Raw material price fluctuations affect downstream fastener industry development

In recent years, prices of raw materials have skyrocketed due to inflation and appreciation of the renminbi. If the cost of raw materials for fastener companies accounts for more than 60% of the final product price, it will face severe pressure. When it exceeds 70%, it will have to increase its price. This is a problem for some fastener companies, especially small and medium-sized enterprises, because Without complicated assembly processes, there is no scale effect. The rise of raw materials poses a great threat to their survival.

Even if this is the case, the fact that the era of high cost of China's fastener industry has come is irreversible. Fasteners and parts and components companies can only accept the reality that prices have been “rising”, and manufacturers are under the circumstance that profits are being squeezed less and less. Only increase the unit price of the product to maintain the most basic production expenses. Some companies have disclosed to the Chinese screw network that they had to raise the price of their products to survive because of the soaring raw materials, but because of this, they have received an official letter asking customers to lower their prices. The increase in raw material prices for fasteners has caused rising production costs, which has become a bottleneck in the development of tight enterprises and even threatened survival. However, we cannot rest on our laurels, just as the general manager of Hangzhou Special Standards Co., Ltd. Chen Weibiao said: “The raw materials keep soaring. External factors, we cannot change these economic factors, but we can begin to change from within our company, such as: product quality, internal structure, strengthening technical input, accurately positioning product value levels, improving customer service concepts, etc. These internal factors are all We need to change the focus.” This leads to problems that fastener companies need to think about: The rising cost of raw materials has caused companies to increase product prices, but the premise of rising product prices is the increase in technology and brand strength. This is an ongoing process. This, for small and medium-sized fastener enterprises, is a bottleneck for technological upgrading. They need to survive hard.

Urgently need to remove the “low-end” tag In this era of high-cost production, the advantages of “speed-for-market” and “cost-for-cost” have been weakened. We look back at the past development of the fastener industry and it is not difficult to find When the market is booming, product saturation will inevitably occur. China's fastener production accounts for a quarter of global production, but most of them are low-intensity and low-grade products, among which standard items below 8.8 account for about 45%-50%, in an environment where raw material prices are high, The overcapacity of low-grade standard parts has become a stumbling block to the development of the entire fastener industry. Overcapacity, a large amount of inventory pressure leading to tight operating funds, companies want to convert costs into profits have to find new ways, increase investment in technology, with good technology in order to open up broader market resources. Today, we should look to the future. Key national construction projects such as "high-speed rail," "aerospace," "highways," and "airports," are providing opportunities for tight-to-high-end enterprises. The Boeing Company plans to add 3,400 aircraft in the future and the National Development and Reform Commission will invest 8,000 in the future. Billion to build rail transit in 6 cities, and according to 36 plans to build urban rail transit project cities, by 2020, the new operating mileage of urban rail transit will reach 6560 kilometers, and the demand for rail fasteners will reach 5.7 billion yuan. . These large-scale projects will greatly increase the demand for high-strength fasteners such as high-strength fasteners and titanium alloys. It is not impossible to remove the “low-end” labels!

Always pay attention to grasp the timing of procurement For fastener manufacturers, all finished products are inseparable from the purchase of large quantities of raw materials such as iron ore and wire rods. Since the beginning of September, the factory price of common carbon steel billets has risen by more than 16%, iron ore The Platts' rebound rate is also close to 26%. The rapid increase in raw material prices has made it difficult for downstream demand to follow up. Later, the sharp reversal of ore prices may be difficult to avoid. Raw material price fluctuations have a decisive role in the procurement costs of fastening companies in China, and actively purchase raw materials at relatively low prices. To prepare for reducing costs for mass production in the future. Therefore, being able to focus on raw material price fluctuations and buying at low cost is also one of the conditions for the success of a business decision maker.

Controlling production costs and saving resources The fasteners have always been dominated by iron and steel materials. Due to fierce market competition, quality and cost have become the main means for competition among fastener companies. Mr. Zhang Xianming, a fastener specialist engaged in metal materials and heat treatment for many years and experienced in the field of heat treatment, believes that the two main methods are used to reduce costs: 1. To reduce the content of alloying elements or to use other low-cost alloy elements as reinforcement materials; 2. To reduce The manufacturing cost of fasteners, such as the non-modulated steel used to reduce the heat treatment process in the bolt production process, the free-cutting steel used to improve the machining ability of nuts, etc. The introduction of technology in the automotive industry in China has played a role in promoting the application of new materials for cold heading steel. Some of the major high-strength fasteners have adopted foreign material standards. Zhang Gong believes that this goal of saving resources must be met to accelerate special steel for special bolts. The research and development will be valued in the next 3-5 years. This is also the trend of tight enterprises in the situation of soaring raw material prices.