March Producer Prices Drop 2.5 Percent in China as Energy and Chemical Sectors Lead Decline

China’s producer prices fell 2.5% year-on-year in March 2025, according to data released by the National Bureau of Statistics on April 10. The slide marks continued pressure on industrial pricing, driven primarily by falling costs in energy extraction and chemical manufacturing.

The sharpest drop came from the oil and gas extraction industry, which recorded an 8.5% decline, followed by a 7.8% decrease in petroleum refining and coal processing. Prices in the chemical raw materials and products sector also dropped 3.6% year-on-year, reflecting weak demand and subdued commodity markets.

During the first quarter of 2025, both producer and purchasing prices were down 2.3% from the same period last year. Key industrial categories showed sustained downward momentum, including a 6.5% decrease in refinery output prices and a 4.4% drop in oil and gas extraction pricing.

March data also revealed that prices for production materials fell 2.8%, pulling overall factory-gate prices down by approximately 2.09 percentage points. Mining and raw materials industries posted notable contractions, with mining prices shrinking 8.3%. Meanwhile, consumer goods prices declined 1.5%, led by a 3.4% drop in durable goods.

On the purchasing side, input costs for black metal materials plunged 7.8%, while fuel and power inputs dropped 6.8%. Chemical feedstocks declined 3.4%, and agricultural products were down 3.0%. In contrast, non-ferrous metals and wiring materials surged 10.8%, providing one of the few areas of price growth.

Compared to February, March’s producer prices eased 0.4%, with both production and consumer goods showing slight dips. The extraction sector continued its monthly slide, falling 2.9%. However, modest gains were seen in chemical feedstocks and non-ferrous materials, each rising 0.5% month-on-month.

With energy and materials costs weakening, China’s industrial pricing pressures may persist in the near term, raising concerns for producers but potentially offering some relief on the inflation front for downstream industries.