In April 2020, the domestic steel price still maintained at about 3100 yuan/ton, while in May 2021, the steel futures price continued to soar to about 6200 yuan/ton, the price rise nearly doubled, hitting a new record.
The change of steel price, causeed a big effect to Chinese manufacturing industry, particularly, to those manufaturing industries which will use more steel, such as transportation industry, home appliances industry, machinery manufacturing, etc.The main reasons for the steel price rise are not only because the overissued currency push up the values of products , but also due to the COVID, the increased investment in infrastructure and the obstacles in transportation, also push up the cost of raw materials. The other reason is the supply and demand relationship of imported iron ore in China.
Due to the raw material price increasing, the cost of production for manufacturer increase too. it takes time since customer place the order to purchase raw materials and start manufacturing equipment. During this period, the price of raw materials rises rapidly and unpredictably. That means after manufacturers receive orders, the cost rises rapidly to the point of loss before delivery. However, the contract cannot be changed easily, not to mention increase the price. This leads to the decreasing of profit margin for the equipment manufacturers continuesly.According to the current trend of steel price rising, if the manufacturers increase the price as well, customers are not satisfied,then cancel orders, the result for the manufacturers is the reduction of orders and even worse.
At present, steel prices are difficult to reduce to the previous level in the short term, there is still room for rising, we need to be well prepared for the price increasing of all kinds of commodities. In the meantime, we hope the customers to make wise decisions of purchasing. If it’s rigid demand, the earlier purchasing the better.
Post time: May-31-2021