Steel prices continue to rise, hardware industry profits "zero"

As the global economy recovers, the prices of bulk raw materials continue to rise. It is understood that after the price of steel rose by 100 yuan/ton in one day on March 17, the upward trend did not stop. In less than a month, the prices of various types of steel rose by 300 yuan to 500 yuan per ton. Many steel companies in Zhongshan City said that the soaring steel prices have almost zeroed the original meager profits, and the economic recovery has almost offset.
Steel prices rose by a few hundred dollars in a month. After Baosteel announced the price adjustment, the latest steel product sales price policy of Wugang in May showed that the price of most of its products was raised by 500 yuan per ton.
On March 17, the prices of various types of steel products rose by RMB 100/ton, and the average price of hot rolled steel on the same day was RMB 4,300/ton. Since then, domestic steel prices have been rising for nearly one month. As of the recent day, the average price of hot rolled steel has reached 4,600 yuan / ton. The performance of cold-rolled steel is also strong, rising from the average price of 5,300 yuan / ton at the close of trading on March 17 to 5700 yuan / ton. In addition, the price of construction steel rebar wire also rose from the average price of 4,000/ton on March 17 to the recent average price of 4,500 yuan / ton.
According to statistics from relevant departments, China's steel prices rose significantly in the first quarter, with billet prices rising 24%, building materials prices rising 13%-25%, and sheet prices rising 15%-20%, the highest since August 2009.
Steel prices continue to rise, which is good for steel companies, but it is a heavy pressure for downstream steel companies.
"The original order is not at a loss"
Steel prices continued to rise, hitting Zhongshan steel companies unprepared. Zhongshan's traditional advantageous industries such as hardware and small household appliances are all large steel users. Many companies said in an interview that the cost pressure of enterprises has increased and they are afraid to increase their inventory too much. In the process of taking orders, they have to be cautious and cautious. .
Zhongshan Yunming Commodity Co., Ltd. is a company that produces architectural sanitary ware products. Mr. Li, the relevant department manager of the company, told reporters that the price of steel has risen by about four or five hundred yuan in the recent period. For the enterprises in the construction and sanitary industry, the impact is very high. Big. "Our line is basically able to maintain a profit of around 5% under normal circumstances, and with the steel price rising by one hundred yuan and rising twice, it has basically consumed this profit."
Mr. Li said that the company had previously signed a supply contract with some construction units. The contract price was determined according to the steel price at that time, but now the steel price has increased by 20%. “It can be guaranteed without loss.”
For the current steel price continues to rise, the total number of fans of the Legu system is also bitter. "Steel prices have risen by 20%, and it is almost necessary to digest the profits of our lock-making enterprises." Mr. Cai said that in the case of a sharp rise in steel prices, customers are generally not willing to bear this part of the cost. Once they increase the price of the product, the customer's order will immediately decrease, so they have to harden the cost of this part.
In the face of rising steel prices, Yunming Daily Necessities Co., Ltd. has also taken a series of measures to deal with it. "For example, when signing contracts with some construction units, they generally sign contracts with adjustable prices, so that we can guarantee our basic profits, thus avoiding risks." Mr. Li introduced.
Steel prices may continue to rise. The profits of steel companies are shrinking. So, what will happen to the future steel price trend?
In this regard, Mr. Cai of Legu locks believes that the price of steel may fluctuate for a period of time, and the possibility of maintaining the status quo is relatively high; while Mr. Li of Yunming Commodity Company believes that steel prices will continue to rise, while other various The price of raw materials is also rising, and the situation will be very unfavorable for manufacturers that have just picked up their orders.
The industry analysts believe that with Baosteel, Wuhan Iron and Steel and other steel companies in the recent adjustment of steel sales prices in May, it is expected that steel prices will remain bullish in the future. In addition, the current market generally believes that the price increase of iron ore has basically become a fact, and the cost driving force is huge. Beginning this month, downstream demand has slowly started, and the factors that drive the price increase in the steel market are also slowly supported by pure cost support.
 

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