The wire and cable industry is an industry that relies heavily on raw materials, especially the reliance on copper materials has never changed over the years. However, as we all know, the high price of copper materials and the special order and contract issues in the cable industry have caused copper materials to increase or decrease in price, which is unfavorable for wire and cable manufacturers.
In the cable industry, whether it is copper or aluminum, both constitute the main raw materials of the wire and cable industry. In 2011, the total output value of the wire and cable manufacturing industry has exceeded one trillion, ranking first in the world. In 2006, the total output value of my country's wire and cable manufacturing industry was less than 400 billion, and the output value grew rapidly. It is precisely because of the rapid development of China’s wire and cable industry that there is an increasing demand for non-ferrous metals such as copper and aluminum.
According to relevant statistics, the amount of copper used in wires and cables accounts for about 60-70% of the national copper consumption. The amount of copper used in various wire and cable products is roughly as follows: power cables account for about 20-30%, and wires and cables for electrical equipment account for about 20-30%. Accounted for 28-30%, winding wires accounted for about 26-29%, communication cables accounted for about 5--7 percent, and other cables accounted for about 4-5%.
With the development in recent years, China’s local wire and cable manufacturers are under heavy cost pressure, because copper, aluminum, plastics and other raw materials account for more than 80% of the cost of wires and cables, plus energy prices, transportation costs, and The rising cost of human resources has made these companies even worse. In recent years, due to the soaring price of the world's copper ingot market and the soaring cost of domestic wires and cables, almost all cable companies are facing a serious cost crisis.
Some cable companies hope that power grid operators can change their bidding methods and increase the price of signed contracts so that cable companies can tide over the difficulties. However, more companies have begun to compete without rules. At the same time, due to the large, small and scattered wire and cable companies in our country, the disorderly competition and price reduction in the wire and cable industry have been aggravated.
In the face of rising prices of raw materials and rising wire and cable costs, manufacturers most often show "helplessness". Because they have signed orders with the power, communications, transportation or steel industries, the delivery cycle is generally more than one year, and until the day of delivery, the price on the contract often cannot even recover the cost. Once the contract is signed, the price cannot be changed. Therefore, the cost pressure caused by rising raw material prices can only be borne by the enterprise.
The rising prices of major raw materials such as copper and aluminum have now seriously affected the survival of the wire and cable industry. Foreign cable companies have mature measures to deal with the rising prices of raw materials. Foreign cable companies have established a good risk control system, avoiding the risk of copper and aluminum price fluctuations by signing long-term supply treaties, hedging, and forward trade contracts with suppliers; adopting centralized procurement departments to improve companies and suppliers Strengthen and improve the raw material risk control system and mechanism; some companies, such as SuperiorTelecom, are preparing to extend the industrial chain, especially in the supply of copper materials, to weaken the risk of copper price fluctuations; multinational companies have established control of interest rates and exchange rates Volatility risk mechanism. The asset-liability ratio of multinational companies is much lower than that of domestic companies, generally maintained at about 30%. Relatively speaking, the company's asset security is higher.
As the cost of wire and cable has risen sharply, its selling price is difficult to increase reasonably. Therefore, market competition is becoming increasingly fierce, especially in the low-end wire and cable product market with relatively low technical added value, where price competition is quite common.
The industry believes that the fundamental reason for low-price competition of products is blind investment, overcapacity and oversupply. On the one hand, due to the low investment threshold, a large number of enterprises have flowed in, causing "too much overage" in the industry. There are more than 8,000 large and small enterprises in the wire and cable industry. The production capacity of these industries has exceeded market demand, and there has been a serious surplus.
On the other hand, due to the low "threshold", not only the concentration of the industry is getting lower and lower, but also some "workshop enterprises" that do not have the necessary means such as production capacity, quality control and testing can be mixed in the industry and become Counterfeit, shoddy, shoddy, cutting corners, shoddy cable products are the source of production, and they disrupt market competition order by means of lowering sales prices, and intensify disorderly competition in the industry.
A considerable number of cable companies believe that copper prices are high and costs have risen sharply. Some small companies cannot afford it, and some have even stopped production. However, there is still a market, and millions of cable orders account for a certain percentage. However, the purchaser users are unwilling to accept the fact that the cost of cables has increased 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 adjusted this time, but if there is more cable demand, I must do it. "Make up for the loss inside the embankment", and recover the loss next time you order. This is the unique "overlord clause" of the cable industry, which reflects the difficulties of the cable industry under the soaring copper price.
Obviously, whether it is the unilateral increase in raw materials or the unique "overlord clause" of the cable industry, it is forcing the wire and cable industry to seek new development paths, whether it is to develop aluminum alloy cables with more stable performance and lower cost. Efforts to modify the unreasonable "Overlord Clause" or to reduce costs through strict wire and cable cost management and more advanced production processes and technologies are all necessary. Especially in recent years, the profit rate of the wire and cable industry has continued to decrease, and the competition in the low-end market has become incandescent. It is even more demanding that wire and cable manufacturers make a path from the perspective of cost.
