(Yicai Global) April 20 -- Rising commodity prices may have some impact on China’s manufacturing sector, but it will be manageable, according to the industry ministry.
Raw material prices have risen significantly in recent months, and that is having a knock-on effect in industry chains. Profitability has improved at some upstream firms, but cost pressures on downstream businesses has intensified, squeezing profit margins, Huang Libin, a spokesperson for the Ministry of Industry and Information Technology, said at a press conference today.
International commodity prices have surged as the global economy emerges from the coronavirus pandemic, but Chinese government officials said today that there are no grounds for a long-term increase.
Huang said price gains are mostly short-term, adding that China has sufficient policy room for macro-control, as well as strong domestic market potential, complete manufacturing categories, and strong market self-adjustment ability. Moreover, the authorities have taken measures to ensure supply and stabilize prices.
In the first two months of this year, the average import prices of iron ore and copper concentrates in China jumped 56.6 percent and 44 percent from a year earlier. The cost of crude oil also saw the largest-ever increase in the same period. Futures for Brent Crude Oil futures and Nymex WTI Light Sweet Crude Oil both rose about 20 percent, Huang said.
At the same time, production of industrial products such as air conditioners, refrigerators and washing machines recovered substantially in the first three months of the year, rising faster than the output of raw materials, which further boosted the prices commodity costs, Huang said.
The MIIT, together with relevant departments, said it will take measures to keep raw material prices stable, including cracking down on malicious speculation.
Editor: Tom Litting