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Steel prices continue to rise enterprises need to avoid the risk of procurement

If you use a word to describe the steel market in recent years, "prices" can be said to bear the brunt, deserved to be the first to market the forefront.

Since 2002, the domestic steel market will supply and demand, steel prices rising, this upward trend in early June 2008 reached its peak, can be said that in those months, the domestic steel prices are raised several times a day. The price of iron ore, coke, oil and other raw materials prices rose sharply, as well as domestic and foreign demand strong pull, the domestic steel prices soared in the easy. After the Spring Festival in February and April, due to post-disaster reconstruction and the Olympic project, the surge in demand for steel, the domestic steel market presents a "fire" scene, and in five or six steel prices reached the peak this year. Hot rolled, galvanized coil and other varieties of steel is a record high in recent years. Tianjin 5.5 hot rolled from the beginning of the 4630 yuan / ton, up to early June 5930 yuan / ton, or up to 1,300 yuan / ton.

However, after July, with the arrival of the rainy season, steel into the traditional consumption off-season, demand around the slowdown in inventory rose significantly, construction steel and strip market is the first decline trend. Other steel varieties also changed the momentum of the previous sharp soaring, the market conditions are beginning to "go soft", turnover remained in the doldrums, the domestic steel market entered the shock consolidation phase. While the prices of raw materials has been strong loose, and quickly into the downstream channel, steel city into the "stumble endlessly," the vicious cycle. As of mid-November 2008, the domestic market price of steel specifications on behalf of the lowest value this year, the main varieties of this year's highest price decline in more than two thousand dollars, of which plate products are more than three thousand dollars decline. Compared with the beginning of the year, the market price of plate products dropped more than 30%, building materials, strip fell more than 20%, profiles, seamless performance is relatively stable.

After experiencing a steep drop in the steel market in 2008, the steel industry suffered a severe blow, due to the 2008 economic crisis happened, many steel industry demand is insufficient, the overall economic efficiency of steel industry declined significantly. In order to prevent a sharp decline in the economy, the state turned to rely on expanding domestic demand, promote exports and 4 trillion yuan of investment to stimulate economic growth, and has introduced the steel industry and other related industries supporting the growth of domestic demand growth, steel exports Prices quickly from the shadow of the 2008 came out, steel prices remain strong growth momentum, although the middle has experienced several major fluctuations in steel prices, but the overall situation in 2009 is still continuing to rise.

In 2010, with the international and domestic economic situation improved, steel demand has been restored, the developed countries to accelerate the growth of crude steel production, steel prices as a whole upward, although the year fell back, but due to rapid increases in raw material prices in September with the domestic energy- , Are favorable to promote the rapid recovery in market prices, the overall price of steel in 2010 seems to be a trend in the shock up.

Recalling the recent years, the steel market, we can easily see whether the international or domestic steel prices are rising sound of a steel as the main raw material of construction machinery manufacturers must face a greater cost test.

So in the end the continued rise in steel prices will give the machinery manufacturing enterprises what impact? And mechanical steel prices continue to rise in the case of how to develop their own procurement plan? Today we will work on these issues together to explore the answers to questions.

How to deal with steel prices continued to rise

First, open source and reduce expenditure, reduce internal friction, to maximize the use of raw materials, or the amount of large, to take the cost of dilution and other means, as the construction machinery industry leader Liugong methods may be able to learn from us. On the one hand, improve the utilization of the plate. At present, the utilization rate of the whole loader industry is about 72% on average. Through the improvement of technology in recent years, including some specifications and shape improvement, some enterprises can reach 80% or even 85% utilization rate of sheet metal. On the other hand, In the process of loading machine manufacturing and processing, and constantly improve the process tooling, improve production efficiency and reduce the consumption of materials used; In addition, with the equipment input increased, and constantly improve the level of personnel management and training to its production capacity and quality assurance capabilities increasingly Improve, greatly reducing the waste. But the latter two aspects of the cost impact is relatively small, the most important thing is to improve the utilization of the plate. "

Second, reduce enterprise inventory, speed up the production cycle, shorten the manufacturing cycle, compression management costs; In addition, increase market investment, and actively participate in promotional activities, such as excavator exhibition, industry prototype launch activities and so on to increase product sales.

Third, product price increases. It is understood that many mechanical engineering enterprises have different levels of price increases. As a large amount of steel construction machinery, companies want to survive, only one way is to raise prices.

Fourth, the use of futures to avoid risks.

For steel downstream enterprises, the risk of frequent changes in raw material prices can not be avoided, when the operators worried about steel prices, you can use the futures market to hedge, that is, the purchase of metal raw materials to be purchased Hedging, thus lifting worries, to avoid the possible price risk.

We assume that in January 2010, a builder signed a turnkey contract, according to the progress of the project estimates, in January 2011 to buy 1,000 tons of rebar. January 2010, the price of steel is 4,000 yuan / ton, due to fear of 12 months after the steel prices, so the contractor in the futures market hedging transactions: to buy January 2011 futures contracts 200 hands, the price is 4000 Yuan / ton; to January 2011, the contractor to the spot price of 4700 yuan / ton to buy 1,000 tons of rebar, while selling 200 futures contracts closed positions, the price of 4700 yuan / ton.

The business through hedging, profit and loss balance, effective control of the spot market price of steel risk.

Fifth, with reference to the steel spot platform, shop around to save procurement costs.

Sixth, business focused on joint procurement. Xingyang market to the construction machinery manufacturing, enterprises, mostly small and medium enterprises, SMEs have their own operating flexibility of the advantages, but there are also low competitiveness, high cost of procurement disadvantage, which requires us to avoid weaknesses in the buyers can implement Joint procurement model for unified procurement, in order to reduce procurement costs and improve competitiveness.

Forecast and Consideration on the Trend of Steel Price

The current high prices of steel is mainly due to the following two aspects: First, iron ore prices remain high. Although the current price of iron ore on the impact of steel prices in March this year than the wave of pushing up prices, but the high cost of China's steel mills still have to consider an important factor. Iron ore contract price in the fourth quarter, while the domestic energy-saving emission reduction to reduce the impact of iron ore demand fell back, but still in the high-running, spot ore, spot prices 63.5% up to 190 US dollars / ton, Although the price fell to less than 130 US dollars / ton, but recently rebounded to 170 US dollars / ton level, showing that the high cost of making the steel mills down the lack of motivation, and next month to the first quarter of the agreement price pricing time, Mine "shrinkage price" trend is obvious, traders also iron ore negotiations results "eyeing." At the same time, coke prices by the upstream coking coal prices have risen, and further increase the cost of steel rigidity. Second, a substantial lighten up the inventory. Throughout this year's inventory levels, the country's major cities rebar inventories in March this year, the peak is nearly 7.4 million tons, as of November 26, inventories fell to 4.21 million tons, the lowest level in the year, a reduction of up to 43%, which energy Emission reduction and real estate warmer contributed.

Recently, the cut will continue to play a role in the terminal demand for real estate regulation and weather will be weakened by the cold, and the calendar year to play the role of the finale in the end "stockpile" demand due to the current high prices and indecisive, which makes steel prices up space is limited .

We all know that has entered the traditional pre-spring steel trade goods store season, the spot price this year has been higher than the same period last year, nearly a thousand dollars, traders dilemma, store goods face great risk, not hoard goods afraid of missing market. Combined with the traders of this mentality, steel companies can take trade and trade synchronous operation practices, that is, the use of futures hedging operations at this stage, we can easily see the current market situation is two, one market outlook, steel prices more likely to rise, Second, rebar futures contracts from the current spread can be seen far month but lower than in recent months, indicating far more than buying futures on the spot is more favorable than the direct purchase. Operation strategy, traders can take half of the cash spot, half of the futures market to buy 1105 contract to establish a virtual inventory of inventory methods to complete this year's hoard goods task, this can make the operation more flexible, more easily controlled risk, once the price did not rise as expected While the decline in the futures hedging positions established on the hedge is easy to close out the loss of the spot is only half of the inventory on the store.

Although some of the operations can save us a lot of raw material procurement costs, but this can only solve the temporary difficulties, but placed in front of us uncertainties and difficulties too much, then as a construction machinery manufacturing enterprises how to face What are the direct impacts of uncontrolled rising costs, and how to prepare for reserves and improve their ability to resist risks? This will be an issue that we are seriously considering.

At present, the main problem faced by machinery manufacturing enterprises is the rising steel prices, how to reduce procurement costs, breaking the high cost of industry bottlenecks, and also face the problem of industrial transformation, that is, after breaking the cost bottleneck, Of low-cost strategy, to the high-tech, high-quality, high-priced direction of the transfer. "Made in China" has been a "low-quality, low-cost" crisis tendencies, "winning by quality" is the future direction of enterprise development. Steel and other raw material prices, the result is bound to make poor quality, low-tech, low value-added enterprises to take the lead to disappear. Only as soon as possible transformation, machinery manufacturers have hope, to small and small to the fine and good business development path.



Contact: Emily Wong

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