Raw Material and Business Performance Risks from Rising Heavy Fuel Oil Prices

「In Japan, personal consumption is gradually recovering as employment and income conditions improve. However, concerns over higher energy prices and logistics costs associated with the trade policies of various countries, foreign exchange trends and heightened tensions in the Middle East have left the outlook uncertain.」

「Although we requested increases in processing fees to pass on repeated increases in raw material and energy costs, processing fees have still not been raised sufficiently to reflect the cost increases.」

「In Japan's dyeing and processing business, amid persistently high raw material and energy prices, we focused on cost-reduction initiatives, including continued increases in processing fees, equipment improvements and upgrades, process rationalization, and reductions in chemical usage.」

「Our Group's core dyeing and processing business relies primarily on biomass boilers fueled by wood chips, resulting in a low level of dependence on heavy fuel oil, although wood chip prices are trending upward.」

「The situation remains such that cost reductions cannot keep pace with sharp price increases, with purchase prices for some items doubling year on year.」

「During the second quarter of the current consolidated fiscal year, Japan's economy remained challenging due to rising prices for raw materials and energy stemming from geopolitical risks and supply chain disruptions, as well as mounting inflationary pressure associated with the rapid depreciation of the yen.」

「During the first quarter of the current consolidated fiscal year, Japan's economy remained challenging due to the global surge in raw material and energy prices associated with the prolonged situation involving Russia and Ukraine, as well as rising prices resulting from the rapid depreciation of the yen.」

「Regarding measures to prevent COVID-19 infections, restrictions on activities are being eased and infection-control measures are being reviewed. However, energy prices have risen further amid soaring global crude oil and raw material prices and the impact of Russia's invasion of Ukraine, and the outlook remains uncertain.」

「During the cumulative nine-month period under review, the Japanese economy remained uncertain. Although expectations for the resumption and recovery of economic activity rose as vaccination against COVID-19 progressed and restrictions were eased, as well as for a recovery in corporate investment and production, the outlook remained uncertain due to sharp global increases in crude oil and raw material prices, the spread of the Omicron variant and concerns over a sixth wave of infections in Japan.」

「Our Group's core dyeing and processing business relies primarily on biomass boilers fueled by wood chips, resulting in a low level of dependence on heavy fuel oil, although wood chip prices are trending upward. If heavy fuel oil prices surge, they will significantly affect the procurement costs of related raw materials. In addition, dependence on imported dyes, chemicals and other products from overseas is high, and disruptions to the supply-demand balance caused by environmental or import and export regulations, disasters or accidents could affect raw material procurement costs.」

「Business conditions remain challenging due to higher production costs, including soaring raw material prices caused by explosions at dye plants in China and environmental regulations, as well as higher logistics costs associated with labor shortages.」

「Dye prices continue to soar due to the impact of explosions at dye plants in China and environmental regulations, creating a challenging environment that is squeezing earnings.」

「The dyeing and processing industry continues to face a challenging environment in which high prices for basic chemicals such as caustic soda, together with higher dye prices and logistics costs, are squeezing earnings. Dye prices in particular have risen sharply, driven by tighter environmental regulations in China and the impact of an explosion at a raw material plant there in March, further accelerating cost increases.」

「We worked to improve transaction terms, including passing costs on through processing fees, but in the current fiscal year we were unable to absorb all of the cost increases against expenses that continued to rise.」

「The dyeing and processing industry continues to face a challenging environment in which the rapid rise in manufacturing costs is squeezing earnings. Raw material costs continue to soar across the board, with basic chemical prices such as caustic soda remaining high and dye prices repeatedly rising sharply worldwide, partly due to the impact of environmental regulations in China.」

「In the dyeing and processing industry, manufacturing costs have risen sharply due to substantial increases in the prices of basic chemicals, particularly caustic soda, and soaring dye prices. In Japan, the situation remains serious, compounded by higher freight and storage charges and soaring heavy fuel oil, gas and electricity costs.」

「In Japan's dyeing and processing industry, substantial increases in the prices of chemicals, particularly caustic soda, soaring dye prices, and higher freight rates caused by labor shortages have become serious issues. Overseas, production costs are also rising due to higher dye and chemical prices and labor costs.」

「We have been unable to pass increases in raw material costs, including those caused by higher crude oil prices, on to final prices. Although the economy is gradually recovering, the country remains only halfway to overcoming deflation.」

「Our Group's core dyeing and processing business is an energy-intensive industry, so soaring heavy fuel oil prices affect the procurement costs of raw materials, including dyes and processing chemicals.」

「Our Group's core dyeing and processing business is an energy-intensive industry, so soaring heavy fuel oil prices affect the procurement costs of raw materials, including dyes and processing chemicals.」