Since the 1990s, China's wire and cable bathed the fast-moving and steady development of the national economy, and it has developed rapidly. It has been hailed as the “neural†and “vascular†wire and cable industry in the city, shouldering the pillars of the national economy for all walks of life. Supporting functions. It has grown into the second largest industry in China's machinery industry after the automobile, and China is a huge and growing market. China's population is one-fifth of the world's population, but the cable industry's output value is only It accounts for about 15% of the world cable industry. There are still many development spaces and blank spots in this huge market, which needs to be developed. During the "Eleventh Five-Year Plan" period, according to the annual growth rate of the national economy, the growth rate of the wire and cable industry will be equal to the development speed of the national economy, which is expected to be around 8.5%. From a macro perspective, the entire Chinese wire and cable industry is in a period of rapid growth.
At the same time as the rapid development of China's cable industry, the wire and cable industry has begun to face new problems. At present, the wire and cable industry product variety satisfaction rate and domestic market share are more than 90%, the industry's production capacity has greatly exceeded market demand. Over-capacity, insufficient effective supply, prominent structural contradictions, low input and output, and weak scientific and technological innovations have become increasingly serious, and have begun to seriously hinder the healthy development of the wire and cable industry.
1. Prospects for raw materials such as copper and aluminum
Non-ferrous metals such as copper and aluminum are the most important raw materials for the wire and cable industry. In the electrical industry, wire and cable manufacturing is the industry with the largest demand for copper and aluminum. In recent years, the power, communications, railway, rail city transportation, shipbuilding, automobile, petrochemical, construction, highway, home appliances and other industries still maintain a large investment scale, construction speed is accelerating, and the demand for wire and cable is growing. According to the latest data released by the National Bureau of Statistics, the total industrial output value and main business income of the wire and cable manufacturing industry in 2006 reached 396.67 billion yuan and 386.592 billion yuan respectively, an increase of 48.23% and 47.93%. Both indicators rank first in the electrical industry. The physical output consumes more than 3 million tons of copper and more than 1 million tons of aluminum. It has become the world's largest wire and cable manufacturing industry with the largest market size and fastest growth.
The amount of copper used in wire and cable accounts for 60-70% of the national copper consumption. The amount of copper used in various wire and cable products is roughly 20 to 30% for power cables and 28 to 30% for electrical equipment. Winding wires account for about 26 to 29%, communication cables account for about 5 to 7%, and other cables account for about 4 to 5%.
With the rapid development of China's economy, it is expected that the amount of copper used in the wire and cable industry will reach 450 to 5 million tons by the end of the 11th Five-Year Plan.
2. The material rises and is trapped by "copper"
In 2006, in the "up" sound, China's wire and cable manufacturers were trapped by "copper" and experienced unprecedented cost pressures, because copper, aluminum, plastic and other raw materials accounted for more than 80% of the cost of wire and cable. Coupled with the rise in energy prices, transportation costs and human resource costs, these companies are even worse.
As the cost is rising sharply, its sales price is difficult to increase reasonably. Therefore, the market competition is increasingly fierce, especially in the low-end wire and cable products market with relatively low technology added value, the situation of price-price competition is quite common. At present, some cable companies have suffered losses. The industry believes that the root cause of low-price competition is blind investment, overcapacity, and oversupply. On the one hand, due to the low investment threshold, a large number of enterprises have flooded, causing enterprises in the industry to “excessively excessiveâ€. It is understood that there are more than 5,000 large and small enterprises in the wire and cable industry. The production capacity of these industries exceeds market demand and there is a serious excess. On the other hand, because the “threshold†is low, not only is the concentration of the industry becoming lower and lower, but also a “workshop enterprise†that does not have the necessary means of production capacity, quality control and testing at all, has been mixed in the industry and become Counterfeit and shoddy, shoddy, cut corners, shoddy goods, shoddy cable products, and disrupt the market competition by means of lowering sales prices, thus exacerbating disorderly competition within the industry.
There are quite a few cable companies that believe that copper prices are high and costs are rising sharply. Some small businesses cannot afford it, and some even have stopped production. But the market is still there, and millions of cable orders actually account for a certain percentage. However, buyers are reluctant to accept the fact that cable costs are raised due to the increase in copper prices. Cable companies are very difficult. Some companies have to sign contracts with users. The cable price is not adjustable, but if there is any cable demand, I must do it. "The loss of the embankment within the embankment" will be recovered after the next order. This is the unique "overlord clause" of the cable industry, which reflects the difficulty of the cable industry in the soaring copper price.
In recent years, as the price of the world copper ingot market has soared, the domestic cable industry has suffered from the surge in raw materials, and almost all cable companies are facing serious crisis. Some cable companies hope that the power grid business unit can change the bidding method and increase the contract price that has been signed so that cable companies can tide over the difficulties.
The random competition in the cable industry is inevitably faced with a big integration and the advent of the era of mergers. If the speed of development of a company is almost the same as that of the region and the country, it is not development, not rapid development. It is likely to be eliminated in this wave of tides. Therefore, cable companies should have sufficient crisis awareness!
There are more than 50 cable enterprises that can really have the bidding ability in some major projects in the country. The enterprises are many, small and scattered, which has caused disorderly competition in the wire and cable industry and the phenomenon of price reduction is very serious.
Faced with the rising prices of raw materials, wire and cable manufacturers have shown the most "frustration." Because of their orders with the power, communications, transportation or steel industries, the delivery cycle is generally more than one year, and on the day of delivery, the price on the contract is often not even recovered. Once the contract is signed, the price cannot be changed. Therefore, the cost pressure caused by the rising raw material price can only be borne by the enterprise itself.
The price increase of major raw materials such as copper and aluminum has now seriously affected the survival of the wire and cable industry. How do foreign cable companies cope with the rising prices of raw materials?
They have established a good risk control system to avoid the risk of copper and aluminum price fluctuations by signing long-term supply treaties, hedging, and forward trade contracts with suppliers; adopting a centralized procurement department to enhance the negotiation status between the company and its suppliers. Strengthen and improve the raw material risk control system and mechanism; some companies, such as Nexans and Superior Telecom, are preparing to extend the industrial chain, especially to the copper supply sector, to weaken the risk of copper price fluctuations; multinational companies have established interest rate control and The risk mechanism of exchange rate fluctuations.
Multinational corporations are far lower than domestic companies in terms of asset-liability ratio, and generally remain at around 30%. Relatively speaking, the company's assets are more secure.
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