After The Year, The Raw Materials Rose Sharply! Downstream Fastener Enterprises Group Up To Raise Prices

After the Spring Festival this year, the "good start" seems to be earlier than usual. Taking the fastener industry as an example, benefiting from the price rise of metal raw materials, such as copper, iron ore, aluminum, stainless steel, zinc alloy and other bulk raw materials, the price of steel raw materials ushered in a sharp general rise, which also quickly spread to the whole industry and triggered a full price adjustment.


Since the second half of 2020, with the promotion of a series of loose policies, the price of materials has risen steadily again, showing a strong resilience. However, as soon as this year's Spring Festival holiday is over, the price increase momentum has exceeded the expectation of most businesses.


(1) The price of raw materials rises, and the production cost of steel works is high


China needs more than 80% of iron ore, and the rising prices of ore, coke and other raw materials push up the production cost of steel plants. The increase of production cost of steel plants is the main reason for its continuous rise, and the subsequent rise intention of steel plants is still strong.


(2) Global currency overrun pushes commodity up


The United States recently launched a new $1.9 trillion economic stimulus plan. The people's Bank of China has also continued to implement active fiscal policy and prudent monetary policy this year to maintain the necessary support for economic recovery. Last year, it lowered the deposit reserve ratio three times, releasing a total of 1.75 trillion yuan of long-term funds. Generally speaking, the capital tends to be loose. Global currency over issuance supports inflation expectation, which in turn will push up commodity market prices, and the rise of steel price also has its help.


(3) Some enterprises return to work ahead of schedule


This year, due to the impact of public health incidents, the state advocated "Celebrating the new year on the spot". Some enterprise employees responded. It is reported that a terminal processing enterprise has retained a production line during the Spring Festival holiday. After the holiday, the overall time for the enterprise to return to work this year is earlier than that of last year. Generally, the enterprise's return to work will increase the purchase of raw steel and support the rise of steel prices. In previous years, terminal enterprises returned to work after January 15.


(4) The stock before the festival is insufficient, and some businesses supplement the stock after the festival


Because the steel price is generally in a high position before the festival, combined with the uncertainty of public health time, although most businesses are bullish on the market after the festival, the actual stock before the festival is relatively limited, and the wait-and-see mentality is strong. After the festival, the steel price rises rapidly, and some businesses begin to replenish the stock appropriately. Under the mentality of buying up but not buying down, the steel price also increases.


Therefore, at present, if we want to resolve this crisis, we should not wait passively, but rely on the macro-control of the market. We should also take the initiative, actively look for opportunities, and truly "look for opportunities in danger".


How to solve the problem, only "price increase"? The rising prices of steel, copper, aluminum and other raw materials will inevitably affect the entire industrial chain and spread to all industries, especially those manufacturing enterprises, which are hard to ignore: only because these raw materials have always been the necessary materials for manufacturing enterprises.


How to resolve the crisis of the "rising price tide" has become a major consideration for enterprises. Among them, following the rising price has become the only choice for enterprises. That is to say, when the price of raw materials on your side rises, the price of products on my side also rises. Only in this way can we not suffer losses.


In fact, the same is true. Affected by the rising prices of steel, copper, aluminum and other raw materials, most enterprises have started the mode of product price rising, especially for fastener manufacturing enterprises. It is understood that many enterprises have already started the mode of product price rising.


What is the impact of rising raw material prices?


As the price of raw materials rises, the products of downstream enterprises also rise, which undoubtedly accelerates the performance differentiation of downstream enterprises.


Li Yan, researcher of Industrial Economic Research Department of development research center of the State Council:


The price rise of raw materials has a transmission mechanism to the price rise of downstream enterprises such as equipment and fasteners, and it will also aggravate the polarization of downstream enterprises' performance.


Enterprises with competitive advantages can continue to pass the upstream price and cost to the terminal, or offset the impact of rising costs through their own innovation advantages in product design and quality. But for enterprises that rely more on low cost or extensive operation, the impact and challenge will be greater


Reading what Li Yan Research Institute said, it is not difficult to see that enterprises with competitive advantages are more comfortable in the face of "rising prices".


Therefore, in addition to price increases, the more feasible way for fastener enterprises to resolve the crisis is to develop new technologies and products, improve product quality and make products more competitive.


In addition, the domestic new infrastructure is in full swing, supporting the increasing demand for fasteners. Fasteners with more competitive advantages are also conducive to the development of emerging markets, so as to ease the business crisis of enterprises with the vast blue ocean of emerging markets.


The "rising price tide" has come. No matter how worried or frightened, it can not change the fact that the pressure brought by the rising price of raw materials. Therefore, instead of complaining about the rising price, we should take the initiative to find a way to resolve the crisis.


In the fierce market competition and rising operating costs, looking for new market growth point is still a good way for fastener enterprises to break away from the crisis.