The iron and steel industry as China's basic industry in the era of heavy chemical industry, its price increase can be passed to the downstream industries to ensure that steel companies to recover losses through price increases, and those who pay the bill are undoubtedly automobiles, ships, home appliances, construction and other downstream industries. This year's rise in iron ore prices will inevitably lead to a deterioration of the overall production situation of the machinery industry. In the face of the high steel price era, where does the machinery industry go?
According to the "Blue Ocean Strategy" published by the Harvard Business School, the company's Red Sea strategy is mainly how to compete in the existing and known market space. What we need to analyze is the competitive situation and the conditions of the existing industry. The Blue Ocean Strategy is There is no limit to existing industry boundaries, and many times it can be opened in the Red Sea. Differentiation is part of the blue ocean strategy. Segmentation is the discovery of blue oceans, and design innovation is the creation of blue oceans. Analysts believe that the value chain, industrial chain and process reengineering are the major trends in current industrial development. For the machinery industry enterprises, the implementation of Blue Ocean Strategy not only needs to strengthen the industrial chain cooperation and technological innovation, expand market segments and modern service industries, but also need to actively promote energy-saving emission reduction, energy conservation and emission reduction into the company's process innovation system.
The highest pressure on machinery industry under high steel prices
Statistics show that in 2006, China produced 466.85 million tons of steel, minus 43.01 million tons of export steel, and domestic production of 42.384 million tons of steel; automobile industry used steel was 17 million tons, and shipbuilding industry used 5.66 million tons of steel. With 5 million tons of steel and 57 million tons of steel for mechanical industrial use, which accounted for 13.4% of the total domestic iron and steel production that year, it is a true steel user.
Compared with iron and steel companies that can increase their prices, it is difficult for machinery companies to send prices down. The machinery industry is a highly market-oriented industry. The competition is fierce. If the downward pressure on price increases is transmitted, customers may be lost. Even if the price of the product is increased, the margin will be smaller to ensure sales, which will not cause a drop in revenue and profits.
Steel products generally account for 20% of the cost of mechanical products, 30% for heavy equipment, some 50% for forged casting products, and 60% for power generation equipment. The cost of steel in some mining machinery, port machinery, and construction machinery can even reach 70. %the above. A 10% increase in steel prices will have a very big impact on the machinery industry. In 2007, the profit margin of the main business income of the machinery industry was only 6.19%. Even if calculated according to 20% of the average cost of steel, the profit of two percentage points should be squeezed out. Some forging foundry heat treatment companies even have to squeeze out 5 percentage points of profits.
Heavy machinery industry should strengthen industrial alliance
In the long run, large and medium-sized machinery companies should strengthen their vertical integration with iron and steel companies and cross-share each other to share the risk of steel price increases, especially in the heavy machinery industry.
The heavy machinery industry is characterized by a large number of long-term products, most of the delivery time is 4 months or more, more than 1 year, the basic material composition is mainly steel, and other non-metal materials are less than 0.5% of the product weight. As the supply contract has already been signed, the price of the product cannot be readjusted. The increase in raw material prices can only be borne by the company. In fact, many products in the heavy machinery industry are geared to the steel industry. Steel companies are both raw material suppliers and product users, and should share some of the losses caused by raw material price increases for heavy machinery companies.
At the same time, machinery enterprises should also speed up the transformation of economic development methods, increase investment in product R&D, and enhance their capacity for independent innovation to develop high value-added products.
The machinery and equipment manufacturing industry is a labor, capital, and technology-intensive industry. Its products are relatively complex and require high technical content. Compared with capital, labor, and other factors of production, technological progress has a more significant effect on the industry.
At present, international manufacturing is undergoing a profound strategic shift. Its content can be summarized as follows: From the transformation of high-volume, low-variety technologies to small-batch, multi-variety manufacturing methods, from the emphasis on the division of traditional industries to the global layout of the industry chain, from traditional and conventional technologies to widespread use of high-quality, high-efficiency The transformation of advanced manufacturing technologies with core technologies of low consumption, cleanliness, and flexible production has changed from a pyramid's multi-level production structure to a flat mesh structure. For the machinery industry, the international competition is mainly the competition of manufacturing technology. In the composition of the productivity of companies in various countries, the role of manufacturing technology generally accounts for 55% to 65%.
China's machinery industry must speed up the transformation of economic development methods, and should focus on intangible products and assets, that is, strengthen product development and process technology, especially the development of special-purpose equipment production lines and specialized new products, and increase technological innovation, products and processes. R&D, market development, human resources training, etc.
Innovation must focus on product differentiation
Companies can rely on service, price, and quality to win. Today's companies must rely on speed, innovation and value chain to win. For machinery manufacturing companies, the focus of innovation is design innovation, that is, the use of existing technologies and knowledge to achieve major breakthroughs in the practical application of products or production processes, in order to develop differentiated products to expand and segment the market.
Unlike the high input, high cost, high yield, and high risk of the steel industry, the machinery industry is high-input, high-cost, low-yield, and high-risk. Although the prices of raw materials, energy, and costs have been rising, the unit price of mechanical products has been declining. In 2007, the price of iron ore rose by 9.5%. Coupled with the increase in raw material prices, some machinery companies have stopped production. This year, the price of iron ore rose by 65%. The price of other raw materials is also operating at a high level and there is no hope of reducing prices. This is undoubtedly aggravated by machinery enterprises with low technological content and poor economic returns.
In the era of high steel prices, machinery companies do not have much choice. At present, it is not a question of whether or not an enterprise should be engaged in the modern manufacturing service industry, but rather the question of how the enterprise should be a modern manufacturing service industry. Neither price can be rushed, and internal can not be digested, companies should make a fuss about services. Products can make money or even lose money, but they can win more orders through quality products and quality services, creating a virtuous circle.
Fully tap potential for energy saving and consumption reduction
Relying on energy conservation and emission reduction to reduce costs and digesting some of the price increase factors, it can also be called technological innovation. In the face of rising costs, machinery manufacturing companies should actively promote energy conservation and emission reduction, and reduce energy consumption targets.
Although the comprehensive energy consumption per ten thousand yuan output value of China’s machinery industry has been reduced by 21% annually in recent years, the overall energy consumption level of the whole industry is one-third of the national average level of industrial energy consumption, but the energy consumption of the output value of the mechanical industry unit is industrially developed. 4 times, the space for energy saving and consumption reduction is still large.
At the same time, machinery manufacturing companies must strengthen basic R&D, find steel substitutes and reduce the level of steel consumption. The rising prices of energy and resources in the global market will be a long-term trend and will not show signs of falling within a short period of time. However, the raw material cost for steel production is relatively low, and seeing the reduction in unit consumption levels has a relatively rapid effect.
In fact, in recent years, the average annual production value of steel in the machinery industry has been reduced by 8%. However, with the soaring prices of steel, the machinery industry must pay particular attention to increasing added value and reducing costs through technological and technological advancement. It is expected that while the level of unit consumption of steel products is declining, the overall high-speed growth of the machinery industry will lead to a continuous increase in the total demand for steel products.
Related reports: Steel prices rose as raw materials rose
According to the latest price monitoring data from the National Development and Reform Commission, the national steel price continued to rise in March. The comprehensive average price of major steel products was 5,572 yuan/ton, which was 9.37% higher than the previous month and 36.1% higher than the same period of last year. This price also set a new high this year.
According to the National Development and Reform Commission's monitoring of the major steel markets in 30 provinces (autonomous regions and municipalities) of the country, the prices of various steel products have risen significantly in March, and steel prices have reached new highs this year. Among them, construction steel, medium plate, hot and cold coils and other major steel products rose more than 100 yuan per ton. Market analysts pointed out that steel prices rose with the price of raw materials such as coke. It is understood that Baosteel, Shougang, etc., purchased in March a level of coke price per ton has increased 200 yuan over the beginning of the year, breaking the 2,000 yuan mark.
In addition, the prices of raw materials such as iron ore and scrap have also continued to rise, which has led to an increase in the cost of steel production. The rise in raw material prices has caused many small steel companies to stop production or reduce production. Industry sources pointed out that the price of raw materials is strong, especially the recent increase in the price of international coking coal, which is a very strong support for domestic steel prices, so the price of China's steel market should continue to rise.
According to the latest analysis report provided by my steel network, domestic steel prices continued to show a slight upward trend from April 14 to 18, which is the fourth consecutive week that domestic steel prices have kept rising.
According to the analysis, the price of construction steel is generally consolidating upwards. The average price of rebars in major domestic markets has exceeded the 5,000 yuan mark and reached 5,150 yuan. In the week of April 14-18, a total of 28 rebar producers and 28 wire rod manufacturers across the country adjusted their factory prices upwards. With the gradual widening of the price gap between the southern market and the northern market, the amount of resources from the north to the south decreased significantly.
Industry insiders pointed out that the next major factors affecting the market trend of construction steel products include: First, inventory in Shanghai, Hangzhou and other regions continued to decline. Currently, Shanghai rebar stocks have dropped to about 340,000 tons; second, domestic funds continue to tighten; It is the price of raw materials that continues to be high and there is steady increase. At present, the ton price of rebar billet in Jiangsu is 5050~5150 yuan, and it is estimated that the construction steel price will continue to rise slightly.
In addition, the overall plate price was slightly increased. During the week of April 14-18, a total of six plate manufacturers across the country adjusted their factory prices upwards. The ton price rose by RMB 100-200, and the availability of steel resources was limited. The prices of hot-rolled coils rose slightly across the board. The ton prices of four cities in Shijiazhuang, Nanchang, Hefei, and Urumqi rose by more than 100 yuan. The overall cold plate price rose slightly. The resources for thin gauges and thick gauges were relatively small and the prices were high.
According to the "Blue Ocean Strategy" published by the Harvard Business School, the company's Red Sea strategy is mainly how to compete in the existing and known market space. What we need to analyze is the competitive situation and the conditions of the existing industry. The Blue Ocean Strategy is There is no limit to existing industry boundaries, and many times it can be opened in the Red Sea. Differentiation is part of the blue ocean strategy. Segmentation is the discovery of blue oceans, and design innovation is the creation of blue oceans. Analysts believe that the value chain, industrial chain and process reengineering are the major trends in current industrial development. For the machinery industry enterprises, the implementation of Blue Ocean Strategy not only needs to strengthen the industrial chain cooperation and technological innovation, expand market segments and modern service industries, but also need to actively promote energy-saving emission reduction, energy conservation and emission reduction into the company's process innovation system.
The highest pressure on machinery industry under high steel prices
Statistics show that in 2006, China produced 466.85 million tons of steel, minus 43.01 million tons of export steel, and domestic production of 42.384 million tons of steel; automobile industry used steel was 17 million tons, and shipbuilding industry used 5.66 million tons of steel. With 5 million tons of steel and 57 million tons of steel for mechanical industrial use, which accounted for 13.4% of the total domestic iron and steel production that year, it is a true steel user.
Compared with iron and steel companies that can increase their prices, it is difficult for machinery companies to send prices down. The machinery industry is a highly market-oriented industry. The competition is fierce. If the downward pressure on price increases is transmitted, customers may be lost. Even if the price of the product is increased, the margin will be smaller to ensure sales, which will not cause a drop in revenue and profits.
Steel products generally account for 20% of the cost of mechanical products, 30% for heavy equipment, some 50% for forged casting products, and 60% for power generation equipment. The cost of steel in some mining machinery, port machinery, and construction machinery can even reach 70. %the above. A 10% increase in steel prices will have a very big impact on the machinery industry. In 2007, the profit margin of the main business income of the machinery industry was only 6.19%. Even if calculated according to 20% of the average cost of steel, the profit of two percentage points should be squeezed out. Some forging foundry heat treatment companies even have to squeeze out 5 percentage points of profits.
Heavy machinery industry should strengthen industrial alliance
In the long run, large and medium-sized machinery companies should strengthen their vertical integration with iron and steel companies and cross-share each other to share the risk of steel price increases, especially in the heavy machinery industry.
The heavy machinery industry is characterized by a large number of long-term products, most of the delivery time is 4 months or more, more than 1 year, the basic material composition is mainly steel, and other non-metal materials are less than 0.5% of the product weight. As the supply contract has already been signed, the price of the product cannot be readjusted. The increase in raw material prices can only be borne by the company. In fact, many products in the heavy machinery industry are geared to the steel industry. Steel companies are both raw material suppliers and product users, and should share some of the losses caused by raw material price increases for heavy machinery companies.
At the same time, machinery enterprises should also speed up the transformation of economic development methods, increase investment in product R&D, and enhance their capacity for independent innovation to develop high value-added products.
The machinery and equipment manufacturing industry is a labor, capital, and technology-intensive industry. Its products are relatively complex and require high technical content. Compared with capital, labor, and other factors of production, technological progress has a more significant effect on the industry.
At present, international manufacturing is undergoing a profound strategic shift. Its content can be summarized as follows: From the transformation of high-volume, low-variety technologies to small-batch, multi-variety manufacturing methods, from the emphasis on the division of traditional industries to the global layout of the industry chain, from traditional and conventional technologies to widespread use of high-quality, high-efficiency The transformation of advanced manufacturing technologies with core technologies of low consumption, cleanliness, and flexible production has changed from a pyramid's multi-level production structure to a flat mesh structure. For the machinery industry, the international competition is mainly the competition of manufacturing technology. In the composition of the productivity of companies in various countries, the role of manufacturing technology generally accounts for 55% to 65%.
China's machinery industry must speed up the transformation of economic development methods, and should focus on intangible products and assets, that is, strengthen product development and process technology, especially the development of special-purpose equipment production lines and specialized new products, and increase technological innovation, products and processes. R&D, market development, human resources training, etc.
Innovation must focus on product differentiation
Companies can rely on service, price, and quality to win. Today's companies must rely on speed, innovation and value chain to win. For machinery manufacturing companies, the focus of innovation is design innovation, that is, the use of existing technologies and knowledge to achieve major breakthroughs in the practical application of products or production processes, in order to develop differentiated products to expand and segment the market.
Unlike the high input, high cost, high yield, and high risk of the steel industry, the machinery industry is high-input, high-cost, low-yield, and high-risk. Although the prices of raw materials, energy, and costs have been rising, the unit price of mechanical products has been declining. In 2007, the price of iron ore rose by 9.5%. Coupled with the increase in raw material prices, some machinery companies have stopped production. This year, the price of iron ore rose by 65%. The price of other raw materials is also operating at a high level and there is no hope of reducing prices. This is undoubtedly aggravated by machinery enterprises with low technological content and poor economic returns.
In the era of high steel prices, machinery companies do not have much choice. At present, it is not a question of whether or not an enterprise should be engaged in the modern manufacturing service industry, but rather the question of how the enterprise should be a modern manufacturing service industry. Neither price can be rushed, and internal can not be digested, companies should make a fuss about services. Products can make money or even lose money, but they can win more orders through quality products and quality services, creating a virtuous circle.
Fully tap potential for energy saving and consumption reduction
Relying on energy conservation and emission reduction to reduce costs and digesting some of the price increase factors, it can also be called technological innovation. In the face of rising costs, machinery manufacturing companies should actively promote energy conservation and emission reduction, and reduce energy consumption targets.
Although the comprehensive energy consumption per ten thousand yuan output value of China’s machinery industry has been reduced by 21% annually in recent years, the overall energy consumption level of the whole industry is one-third of the national average level of industrial energy consumption, but the energy consumption of the output value of the mechanical industry unit is industrially developed. 4 times, the space for energy saving and consumption reduction is still large.
At the same time, machinery manufacturing companies must strengthen basic R&D, find steel substitutes and reduce the level of steel consumption. The rising prices of energy and resources in the global market will be a long-term trend and will not show signs of falling within a short period of time. However, the raw material cost for steel production is relatively low, and seeing the reduction in unit consumption levels has a relatively rapid effect.
In fact, in recent years, the average annual production value of steel in the machinery industry has been reduced by 8%. However, with the soaring prices of steel, the machinery industry must pay particular attention to increasing added value and reducing costs through technological and technological advancement. It is expected that while the level of unit consumption of steel products is declining, the overall high-speed growth of the machinery industry will lead to a continuous increase in the total demand for steel products.
Related reports: Steel prices rose as raw materials rose
According to the latest price monitoring data from the National Development and Reform Commission, the national steel price continued to rise in March. The comprehensive average price of major steel products was 5,572 yuan/ton, which was 9.37% higher than the previous month and 36.1% higher than the same period of last year. This price also set a new high this year.
According to the National Development and Reform Commission's monitoring of the major steel markets in 30 provinces (autonomous regions and municipalities) of the country, the prices of various steel products have risen significantly in March, and steel prices have reached new highs this year. Among them, construction steel, medium plate, hot and cold coils and other major steel products rose more than 100 yuan per ton. Market analysts pointed out that steel prices rose with the price of raw materials such as coke. It is understood that Baosteel, Shougang, etc., purchased in March a level of coke price per ton has increased 200 yuan over the beginning of the year, breaking the 2,000 yuan mark.
In addition, the prices of raw materials such as iron ore and scrap have also continued to rise, which has led to an increase in the cost of steel production. The rise in raw material prices has caused many small steel companies to stop production or reduce production. Industry sources pointed out that the price of raw materials is strong, especially the recent increase in the price of international coking coal, which is a very strong support for domestic steel prices, so the price of China's steel market should continue to rise.
According to the latest analysis report provided by my steel network, domestic steel prices continued to show a slight upward trend from April 14 to 18, which is the fourth consecutive week that domestic steel prices have kept rising.
According to the analysis, the price of construction steel is generally consolidating upwards. The average price of rebars in major domestic markets has exceeded the 5,000 yuan mark and reached 5,150 yuan. In the week of April 14-18, a total of 28 rebar producers and 28 wire rod manufacturers across the country adjusted their factory prices upwards. With the gradual widening of the price gap between the southern market and the northern market, the amount of resources from the north to the south decreased significantly.
Industry insiders pointed out that the next major factors affecting the market trend of construction steel products include: First, inventory in Shanghai, Hangzhou and other regions continued to decline. Currently, Shanghai rebar stocks have dropped to about 340,000 tons; second, domestic funds continue to tighten; It is the price of raw materials that continues to be high and there is steady increase. At present, the ton price of rebar billet in Jiangsu is 5050~5150 yuan, and it is estimated that the construction steel price will continue to rise slightly.
In addition, the overall plate price was slightly increased. During the week of April 14-18, a total of six plate manufacturers across the country adjusted their factory prices upwards. The ton price rose by RMB 100-200, and the availability of steel resources was limited. The prices of hot-rolled coils rose slightly across the board. The ton prices of four cities in Shijiazhuang, Nanchang, Hefei, and Urumqi rose by more than 100 yuan. The overall cold plate price rose slightly. The resources for thin gauges and thick gauges were relatively small and the prices were high.
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