The construction machinery industry again raised the prices of some categories during the year because steel prices continued to run at a high level.
On June 4, a reporter from the Securities Times learned from Zoomlion that since June 1, the prices of the company's station machinery and construction crane products have been raised by 1,000 yuan/ton.
Xugong Machinery also issued a price adjustment letter in mid-May, and the company's tower cranes and construction hoists all series of products increased prices in June.
The last round of price adjustments was due to the bottoming of price competition in the industry and rising market demand, while this time the price adjustment was driven by rising raw material prices. Therefore, the price-increasing construction machinery is mostly the category of steel structure materials, which is also the category that some enterprises have competitive advantages.
"Currently, the impact of steel prices on the leading construction machinery companies is not prominent. Due to the weak bargaining power of small and medium-sized enterprises, this round of raw material price increases is expected to further increase the concentration of the industry." Many corporate figures told the Securities Times reporter.
In addition, one data to note is that even in the upward channel of product prices, domestic excavator export sales increased by 100.3% from January to April, and monthly export sales increased by 166.3%.
Steel prices may run high in the future
According to the product price adjustment letter obtained by the reporter, “Since May, steel prices have continued to rise due to the sharp rise in the price of iron ore raw materials. With the current global manufacturing recovery and strong domestic demand, steel prices are expected to continue to rise strongly. "
The above-mentioned price adjustment companies stated that they will make real-time adjustments based on the extent of changes in steel prices. At the same time, considering the rapid changes in current steel prices, the company’s proposed quotation is valid for 2 months, and the product price will be recalculated if the delivery is not executed within the time limit.
The price adjustment letter of another company stated that since 2021, the market prices of raw materials such as steel have been rising all the way. In order to maintain market order, the company has assumed the cost pressure caused by rising raw materials.
So, what kind of trend is the domestic steel price that makes the downstream manufacturing industry unable to "calm down"?
According to the monitoring of the Iron and Steel Association, as of May 14, the China Steel Price Index (CSPI) rose to 174.81 points, an increase of 40.39% from the beginning of the year and a year-on-year increase of 77.06%. The rising market reached a climax in mid-May. The billet price has been adjusted by 450 yuan three times in one day, reaching 5770 yuan/ton.
An insider of a construction machinery company told the Securities Times reporter that since May, the price of steel required for the company's products has jumped sharply, from 4,000 yuan/ton at the end of last year to around 6,500 yuan/ton, "directly leading to a sharp increase in production costs."
Later, under the influence of policies, the prices of steel-related futures products continued to weaken, and the previous gains were retreated significantly, but they were still operating at a relatively historical high.
Take hot-rolled coils, which are widely used in the construction machinery industry, as an example. Its main contract hot-rolled coil 2110 reached a high of 6,727 yuan/ton on May 13, and then fell back to today at 5434 yuan/ton, but still more On October 16, 2020, the opening price of 3,500 yuan/ton increased by about 55%.
What needs attention is that many people in the industry believe that steel prices will still run at a high level. Therefore, the cost pressure it brings to the construction machinery industry may exist for a long time.
Wang Guoqing, director of the Lange Steel Research Center, told the Securities Times reporter: “After the sharp rise and fall in May, domestic steel prices have returned to fundamentals, but the current international steel prices are still high, which will have a pulling effect on the domestic market. There is a certain upside."
In addition, Wang Guoqing believes that there are two important macro factors that will affect the trend of domestic steel prices: one is the expected monetary easing policy of the Federal Reserve, which will make the market have a tendency to judge the price of bulk commodities; In the context of the "Zhonghe" policy, the implementation of domestic measures to reduce steel production has progressed.
"From the medium-term perspective, the domestic steel market will tend to operate stably, and the long-term trend depends on the market thrust formed by the above two factors." Wang Guoqing said.
Top companies digest cost pressure
The impact of rising raw material costs can be hedged by leading construction machinery companies through scale effects, industrial chain sharing, and digital cost reduction and efficiency enhancement. Moreover, companies with core competitiveness in some categories have the ability to increase prices.
Du Yigang, vice president of Zoomlion, said: Recently, steel prices have risen sharply in the short term, which has put a certain pressure on the company's costs.
However, Du Yigang also revealed that on the one hand, the company has made corresponding price adjustments for products that account for a relatively large amount of steel (such as construction cranes, mixing plants, etc.), which partly transmits cost pressure; on the other hand, it negotiates with suppliers to jointly absorb part of the cost. Jointly respond to market fluctuations, "The current level of the company's gross profit is generally stable."
Public information shows that Zoomlion's long-boom pump truck, truck-mounted pump, and mixing station have the largest market share in the industry; the sales scale of construction cranes has consistently ranked first in the world. The above-mentioned strong categories of the company are also in this price increase plan.
"The increase of 1,000 yuan per ton of steel will probably affect the company's 1% gross profit," said Xiang Wenbo, president of Sany Heavy Industry (600031). "However, the company's annual production costs are decreasing, and the company's scale effect will ultimately be used to resist the increase in raw material prices. risk."
Yu Hongfu, chairman of Sany Heavy Machinery, added that the company's industrial chain can reduce costs and increase efficiency, and the impact of rising raw material costs can be controlled to a small extent.
Wang Guoqing believes that the rapid increase in steel prices in the early stage will definitely put a lot of cost pressure on the downstream manufacturing industry, but because of the different proportions of steel, the pressure is also different. "Small and medium-sized enterprises have weaker ability to resist cost risks, and the rise in raw materials will cause Has a greater impact."
"From a national level, the government definitely hopes that the industrial chain will develop in a coordinated and balanced manner. Therefore, the country will always pay attention to the stability of commodity prices to ensure the stable development of the overall economy." Wang Guoqing said.
How to weaken the industry shock caused by the rise in steel prices?
Wang Guoqing suggested that the manufacturing industry should strengthen communication and collaboration with upstream steel companies to form benefit sharing; the national level should grasp the policy direction of market-oriented adjustment.
For example, Gao Feng, the spokesperson of the Ministry of Commerce, recently stated at a regular press conference on June 3 that he will continue to do a good job in ensuring the supply and stabilizing prices of bulk commodities, actively promote import diversification, and strengthen departmental collaboration, guarantee capacity, and freight rates. The supervision and other aspects continue to increase efforts.
“Related policies recently issued indicate that the state hopes that the prices of bulk commodities, especially steel, will remain stable to ensure the stable operation of the overall industrial chain.” Wang Guoqing said.
Excavator exports doubled in the first 4 months
In addition, an industry insider said that the construction machinery industry can also conduct cost-increasing pressure by exporting high-value-added products abroad.
Since the soaring price of imported iron ore pushes up domestic steel prices, the downstream manufacturing export price increase will be able to well absorb the pressure of rising costs.
But the key question is whether China's construction machinery industry has global competitive advantages and bargaining power.
According to industry statistics from China Construction Machinery Industry Association, the 26 mainframe manufacturers included in the statistics from January to April 2021 sold a total of 173,513 units of various excavation machinery products, a year-on-year increase of 52.1%.
In April 2021, a total of 46,572 units of various excavation machinery products were sold, a year-on-year increase of 2.5%; of which, the domestic market sales were 41,100 units, a year-on-year decrease of 5.2%.
This shows that the cumulative sales of the construction machinery industry is still growing year-on-year, but the monthly growth rate has declined under the high base.
In addition, the data to pay attention to is that from January to April this year, domestic excavator sales increased by 47.8% year-on-year, export sales increased by 100.3%, and monthly export sales increased by 166.3%, continuing to maintain a high growth rate.
On May 31st, Sany Heavy Industry announced that its global sales of excavators topped the list in the world. However, Xiang Wenbo said: “Of the nearly 100,000 excavators sold last year, about 90% were sold in the domestic market, and the global market still needs to be further expanded.”
Xiang Wenbo said that in the past, the company's overseas focus was on regions where developing countries are located, such as Africa, Southeast Asia, and South America. The next step will be to shift its focus to developed markets such as Europe and the United States.
"The company's product competitiveness has greatly increased, which has driven a substantial increase in overseas sales." Yang Duzhi, the secretary of the board of Zoomlion, said that the company's overseas market is achieving breakthroughs. At the same time, Zoomlion's large overseas orders continued, and the overseas sales of tower cranes, crawler cranes, earth-moving machinery, aerial work machinery and other products reached new highs.
It is worth mentioning that many institutions believe that the sales volume of the construction machinery industry is expected to continue to achieve double-digit positive growth, and the export of leading enterprises may further accelerate.
Among them, China Galaxy said that under the support of infrastructure, downstream demand is resilient, and it has optimistic expectations for the sales of construction machinery in 2021. It is expected that the export of construction machinery will become an important part of supporting overall sales.
