream industry production recovery has formed a tense situation of supply and demand. In the first quarter of this year, the output of light industrial products such as air conditioners, refrigerators, washing machines and some major mechanical products in the downstream industries showed a sharp recovery growth trend, the growth rate far exceeds the output growth rate of raw materials such as steel, copper and aluminum. Some chemical companies stopped production overhaul, the United States, such as the polar storm led to a sharp decline in production of some products. Third, the Non-ferrous metal, some chemical products and other prominent financial attributes, loose monetary policy, the global economy is expected to improve the activity of relevant futures trading in the world.

"China has a huge industrial sector and a large volume of overseas purchases of some commodities. The rising prices of related commodities have a direct impact on PPI. In recent months, the ex-factory prices of products in upstream industries have all shown a clear upward trend. As the industrial chain has been transmitted to the middle and lower reaches, although the profitability of some upstream enterprises has improved to a certain extent, it has also increased the cost pressure of downstream enterprises to a certain extent, squeezing the profit space of enterprises. At the same time, we also see that most of the factors involved in price increases are short-term and sudden, and commodity prices do not have the basis for a long-term rise,"Huang said, in the next step, the Ministry of Industry and Information Technology, together with the relevant departments, will actively take measures to promote the stabilization of raw material prices: first, strengthen operational monitoring and price supervision, stabilize market expectations, release operational information in a timely manner, and give good guidance to public opinion, prevent panic buying or hoarding. Cooperate with relevant departments to firmly crack down on market monopoly, malicious speculation and other illegal and illegal acts. Second, support upstream and downstream enterprises to establish long-term stable cooperative relations, coordinate to deal with the risk of market price fluctuation, and encourage smelting enterprises and processing enterprises to carry out futures hedging transactions.

Source: Futures Daily

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