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The Impact Of Rising Raw Material Costs

Views:6     Author:Site Editor     Publish Time: 2021-04-07      Origin:Site Inquire

The Impact Of Rising Raw Material Costs

The basis of industry is raw materials. The price increase of raw materials directly affects the subsequent industrial development, so product prices will also rise. In the last period of time, some raw materials have risen, especially some metal materials, such as copper, aluminum and iron, which have risen by 38%, 37% and 30% respectively. This kind of increase is still very obvious. Affected by the increase in raw material prices, some industrial products have also begun to experience price increases. In addition, not only the price of metal materials has risen, but the prices of some non-metallic materials have also begun to rise. The more obvious ones are glass and plastics, which have risen by 35% and 30% respectively. This kind of increase is also very large in the past. , So the price of various raw materials has risen by more than 30%. Who is behind it and what is the impact?


1. Regarding the rising prices of raw materials, the most fundamental explanation is due to market fluctuations.

In particular, the global economic depression brought about by the epidemic, as the epidemic gradually recovered, the economy began to recover. In this way, the necessary demand for raw materials will increase. However, due to the epidemic and limited raw materials, this has led to the current situation. The prices of raw materials have also begun to rise under the influence of inflation.


2. Of course, there is another important driving force behind the rise in raw material prices-market regulation.

In the process of capital market regulation, it is an inevitable fact that the trading market constantly uses the futures market to raise the price of raw materials, leading to the rise of raw material prices. Therefore, in the regulation of the futures market, raw materials have become a commodity. Just like stock funds, they will inevitably trigger price fluctuations when they are sold. Therefore, a large part of the rise in raw material prices should also be attributed to the capital market. In the regulation.


3. The current situation of rising raw materials should also see the side effects brought about by the hegemony of the US dollar.

In the face of the economic depression brought about by the epidemic, the hegemony of the US dollar began to emerge, mainly to resist the inflation of the US dollar, but the side effects of such resistance are also very obvious. The way the US dollar resists inflation is to transfer inflation to other currencies, such as the euro or the renminbi, which are all targets of transfer. But I have to admit that in the process of transferring, the US dollar still has a small degree of inflation, which means that the US dollar itself is also experiencing inflation, but the rate is not so large.


The most direct impact of inflation brought about by dollar hegemony is reflected in the prices of raw materials. After the U.S. dollar's inflation shift, most non- U.S. dollar regions have seen a trend of rising raw materials. On the one hand, Wall Street uses futures to harvest the raw material market on a large scale. On the other hand, the inflation shift of the US dollar has caused the price of raw materials to rise today, but this is also a side effect of the US dollar through its hegemony.


4. The prices of various materials have been rising continuously by more than 30%. What is the impact?

This is mainly manifested in industrial production. The cost of enterprises will continue to rise, so the price of production will increase, and finally it will be implemented on consumers.

For companies, the increase in raw material costs is very fatal, which will affect the production prices of products and thus affect the competitiveness of enterprises. But for individuals, rising product prices are also a manifestation of pressure on life.

Therefore, the rise of raw materials is a bad signal for both enterprises and final consumers. This means that the fluctuation of product prices will increase in the future, and the price burden borne by consumers will increase, which will eventually lead to a continuous increase in the consumption burden.


The rise in raw materials has become more and more obvious. Obviously, this is also an important reason for hindering industrial production, but it is also an inevitable adjustment of the capital market. When the market was cold, the output of raw materials decreased, and the capital market began to buy a large number of futures after seeing the decrease in the output of raw materials, causing the prices of raw materials to continue to rise. This not only did not stimulate the industry to resume production, but it would further increase the cost of industrial production and increase the burden on enterprises. At the same time, product prices are rising, so consumers have to pay for it. At the same time, with the manifestation of the hegemony of the US dollar, this inflationary pressure will continue to increase, eventually triggering a depression in the real economy, which also requires further regulation to prevent the real economy from paying for the competition for financial capital.


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