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China’s small manufacturers endure ‘difficult time’ as surging raw material prices drive up costs
- Demand for raw materials has surged in China as the economy has recovered from the pandemic, but that has increased costs for downstream manufacturers
- While big industrial companies have seen profits grow this year, soaring prices for commodities like iron ore are starting to put pressure on smaller firms
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Last year, as China’s economy started to rebound from the coronavirus pandemic, Ding Yi saw export orders take off.
Ding, who runs a factory making stainless steel strips in the city of Wuxi in eastern Jiangsu Province, even invested in new equipment while demand was good.
But with commodity prices now above pre-pandemic levels, the businessman is starting to feel anxious again.
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“We tried to find new suppliers, but every supplier was raising prices,” he said. “Then we raised the prices of our products instead, but our downstream suppliers could not accept it.
“Now we are stuck in a stalemate.”
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Profits at China’s industrial firms nearly doubled in March from a year ago as both foreign and domestic demand surged along with the economic recovery. But the sharp rise in demand from China and developing countries has had the knock on effect of boosting demand for raw materials, eating into those profits.
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