Iron ore from the price increase of 71.5% at the beginning of the year to a recent price reduction of 24.2%—The chemical equipment company is relieved
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In the face of this sudden change, chemical equipment companies are naturally overjoyed.
At the beginning of this year, the price of imported iron ore rose by 71.5%, leading to a rise in domestic steel prices. Steel is the main raw material for chemical equipment, and steel generally accounts for about 85% of its raw material costs. The rise in steel prices has caused the cost of chemical equipment companies to rise by more than 20%. In the first quarter of this year, excessive steel prices made 51 percent of the nation's chemical equipment enterprises in a loss state. Shaanxi Blower (Group) Co., Ltd. increased its product cost by 2.66 million yuan; the total manufacturing cost of the Lanzhou Chemical Machinery Plant in Gansu Province increased by more than 30%; the profit margin of the Double Star Machinery Corporation decreased by more than 2% over the same period of last year; Jiangsu Debang Chemical Industry Co., Ltd. Equipment Manufacturing Co., Ltd. profit decreased by 10%......
After six months, the situation changed again. The price of imported iron ore dropped from 90 US dollars/ton at the beginning of the year to the current 68.2 US$/ton. This is undoubtedly a good news for chemical equipment companies that have been threatened by losses.
Nanjing Chemical Industry Co., Ltd. Chemical Machinery Plant Material Supply Department official told reporters that in August after the price of iron ore was reduced, South China Chemicals 16Mn material commonly used second and third grade forging prices fell 200-500 yuan compared to the beginning of the year. Ren Zongqi, the manager of Sichuan Jinlu Resin Company’s machine repair division, provided the following data: In April of this year, the average price of ordinary steel sheet used by the company was 5,700 yuan/ton, and the highest was 6,300 yuan/ton, and it was August. When the average price of ordinary steel sheet is 4,400 yuan / ton. “The market price of steel is a small factory that changes every day. The big factory will change on the 3rd. Maybe the price of steel will fall!†Ren Zongqi said.
Jinxi Chemical Machinery Group Co., Ltd. Supply Section official said: "At present our factory inventory of steel can guarantee 2 months do not purchase, we have to wait for steel prices to decline a little more."
The reporter found that most of the chemical equipment companies have shown enough calm for the reduction of iron ore prices. Zhou Yi, director of the integrated department of China National Chemical Equipment Association, said that the prices of upstream products have changed, and downstream products have to wait for a period of time to be reflected. Moreover, the vast majority of chemical equipment companies and steel production companies have corresponding price transfer mechanisms. During the contract period, price fluctuations due to price cuts of raw materials are generally transmitted to companies within a few months after price fluctuations occur. Moreover, the extent to which steel prices can be reduced does not depend on the single factor of iron ore price cuts. If energy and transportation costs rise, the price of steel products will fall even less, and they will not even fall back.
More companies do not put "treasure" on raw material price cuts. In order to cope with the vagaries of steel prices, Double Star Machinery Co., Ltd. began to seek new coping strategies from the beginning of the year. For products with low technological content, no price competition advantage, and low profit margin, they started to use the brand for branding and processing, and focused their efforts on high-end products with high technological content, high prices, and large profit margins. In this way, on the one hand, the impact caused by instability in the prices of domestic steel and other raw materials is reduced. On the other hand, the machinery has also turned to the competition in the high-end product market, which has improved product quality and enhanced its position in the industry.
The reporter also telephone interviewed Shaanxi Blower Co., Ltd., Gansu Lanzhou Chemical Machinery Factory and other chemical equipment business leaders. They all said that steel price cuts are certainly good news, but they will not be able to sit back and relax because the market is changing rapidly. A small positive news is that they will not be intoxicated.
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