On the first day of November, my circle of friends was once again swept by the news of Chaozhou’s natural gas price hike. Chaozhou natural gas prices rose to 6.45 yuan/cube, while the price for the same period last year was 3.1 yuan/cube, which again refreshed the record. Industry insiders expect Chaozhou natural gas is going up to 7 yuan/cubic meter within 2 weeks. In addition to natural gas, ceramics, sanitary ware of various raw materials from plaster, cardboard boxes, plastic accessories, to small daily necessities will all increase in price. Factories ushered in a wave of price hikes.
[Today at 17:40
Tide Fuel Development: Dear customers: The price of natural gas will be implemented at RMB 6.45 per cubic meter from 17:30 on 1 November 2021, please refer to our counter for details. Inquiry number: 6925712]
Since this year, natural gas in Chaozhou has continued to rise. Chaozhou City Building and Sanitary Ceramics Industry Association on August 31 had written material – “on the use of industrial natural gas in ceramic enterprises in Chaozhou City” to the Chaozhou City Bureau of Industry and Information reflects a variety of constraints on the development of the ceramic industry such as soaring natural gas prices, hoping that the relevant government departments to intervene in the high price of natural gas energy.
Chaozhou natural gas continued to rise in price phenomenon has also attracted the attention of CCTV Finance “Economic Information Link”. Huang Lihui, chairman of the National People’s Congress, Guangdong extraordinary industrial limited company, said in an interview with CCTV Finance: “At the beginning of this year our natural gas is probably in the following 3 yuan, the proportion of natural gas costs is more than 30%, and now the price increase of natural gas has reached as much as three times, so the cost accounting for us is very high.” According to Huang Lihui, Extraordinary Industries has three ceramic production lines: one is 30,000 yuan, and three is 90,000 yuan. After one month, the cost is more than 2 million yuan. The profit of the business is eaten up because of the price increase.
Huang Lihui – Chairman of Guangdong Extraordinary Industry Co.
“So now the price of natural gas has gone up.”
According to CCTV, there are very few companies in China’s ceramic industry that can do their own brand and produce and sell their own products. Before energy prices and electricity costs rose, ceramic products themselves do not have high gross margins, the average down to no more than 10%. And this time the energy prices, even without counting the chemical raw materials, cartons, labor, etc., in cost has increased by more than 10%, which also led some small and medium-sized ceramic enterprises are currently facing a capital or even a loss of state and had to choose to stop work.
Lin Dopan – Chaozhou City, Guangdong Province, Ceramic Industry Association
“Or a small number of small and micro enterprises is going to stop production.”
Natural gas and other raw material price increases led to a number of ceramic enterprises stopping work at a loss also on the microblogging hot search. As of 16:00 on November 2, the #ManyCeramicEnterprisesShutdownAtLoss topic has been read by more than 8 million people.
Ceramics is the first pillar industry in Chaozhou City, forming four major industrial categories, including daily-use ceramics, architectural and sanitary ceramics, craft ceramics and high-tech ceramics. It is one of the most complete ceramic production areas in China. The annual production and sales of daily-use ceramics, furnishing and art ceramics and architectural and sanitary ceramics account for 25%, 25% and 40% of the country’s output respectively, and exports account for 30%, 40% and 55% of the world’s output, all ranking first in the country. According to official data from Chaozhou City, in 2020, the total industrial output value of ceramics in Chaozhou City exceeded 50 billion yuan, of which, 337 on-board ceramic enterprises achieved a total industrial output value of 32.8 billion yuan, to achieve the industrial added value of 8.3 billion yuan, accounting for 31% of the proportion of on-board industrial added value. From January to June 2021, there were 333 ceramic industry enterprises in Chaozhou, with a total industrial output value of 15.151 billion yuan, an increase of 12.3%. The value-added of the above-regulated industry was 3.778 billion yuan, an increase of 9.6%.