Important factor affecting order delivery time, factory productivity, raw material cost in China-Energy Dual Control Policy

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Important factor affecting order delivery time, factory productivity, raw material cost in China, Dual control system of total energy consumption and energy intensity is in place from the fourth quarter of 2021.

Recently, during the peak delivery period and full orders, the increasingly stringent power curtailment policy in mid-to-late September is a huge test for factories in developed manufacturing provinces.

On September 22, 2020, China officially announced to the United Nations General Assembly that China will strive to achieve CARBON NEUTRALITY by 2050 and adopt “stronger policies and measures” to reach its emission peak before 2030. At present, this goal is just one year away. The strict curtailment policy aims at a “dual control” system of total energy consumption and intensity, so as to achieve carbon neutrality on schedule.

Under the influence of the recent tightening of “Dual-Control” measures in various places, the production capacity of plastics, steel, cement and other raw materials has also been greatly reduced. Analysts believe that raw materials price will raise higher.

Picture below as detailed regulation of Dual-Control to factory

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Factory subjected to Power limitation control shutdown from 18 Sep to 30 Sep, followed by the National holiday 1st Oct to 7th Oct. It means nearly a full month stop for production.

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In the printing and dyeing industry, Zhejiang and Jiangsu are the main industrial areas of printing and dyeing in the country.

Printing and dyeing enterprises in Wujiang area of ​​Suzhou will stop production from September 19 to October 1, which will also affect the national printing and dyeing capacity.

On September 15, before the official suspension of production, the Sweater Dyeing and Finishing Chamber of Commerce in Tongxiang City, Zhejiang Province issued the “Letter on Adjusting the Dyeing and Processing Fees of Hank Yarn”, requesting that the printing and dyeing processing fees be increased by 500 yuan/ton; on September 17, The Changshu Printing and Dyeing Chamber of Commerce in Jiangsu Province issued the “Dyeing Fee Adjustment Notice”, requiring member companies to uniformly increase the printing and dyeing fee by no less than 1,000 yuan/ton from October 1.

In the field of steel, surveys pointed out that most steel mills in Zhejiang have recently received production reduction notices and plan to gradually implement production reductions. The productivity of various products such as construction steel, coils, and high-quality steel have been affected to varying degrees, mainly concentrated in construction steel.

On September 18, the domestic construction steel prices generally rose, and the plate market fluctuated within a narrow range; as production restrictions continued to heat up in various regions, the building materials market remained bullish, with an increase of 90-150 yuan/ton in some regions. On September 18th, seven domestic steel mills raised the ex-factory price of construction steel by RMB 30-150/ton.

Factory from other provinces also have been included, below picture shows Price of Titanium raw material from Guangxi also has been increased by 800RMB per MT.

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