Raw Material Price Hikes Sweep Multiple Sectors: Carton Plants Should Pass Costs On Without Delay

Starting in late September, industry after industry has faced repeated rounds of raw material price increases. For companies, the key question is whether to absorb those costs internally or follow the market in raising prices. At present, condiments, food, ceramics and furniture are among the sectors joining the upward trend, and carton plants that have not yet passed on the full cost burden no longer need to bear it alone.

Listed food companies adjust prices by 8%–18%

Higher costs for raw materials, packaging auxiliaries and energy have prompted food companies to issue price-adjustment notices one after another. In late October, Chacha Food announced that from October 22 it would revise ex-factory prices for its sunflower seed series, pumpkin seeds and Xiaoxiang watermelon seeds, with increases of 8% to 18% depending on the category.

In November, the number of food companies adjusting prices rose noticeably. Fujian Anjoy Foods and Haixin Foods recently said they would cut promotions or raise distributor prices for selected frozen surimi products, frozen dishes and frozen rice and noodle products, by 3% to 10%, effective November 1 and November 3 respectively.

Cooking oil, salt, soy sauce and vinegar join the wave

According to incomplete statistics, more than 10 listed food companies have announced price increases in the past month or so, ranging from 3% to 35%, covering daily essentials such as oil, salt, soy sauce and vinegar. One netizen joked that cooking a meal now costs considerably more than before.

It is understood that Haitian Flavouring and Food announced as early as October 13 that it would adjust ex-factory prices for selected soy sauce, oyster sauce and sauce products, with main products rising by 3% to 7%; the new prices took effect on October 25. After that, listed companies including Jiajia Food, Hengshun Vinegar Industry and Xuetian Salt Industry also issued price-increase notices.

On November 3, the board secretary of Xuetian Salt Industry said the ex-factory price of Xuetian small-packaged table salt had recently been raised in stages by no more than 10%, while industrial salt prices had climbed 30% to 50%. On November 16, Jiajia Food raised ex-factory prices for Jiajia soy sauce, oyster sauce, cooking wine, chicken essence and vinegar series products by 3% to 7%. On November 20, Hengshun Vinegar Industry increased prices for some products by 5% to 15%...

Home furnishing price increases draw CCTV attention

Beyond food companies, price adjustments continue in other sectors. In early November, CCTV Finance reported that due to higher energy prices, ceramic product costs had already risen by more than 10%, even before factoring in chemical raw materials, cartons and labor. It is learned that since early October, ceramic companies in Fujian, Guangdong and other regions have been raising prices one after another.

In fact, the home furnishing sector, including ceramics, has seen relatively frequent price changes lately. According to CCTV Finance, around the National Day holiday, leading home furnishing companies such as Oppein Home and Dongpeng Holdings announced adjustments covering whole-house customization, ceramic tiles, waterproof coatings and lighting, sparking a new round of price increases in the industry.

With raw material prices continuing to climb, many home furnishing manufacturers have seen costs surge and can only raise prices passively in line with the market. CCTV Finance reported that a Guangzhou home furnishing company said categories across the sector—sofas, furniture, bathroom products and ceramic tiles—had generally risen by about 5% to 10%, with some even adjusting prices twice in one week.

Carton plants should stop absorbing costs alone

As end-user companies raise prices one after another, the paper packaging industry has in fact already carried out several rounds of increases. Even so, some carton plants have still not fully passed on cost pressure and are struggling to absorb it themselves. The problem is that costs continue to rise, with little sign of a reversal or decline.

On November 3, Nine Dragons Paper issued another price-increase letter, with its major bases raising prices by RMB 100 per tonne from November 16. This is Nine Dragons Paper's second increase in November and the seventh since late September. Once base paper prices move higher, paperboard prices are certain to follow quickly, pushing carton plants' raw material costs up again.

In the current market environment, base paper prices have risen repeatedly, environmental pressure remains, and major end-user companies have already begun raising prices. For carton plants that have not yet fully passed on costs, continuing to absorb them alone is no longer a wise choice.

——This article is reprinted from China Packaging Network (pack.cn). Original link: http://news.pack.cn/show-378626.html