Recently, domestic steel prices have been falling all the way. The data released by the China Iron and Steel Association recently showed that the steel prices in early March had fallen to the price level in 1994. Then, what impact will the sharp decline in steel prices have on the related downstream industries in China, and how will the large steel users plan this year?
The successive drop in steel prices has finally eased the car manufacturing industry. Under the background of domestic steel prices falling again at the end of February, the current vehicle manufacturing cost of automakers has fallen by more than 10%, and the profitability of the auto industry is recovering.
Changan Ford official told reporters that the continuous decline in steel prices, for manufacturers to digest the cost is a good thing. However, car companies are controlling costs by reducing the amount of steel used, so the impact of falling steel prices may not have been as large as it might have been.
In order to reduce the risk of procurement, steel companies and many auto companies have signed long-term contracts, and most products are sold by direct supply. This way the price between the car manufacturer and the raw material supplier is calculated at a periodic agreement price, so it will be slower than the market price.
A person in charge of procurement told the reporter that at the beginning of the year, auto manufacturers would purchase and supply the supporting steel and parts of the vehicle in accordance with certain plans, so the impact of the decline in steel prices would not be apparent until the second half of the year.
For the large steel consumption of automobiles, commercial vehicle manufacturers benefit greatly. An insider of Foton stated that the lower steel prices have caused auto makers to reduce manufacturing cost pressures.
In the production cost of commercial vehicles, the purchase cost of steel products accounts for about 40%, especially as an indispensable means of transportation in the development of logistics industry. Commercial vehicles benefit from the planning for the revitalization of the logistics industry, the demand growth momentum is rapid, and the steel prices for automobiles The decline will reduce the purchase cost by more than 10%.
However, despite the sharp drop in steel prices and the reduction in automobile manufacturing costs, the car prices in the market have not dropped significantly. According to industry analysts, the rise and fall of vehicle prices still depends mainly on market demand. In addition, as the cost of purchasing steel products decreases, companies may invest some of their savings in upgrading other technologies and components.
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