Steel prices soared in the automobile industry

On the fire

Recently, the steel market prices have continued to soar, and both the international and domestic steel price indices have reached their highest levels in the past decade. The increase in the price of steel for automobiles has been extremely prominent from January to March this year.

According to statistics, at the end of January 2004, the international comprehensive steel price index reached 117.5 points, up 10.7 points from the end of December 2003. In China, the import price of thin plates increased by US$60 per ton, and the average import CIF price (cost, insurance, plus freight) reached US$470/ton.

For steel prices, iron and steel companies have their own reasons: the price increase of iron ore is still higher than the increase in steel prices. However, another personage in the industry analyzes that the reason why the price of steel for automobiles has grown significantly is because steel companies are looking at the Wang auto industry and hope to make a fortune. The current situation is that more and more capital has entered the automotive industry, but the demand for automotive steel is in short supply. As a result, price increases have become a reasonable matter.

Eighty-five percent of the materials used to make cars are steel. Researcher Shi Longbin from the Chongqing Automobile Research Institute believes that steel prices will not have much impact on high-end cars, but the impact on economic cars is more obvious. Because price cuts are the "match song" for the economy car market this year, coupled with rising costs, the situation of double-sided baking can be imagined. "Under the combined effects of unfavorable factors, there may be some inferior companies that have been eliminated this year."

"Long-term increases in steel prices will have some pressure on Geely." Wang Dong, Geely's public relations manager, said that Geely is proceeding with the corresponding cost control. However, he also believes that although the local steel price is fluctuating, auto parts suppliers will not immediately increase the price. “It's like a heavy snowfall. Farmers have fewer harvests, but they can only sell one yuan worth of vegetables. It's not possible to sell two yuan at a time, because vegetable vendors are definitely not acceptable.” To give an example, Wang Dong wants to explain the current situation. Relationship between car manufacturers and parts manufacturers. "Geely currently has a huge spare parts supplier system. Under this premise, the spare parts factory does not dare to raise prices."

Chang Yi Group Propaganda Department Yi said: "In the face of rising steel prices, the Group took internal measures to digest, and through batch production to ease the pressure." However, Changan Suzuki’s related persons also reminded: “The whole vehicle company's internal digestion to ease the pressure of rising raw material prices is essentially a loss of profits.”

Waiting for dawn

In fact, for automakers, whether it is to distribute pressure to parts manufacturers or to lose part of their profits to offset the pressure is only an expedient measure. They still place most of their hopes on the price of steel. "Steel prices should not maintain such a high level for a long time," said Geely Wang's manager. However, from the current industry analysis, he may not laugh.

According to the forecast of the International Monetary Fund, world economic growth in 2004 could reach more than 4%, and global steel demand could reach more than 900 million tons, and the growth rate of demand could reach 6%. In 2004, the growth rate of global steel production was less than the increase in demand. It's about 5%. Obviously, the situation of supply exceeding demand will inevitably cause further rise in the international steel price.

According to analysis by the China Iron and Steel Association, domestic steel prices will continue to operate at high levels this year. In the short term, the possibility of a full reduction in steel prices is unlikely. Xie Qihua, Chairman of Baosteel, clearly pointed out: “The high growth of the steel industry has not come to an end. The process of industrialization and urbanization in China provides a broad space for the growth of the total demand for steel products. This trend has been outstanding in the main areas of steel consumption. , Such as technical level and product grades are higher for automotive steel, household appliances, etc.. According to relevant experts, this year's domestic automobile production will still maintain a rapid growth of more than 20%, and the automobile production volume may exceed 5.6 million vehicles. Obviously, the rapid development of the automotive industry is bound to promote the continued growth of the automotive steel market this year.

Although high-end steel products such as automobiles, home appliances, consumer electronics, and shipbuilding are currently facing different levels of supply shortages.

In recent years, due to huge profits, the steel industry has invested heavily in automotive steel projects. In 2003, the world's three major steel giants Nippon Steel, Baosteel and Arcelor set up a joint venture in Shanghai to establish an advanced automotive sheet manufacturing plant. In 2002, Posco Korea made an additional investment in a joint venture with China to build three plate production plants. Then, in 2003, it signed an agreement with Benxi Iron and Steel Plant to establish a cold-rolled steel plate plant in a joint venture with a designed production capacity of the year. Produce 1.8 million tons of cold-rolled coils and galvanized sheets.

While foreign steel giants marched in large numbers, other domestic steel companies also launched steel projects for automobiles. WISCO's second cold-rolled sheet plant will be completed in 2005, making it the only one capable of producing sheet cold rolling mills with widths exceeding 2000 mm. Masteel, Shougang and other steel companies also have steel projects for automobiles that will be put into production or will soon be put into production.

Industry insiders pointed out: "Once these steel companies' automotive steel projects are fully put into production, they will certainly ease the tension in auto steel. The price of auto-increased car steel will get a certain degree of control. Of course, this time, it may have to wait until the car. The steel project was fully put into operation in 2005.

Parts industry is on the verge of a loss

The performance reports just released let steel companies take a breeze, while the automotive industry, an important consumer in the steel industry, is facing a severe test. The soaring prices of raw materials have drastically increased their costs and the profit margin has been shrinking. “Now the price of steel is like a rocket that goes straight to the sky. We can't be reached.” A person in charge of procurement of auto parts manufacturing companies “look at the parts”.

Forging

Qi Xiangdong, deputy secretary-general of the China Iron and Steel Association, revealed that due to the increase in steel prices, the profits of the domestic steel industry in January this year have doubled compared with the same period of last year. "In the last year's corporate efficiency rankings, 6 of the top 10 were steel companies." Qi Xiangdong said with a smile.

At this time, the experience of auto parts companies can only be described as "bitter." “In just a few months, the domestic steel price has risen by about 30%,” Sun Zhanjun, an analyst at Shenyin Wanguo Securities Steel, pointed out: “The prices of hot rolled steel plates used in the automotive industry have risen more than 10%. %."

According to Zhou Shengmin, chairman of the Automotive Axle Bush Committee of the China Automobile Association, the cost of steel accounts for about 40% of the total cost of the bearing bushes. This year, the increase in steel prices has caused companies to increase costs by more than 10%. In the eyes of today's small and medium-sized parts and accessories companies, it is undoubtedly a far cry to increase the price of accessories for automakers. Companies that originally made profits by relying on low labor costs are now being squeezed.

At a time when the price of auto market was surging, automakers asked suppliers to lower product prices to ensure their profit margins. Steel prices rose “inappropriately” and stimulated the nerves of big steel users. The original plan to guarantee its profit space by controlling production costs will be frustrated. Bao Nanjiang, deputy general manager of Shanghai Huizhong Automobile Manufacturing Co., Ltd. disclosed that since Huizhong mainly produces products with higher steel consumption, such as automobile chassis, steel and related raw materials account for more than 50% of the total cost; 30%, the price of some raw materials has risen by about 50%, “giving great pressure on the company’s cost control.”

“The entire parts and accessories industry is currently on the verge of losing money.” With this in mind, Zhou Shengmin looks dignified. In order to study countermeasures, the Bush Committee and the Internal Combustion Engine Council will hold a special meeting in Jiangxi. According to another report, due to rising steel prices, the cost of some small and medium-sized component companies in the United States has risen by as much as 60%.

No solution

"For the rise in steel prices, it is difficult for parts and components companies to find a good way to deal with them." Zhang Jinmu, executive vice president of Rui'an Automobile and Motorcycle Parts Industry Association, reluctantly stated that most parts and components companies have signed with customers according to previous prices. It is very difficult to increase the price of a contract; at the same time, companies are also very cautious in raising their own market share. Yao Jun, deputy secretary-general of the National Association of Industry and Commerce Automobile (Motorcycle) Accessories Association, also stated that due to the disparity in the strength of the entire vehicle and parts and components companies, the price increase in the supporting areas is almost impossible. Now only in the after-sales service market to do tricks. It is understood that at present, the price of accessories for some models has risen by a certain margin. For example, the price of spare parts for the after-sale maintenance market of FAW Liberation has risen by about 15%, which can compensate for the increase in the cost of parts and components companies to some extent.

“In the past few decades, the price of steel has been declining. Now it is understandable that with the global economic recovery, its price rise.” Jiang Jian, deputy general manager of Delphi Systems (China) Investment Co., Ltd. said lightly. At the same time, Delphi Global Vice President and Purchasing Director David Nilsson also revealed that in order to cope with rising raw material costs, Delphi has adopted lean manufacturing to eliminate unnecessary costs to reduce the pressure on the one hand, using processed scraps. Steel recycling is used to reduce income and increase expenditure; on the other hand, they are still working hard with OEMs in order to work together to overcome difficulties. But all this does not seem to be very smooth. According to Dow Jones reports, Delphi had sought the help of its largest customer, General Motors, and hoped to work together to resolve the cost crisis and tide over the difficulties. However, from the current situation, it seems that the other side has still not adopted.

“The corresponding increase in steel production costs and the inconsistent supply of steel in the market are the main reasons for the high steel prices.” Qi Xiangdong said that the global economic recovery has led to a sharp increase in the demand for steel and other raw materials in various countries, producing iron ore, coking coal, etc. Raw material costs have also increased by 50%. Qi Xiangdong predicted that last year, based on the fact that the benefits of the entire steel industry will increase by nearly 100%, this year it will still be able to maintain a growth rate of at least 20%. And the continued high demand for steel will keep this year's steel prices running at high prices.