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Plastic Raw Materials Supplies Are Tight,Enter The Seller's Market

Oct 11, 2017

Polypropylene is a kind of main raw material of plastic products, a thermoplastic resin produced by polymerization of propylene.There are three types of polypropylene, atactic polypropylene, and syndiotactic polypropylene.

In August, the price of polypropylene rose.In September, the industry was even more surprised: "rise to doubt".According to the statistics, the price of each ton of polypropylene rose from 7,900 yuan in early July to 9,500 yuan, with a cumulative gain of 1,600 yuan per ton, which is more than 30% compared with the same period last year.

According to many suppliers of plastic raw materials, recently, the price of plastic materials has risen, and the supply of goods is in short supply."The recent period of plastic material entering the seller's market, traders and producers have been living a better life, not only at the price, but also not necessarily in stock."Mr Cheng said there was always a "go on" mentality in the raw material market.At the beginning of the growth of the raw materials, the finished products companies made more purchases. "large enterprises have increased their stock of stock, and small enterprises have taken high frequency procurement, so that the supply of goods has been tightened."

Rise or not rise, small and medium enterprises dilemma.Many in the industry say, according to the principle, the raw material rises, the businessman to follow the wind rises is the easiest way to digest cost.However, this is not the case."Overall, small and medium-sized enterprises (smes) in the research and development, technology, does not have the advantages of the process of case, either and large enterprise competition, and competition between each other, more still compete who lower the cost of production."In the interview, most plastics companies and dealers said that if the price increases easily, it would mean giving up the competitive advantage of price.If you insist on not raising prices, you should face the embarrassing situation of losing profits in the market.

Small make up, small and medium-sized enterprise dare to rise in price of another deep reason lies in the fact that a lot of small and medium-sized enterprises need through financial institutions or private financing to solve the problem of insufficient liquidity.In this case, the price of all kinds of raw materials will increase sharply, which will take up more cash flow from smes.Once an enterprise raises its price, it can cause the increase in the return cycle of the fund due to the difficulties in product sales, thus affecting the relatively stable capital chain of the enterprise.

According to a staff member of a plastics industry association, large enterprises have the unmatched capital flow of small and medium-sized enterprises, and the ability to absorb raw material prices is much stronger than that of small and medium-sized enterprises.Small and medium-sized enterprises, which rely on low cost for living space, will not be able to transfer all the cost of raw materials to their products even if they want to raise prices.

How do plastics enterprises face the rising tide?Many enterprises have adopted measures such as technological innovation and management upgrading, while improving the added value of products while strictly controlling costs.

In the past, the price of raw materials has been raised, and it is reasonable for us small and medium-sized enterprises to raise the price of products in small scale and lots of batches to test the reaction of all parties in the water market.At the same time, the remaining production costs are offset by a reduction in profits.However, now we should not only consider the cost of products, but also consider the process and other issues.For example, PC (polycarbonate) is more expensive, we can use other cheaper materials to improve the same performance, to solve the cost pressure for customers.

Plastic raw material up to the enterprise is difficult to estimate the influence of some raw materials prices rose more than 50%, even "low price competition in the market has been useless at this time, means a loss at a lower price, or is a decline in the quality."At this time, enterprises prefer to choose fewer projects and develop some new materials.There has been a "collective surge" of raw materials before, and the industry has been "shuffled" again and again.If you don't want to be the one to be "shuffled," it's important to make a future layout.Enterprises can either make a timely transformation or take more time to develop new products, new technologies and new technologies, and excavate the added value of products.Otherwise, reacting to raw material gains is likely to lead to a "dead end"."Even if I avoid this one shuffling, I can't escape the next time."

For plastic enterprises, technical innovation is very important, the only technology to force, to make the products in terms of cost advantage, advanced management also can make the cost of products has fallen, so want to do both, to survive in the present circumstances.