Record China PPI Rate and Crude Oil Prices

Record China PPI Rate and Crude Oil Prices

Record China PPI Rate and Crude Oil Prices

China's producer prices surged by 13.5% year-on-year in October 2021, beating market expectations of a 12.4% gain and following September's figure of a 10.7% rise. This was the tenth straight month of increase in factory gate prices and the strongest growth since 1995, amid a jump in cost of raw materials and widening power shortage. Prices of means of production increased faster (17.9% vs 14.2% in September), led by extraction (66.5% vs 49.4%), raw materials (25.7% vs 20.4 %), and processing (10.8.% vs 8.9%). At the same time, prices of consumer goods advance more (0.6% vs 0.4%), with cost accelerating for both daily use goods and clothing rose (0.8 vs 0.4%) and food (1.0% vs 0.7%), while fell for consumer durables (-0.1% vs 0.2%). On a monthly basis, producer prices rose 2.5 percent.

High energy prices have affected the price increases and last month Chinese Government started to use Emergency Crude Oil Stocks which they have bought most of them in the first monts of Covid19. The average cost for that Crude Oil is around 10-15 USD Per Barrel and the exact amount of Emergency Stocks are not known. If China continues to use this weapon to keep prices stabilized we may see another sharp decline in Crude Oil. And Chinese Goverment get what they desire. October Crude Oil arrivals were the lowest since September 2018 and if this trends go like this there will no crude oil shortage but surplus in the market.

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10 November 2021 08:46

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