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Analysis on the price of home appliance raw materials and business cost trouble

Number of visits: Date:2011-05-30 19:44

Since the fourth quarter of last year, the domestic steel, copper, aluminum, plastic and other home appliance raw materials has kept high driven by the rising international bulk stock, the high price of raw materials, and the market expectations. To take steel for home appliance as example, due to the lower early base, the current prices of 3.0mm pickled plate, 1.0mm cold-rolled plate, 1.0mm galvanized roll, and 1.0mm non-oriented silicon steel in Shanghai market generally rose 22%~54% than the previous year, 13%~26% than the previous six months, and 5%~9% than early this year. In April, the after-tax order price of Baosteel 1.0mm general carbon cold-rolled coil was nearly RMB 1,000 per ton higher than the previous low point (November 2009), and that of cold rolled coil of Anshan Iron and Steel was RMB 1,600 higher. At the same period, the prices of galvanized coils from Baosteel, Anshan Iron and Steel, and Maanshan Iron & Steel were RMB 700 /ton ~ RMB 1,170 /ton higher. The sharply rising prices of raw materials make the cost of household appliance manufacturers continue to rise, and profits decline. In this case, it is of concern whether home appliance enterprises can resolve the difficulty of cost, because it will be related to the transmission possibility along the industry chain of the rising prices of raw materials. The prices of steel for home appliances rose significantly. The demand exceeded 7.5 million tons in 2009, of which air-conditioning, refrigerators, washing machines, freezers and other white goods are the main force in steel consumption. In general, the major steel needed for the home appliance industry is plates. According to statistics, the steel plates account for 95% of the required, mostly cold rolled and galvanized plates, taking up about 30% of the amount of plates, followed by silicon steel plate. Meanwhile, the home appliance industry also need pickled plate, stainless steel, color coated plate, fingerprint-proof plate, and film faced plate.In addition, any electrical appliance products require silicon and have different steel demands and consumptions. For example, the air conditioning requires a lot of galvanized plate: Backplane of indoor unit, backplane and internal parts of stationary unit, the outdoor unit casing and internal components, in the thickness of 0.25mm ~ 1.5mm. The galvanized plates for small home appliances are mostly in the thickness of 0.3mm ~ 0.8mm and width of 650mm ~ 1,250mm. Refrigerator and washing machine are generally made of cold-rolled plate, galvanized plate, and silicon steel plate. According to statistics, a double-barrel washer consumes 6 kg of cold-rolled plates, a front-load washer, 10 kg; a washer consumes 4.2 kg ~ 7.8 kg of silicon steel; the consumption of cold-rolled stainless steel for washer increases, generally 10 kg for a front-load washer. As the improving quality of home appliances and pursuit of appearance, the high-grade household appliances have increasing demands on color PVC film steel, stainless steel, and fingerprint-proof plate. Currently, the prices of cold-rolled plate and galvanized sheet for home appliances increase significantly, an increase close to or more than 50%, of which the prices of cold-rolled plate, galvanized plate, and silicon steel plate rose 46%, 36%, and 51% over last year, 26%, 21%, 25% over the previous six months. Currently, the order price of steel works reaches the highest level since 2009. With steel prices rising, the direct purchasing cost of home appliance manufacturer rise. If the monthly purchase volume is 50,000 tons, the price grows RMB 100 per ton, so the purchase cost climbs RMB 500. In the past six months, the absolute amount of increase of steel for home appliance exceeded RMB 500, and the overall procurement cost increased substantially. Efforts to resolve the cost pressures are needed. It is understood that as the steel prices rise 10 percent, the production cost of appliance companies increase by about 3%: 3.8% in washer, and 1.5% ~ 3.0% in air conditioning and refrigeration. Obviously, with the rising steel prices, the production costs of the competitive household appliance industry with small profits increase significantly. Moreover, the prices of other raw materials for home appliance such as copper, aluminum and plastic prices are rising, for example, the mid-March copper rose RMB 1,500 / ton than earlier this year, and the average price of ABS plastic in March rose by RMB 300 / ton than in February.


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