The performance reports just released let steel companies take a breeze, while the automotive industry, an important consumer in the steel industry, is facing a severe test. The soaring prices of raw materials have drastically increased their costs and the profit margin has been shrinking. “Now the price of steel is like a rocket that goes straight to the sky. We can't be reached.†A person in charge of procurement of auto parts manufacturing companies “look at the partsâ€.
Forging
Qi Xiangdong, deputy secretary-general of the China Iron and Steel Association, revealed that due to the increase in steel prices, the profits of the domestic steel industry in January this year have doubled compared with the same period of last year. "In the last year's corporate efficiency rankings, 6 of the top 10 were steel companies." Qi Xiangdong said with a smile.
At this time, the experience of auto parts companies can only be described as "bitter." “In just a few months, the domestic steel price has risen by about 30%,†Sun Zhanjun, an analyst at Shenyin Wanguo Securities Steel, pointed out: “The prices of hot rolled steel plates used in the automotive industry have risen more than 10%. %."
According to Zhou Shengmin, chairman of the Automotive Axle Bush Committee of the China Automobile Association, the cost of steel accounts for about 40% of the total cost of the bearing bushes. This year, the increase in steel prices has caused companies to increase costs by more than 10%. In the eyes of today's small and medium-sized parts and accessories companies, it is undoubtedly a far cry to increase the price of accessories for automakers. Companies that originally made profits by relying on low labor costs are now being squeezed.
At a time when the price of auto market was surging, automakers asked suppliers to lower product prices to ensure their profit margins. Steel prices rose “inappropriately†and stimulated the nerves of big steel users. The original plan to guarantee its profit space by controlling production costs will be frustrated. Bao Nanjiang, deputy general manager of Shanghai Huizhong Automobile Manufacturing Co., Ltd. disclosed that since Huizhong mainly produces products with higher steel consumption, such as automobile chassis, steel and related raw materials account for more than 50% of the total cost; 30%, the price of some raw materials has risen by about 50%, “giving great pressure on the company’s cost control.â€
“The entire parts and accessories industry is currently on the verge of losing money.†With this in mind, Zhou Shengmin looks dignified. In order to study countermeasures, the Bush Committee and the Internal Combustion Engine Council will hold a special meeting in Jiangxi. According to another report, due to rising steel prices, the cost of some small and medium-sized component companies in the United States has risen by as much as 60%.
No solution
"For the rise in steel prices, it is difficult for parts and components companies to find a good way to deal with them." Zhang Jinmu, executive vice president of Rui'an Automobile and Motorcycle Parts Industry Association, reluctantly stated that most parts and components companies have signed with customers according to previous prices. It is very difficult to increase the price of a contract; at the same time, companies are also very cautious in raising their own market share. Yao Jun, deputy secretary-general of the National Association of Industry and Commerce Automobile (Motorcycle) Accessories Association, also stated that due to the disparity in the strength of the entire vehicle and parts and components companies, the price increase in the supporting areas is almost impossible. Now only in the after-sales service market to do tricks. It is understood that at present, the price of accessories for some models has risen by a certain margin. For example, the price of spare parts for the after-sale maintenance market of FAW Liberation has risen by about 15%, which can compensate for the increase in the cost of parts and components companies to some extent.
“In the past few decades, the price of steel has been declining. Now it is understandable that with the global economic recovery, its price rise.†Jiang Jian, deputy general manager of Delphi Systems (China) Investment Co., Ltd. said lightly. At the same time, Delphi Global Vice President and Purchasing Director David Nilsson also revealed that in order to cope with rising raw material costs, Delphi has adopted lean manufacturing to eliminate unnecessary costs to reduce the pressure on the one hand, using processed scraps. Steel recycling is used to reduce income and increase expenditure; on the other hand, they are still working hard with OEMs in order to work together to overcome difficulties. But all this does not seem to be very smooth. According to Dow Jones reports, Delphi had sought the help of its largest customer, General Motors, and hoped to work together to resolve the cost crisis and tide over the difficulties. However, from the current situation, it seems that the other side has still not adopted.
“The corresponding increase in steel production costs and the inconsistent supply of steel in the market are the main reasons for the high steel prices.†Qi Xiangdong said that the global economic recovery has led to a sharp increase in the demand for steel and other raw materials in various countries, producing iron ore, coking coal, etc. Raw material costs have also increased by 50%. Qi Xiangdong predicted that last year, based on the fact that the benefits of the entire steel industry will increase by nearly 100%, this year it will still be able to maintain a growth rate of at least 20%. And the continued high demand for steel will keep this year's steel prices running at high prices.
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