The continued high level of CPI will increase the cost of raw materials and labor, ultimately pushing up manufacturing costs. Experts said that it is expected that domestic inflationary pressures will remain large in the future. Affected by this, China's steel industry will continue to maintain high-cost operating conditions.
The data shows that China imported 54.55 million tons of iron ore in July, with an average price of 173.2 US dollars / ton, up 8.8% from April's 159.2 US dollars / ton. Xie Cai, a researcher at Lange Steel Information Research Center, said that the high-cost operation will support the upward trend of steel prices, further reducing the profit margin of steel companies, and at the same time will cause steel traders to face funding problems.
Specifically, steel producers will face the pressure of production costs caused by inflation-induced increases in the prices of various production factors, thereby further reducing the production profit margin of steel enterprises. In turn, some of the increased production costs will be passed on to the steel trade circulation link by increasing the ex-factory price, which will reduce the profit margin of steel traders.
Xie Cai said that due to the increase in ex-factory prices and the same order quantity, the amount of funds required by steel traders increased. In the case of high CPI and the country's continued tightening of liquidity, some steel trading companies will have to face the shortage of funds. Most of the steel trading enterprises are small and medium-sized enterprises. Under the circumstances that the capital is constantly tightened, enterprises will face higher risks and financing costs.
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