Affected by the rise in iron ore prices, the prices of hot and cold-rolled steel sheets and galvanized sheets for automobile manufacturing have risen by 500 yuan or even more per ton. Affected by this, the cost of bicycles for domestic auto manufacturers has risen by at least a thousand yuan. Component suppliers, such as automotive engines, are under pressure to cut their expected profits.
Parts suppliers lowered their expectations
"Iron ore prices have risen by 71.5%. We must at least increase the price per ton of steel by 200 to 300 yuan to offset this part of the cost," said a staff member of Shenyang Baosteel Steel Distribution Center. The company mainly distributes steel products for heavy industry companies such as machine tool processing and automobile manufacturing in Shenyang.
In early March, Baosteel Group announced on its website that it had negotiated with the world’s largest iron ore producer, Brazil’s Vale, and Hamersley’s iron ore company in Australia, and reached an iron ore price agreement in 2005: compared to 2004, All kinds of iron ore raw materials will rise by 71.5% respectively. Baosteel Group subsequently announced its second-quarter steel prices. Hot and cold rolled steel sheets and galvanized sheets used in automobile manufacturing rose by more than 500 yuan from the previous quarter. Several manufacturers such as Wuhan Iron and Steel and Angang, which provide automotive steel plates for domestic automobile manufacturers, have also raised their market prices.
The person of Shenyang Baosteel Steel Distribution Center told the reporter that the steel used for vehicle distribution by the vehicle manufacturer was mainly concentrated on hot and cold rolled plates, pickled plates, galvanized plates, and steel pipes. In general, 1.6 tons of iron ore can produce 1 ton of steel.
Calculated on a car with a weight of 1 ton, 1.5 to 2 tons of steel are required for manufacturing. Calculated in this way, the manufacturing cost of each one-ton vehicle will increase by an average of 700 to 1,000 yuan, while the larger B-class and C-class vehicles will have a larger increase.
Due to the impact of parts supply on futures contracts, parts suppliers can only absorb the pressure of material increase themselves. ASIMCO Technology Co., Ltd. has invested in holding more than 10 parts and components suppliers in China. Mr. Huang of the company told the reporter that the impact of iron ore price increases on the company is mainly concentrated on the piston rings and camshafts with relatively concentrated steel materials. Engine blocks, chassis parts and other parts, some of which have increased by more than 50% of the cost of the product, some of the product cost has even increased two to three times. Mr. Huang said that because the supply contracts of the company and the vehicle manufacturer are all long-term, the price cannot be easily floated. At present, apart from internal digestion, there is no other way to relieve stress. He said that this year's financial statements will be greatly affected. "We may have to substantially adjust our expected profit this year," said Huang.
The most affected are the suppliers of components such as engines and chassis. Zhao Zhuang, general manager of Dongfeng Chaoyang Diesel Engine Company, said in an interview with reporters that in 2004, affected by the rise of raw materials such as steel, the company's business only completed 30% of the expected profit. The increase in iron ore prices at the beginning of this year will increase the cost pressure and it is expected that the situation will not improve this year. "The engine basically has no room for price increase, but 90% of the cost is concentrated on steel. This time the price of iron ore will be a huge pressure on the direct cost of the company." Zhao Zhuang told reporters worriedly.
Car makers complain in one voice
Liu Zhenyu, general manager of micro-vehicle manufacturing company, BYD Auto, said that the profit of mini-vehicle bicycles ranges from RMB 200 to RMB 500. The impact of rising steel prices will cause this part of the profits to shrink substantially or even have no profit. As the company signed a long-term supply contract on steel purchases, he estimated that the impact will appear two months later.
Kenneth Kong, the chief representative of BMW China, told reporters that the cost of domestic luxury cars such as BMW and Audi are mainly concentrated in electronics, safety, and engine technology, because the order contract is a long-term contract, so the price of this part will not increase because of raw materials. The price floats. The impact of automobile manufacturers is mainly due to the price increase of steel materials for bodywork and frame. He said that currently BMW's automotive steel plates are mainly imported, and the specific impact has yet to be evaluated.
The biggest impact of steel prices is on commercial vehicles with large steel materials. A person from CNHTC told reporters that the average weight of domestic heavy vehicles is about 10 tons, and the heaviest weight can reach 15 tons. The average cost of a 10-ton heavy-duty vehicle is at least 5,000 yuan. Liu Keqiang, manager of Shaanxi Zhongqi Marketing Department, told reporters that in the middle of last year, due to the increase in raw materials, some heavy trucks in Shaanxi Heavy Duty Truck had staged price increases, “because of the impact of this iron ore prices, heavy The car may have to increase its price again, and we are currently evaluating and listening to the opinions of its peers.†Liu Keqiang said that the sales profit of high-end heavy-duty vehicles is currently less than 10,000 yuan, and that of mid-range vehicles is only 4,000 yuan. “Shaanxi CNPC has already made contact with domestic heavy-duty vehicle manufacturers and does not rule out the possibility of joint price increases if necessary,†said Liu Keqiang.
Secretary of Public Relations Wang Qi of Foton Motor Co., Ltd. told reporters: “This year’s sharp rise in steel prices has caused us to see how much the increase in cost is still unclear, but what is certain is that the pressure on us is very great. , especially heavy trucks." Wang Qi further said, "Because of the relatively large increase in iron ore, our company is very cautious in handling this matter. Specific countermeasures are still under discussion. We will definitely find out the best solution.†Whether Fukuda would raise the price of its products to ease cost pressures, Wang Qi did not respond positively, but said that it depends on the specific circumstances.
It is understood that, due to the impact of rising steel prices, most mid-range light truck manufacturers have now raised their prices, Beiqi Futian era light truck market prices have risen 1% to 2%. However, at present, there has been no change in the prices of heavy trucks on the market. The industry believes that heavy trucks use more steel, and the profits of medium and high-end heavy trucks are also relatively thin. Therefore, as the cost increases, heavy truck price increases will also be inevitable.
Wei Anhe, deputy general manager of the Guangzhou Automotive Technology Center, said that among automotive raw materials, steel accounted for about 70% of the weight of the car. The rise in steel prices is bound to drive the increase in light truck production costs. In the interview, the dealer of Beiqi Foton told the reporter, “The profit of heavy truck bicycle sales is currently only one or two thousand yuan, and the profit of light trucks is only a few hundred yuan. Our profit margin is already on the end, and the manufacturing cost has increased. There is no way to reduce the profit target. In addition to price increases, there is no other way for manufacturers."
It is understood that in order to find out the best way to relieve pressure, Jianghuai Automobile has specially organized some auto manufacturers, steel mills, and some experts to hold a meeting in Hefei at the end of this month to seek the settlement of the cost pressure after the iron ore price hike. Program.
Wei Anhe said that heavy-duty trucks and light truck manufacturers will join hands in this year's price, which, although it has market competition rules, is also very helpless. Through the cautious and cautious performance of the major manufacturers seeking this solution for relieving pressure, it can be concluded that commercial vehicle companies have already felt the tremendous cost pressure brought by raw material prices.
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