Ingot Shipping

Ingot Shipping

Wire And Cable Industry At The Crossroads

Since the 20th century, 90 years, China's rapid economic wire and cable bathed in the steady development of wind, the rapid development of cities known as the "nerve" and "vessel" in wire and cable industry, shouldering the pillar industries for national economy and all walks of life matching functions. Has grown into China's machinery industry in the position of the second-largest industry behind the car, but China is still a huge and constantly growing and expanding market, China's population is one-fifth of the world's population, but the cable industry, the output value of only of the world's cable industry, about 15% of this huge market there are many gaps in the development of space and, to be developed.

"Eleventh Five-Year" period, according to the national economy growth rate annual increase of 7% to 8%, the wire and cable industry growth rate will be flat and the national economy growth rate is expected at around 8.5%. From a macro point of view, the whole of China wire and cable industry is in rapid development period of growth.

In China's rapid development of the cable industry, wire and cable industry is now faced with new problems. At present, wire and cable industry product variety to meet the rate and the domestic market share of over 90%, industry-wide production capacity far exceeds the market demand. Excess aggregate supply, lack of effective supply, structural problems are conspicuous, input and output is low, a weak scientific and technological innovation is becoming increasingly difficult to start a serious impediment to the healthy development of wire and cable industry.

1. Copper, aluminum and other raw materials, demand prospects

Copper, aluminum and other non-ferrous wire and cable industry is the most important raw material in the electrical industry, wire and cable industry is copper, aluminum demand is the biggest industry. In recent years, electric power, telecommunications, railway, rail urban transport, ship, automobile, petrochemical, construction, highways, household appliances and other industries still maintain a larger scale of investment, construction accelerated, the growing demand for wire and cable.

Based on the latest data released by National Bureau of Statistics show that in 2006 industrial output value of wire and cable manufacturing industry and main business revenue reached 396.67 billion yuan, respectively, and 386.592 billion yuan, an increase of 48.23% and 47.93%. Two indicators were ranked No. 1 in the electrical industry. Kind of output consumed more than 300 million tons of copper, aluminum and more than 100 million tons, as the world's largest wire and cable manufacturing, the market's largest and fastest-growing country.

The amount of copper wire and cable with copper consumption accounting for about 60 ~ 70%, all kinds of wire and cable products, with the copper content along the lines of: power cables account for about 20 ~ 30%, electrical equipment, wire and cable account for about 28 ~ 30%, winding wire about 26 ~ 29%, and communications cables account for about 5 ~ 7%, and other cables about 4 ~ 5%.

With China's rapid economic development, to the "Eleventh Five-Year" by the end of copper wire and cable industry is expected to amount to reach 450 ~ 500 million tons.

2. Materials shares rose for the "copper" by the storm

In 2006, a "going up", China's wire and cable manufacturing enterprises as "copper" by the storm, has experienced unprecedented cost pressures, as copper, aluminum, plastic and other raw materials in the composition of the cost of wire and cable accounted for more than 80% coupled with energy prices, transportation costs, and human resource costs increase, more is to enable these enterprises to worse.

As the costs are soaring, but its sales price is difficult to upgrade and reasonable. Therefore, the market increasingly competitive, especially in the relatively low technology, low-end value-added wire and cable products market, the lower price Competitive Sales situation is quite common. At present, some cable companies against losses. The industry believes that price competition resulting product is the root cause of blind investment and overcapacity, oversupply. On the one hand, due to the low investment threshold, resulting in the influx of a large number of enterprises, resulting in the industry of the enterprise "excessive."

It is understood that the size of wire and cable industry companies up to more than 5,000. Production capacity in these industries than the market demand, there has been a serious surplus. On the other hand, due to the "threshold" is low, is not only becoming less and less concentrated industries, but also a part of does not have the capacity, quality control and inspection and other necessary means of "workshop enterprise" were removed from in the trades to become a fake and shoddy, shoddy, shoddy work and produced shoddy products, the source of cable, and by virtue of depressed selling prices and other means to disturb the market competition order, aggravated disorderly competition within the industry.

Considerable cable companies believe that the higher copper prices, costs have risen sharply, a number of small businesses can not afford, and even some have been discontinued. But the market is still there, millions of cable actually occupy a certain percentage of orders. But the buy side users are unwilling to accept the price of copper increases due to the fact that increases the cost of Er Shi cable. Cable companies are very obstruct, some enterprises had signed a contract with users, this cable price is not adjusted to, but if another cable demand, but also I must do to. "Tsutsumiuchi loss Diwai fill", the next order and then to recover damages. This is the cable industry unique, "King terms", which reflects the cable industry under the difficult soaring copper prices.

In recent years, the world's copper ingot market prices soaring, the domestic cable industry has been suffering from the pain of skyrocketing raw materials, almost all the cable companies are facing a serious crisis. Some cable companies want to change the power grid operating units bidding to raise contract prices have been signed, so that cable companies can weather the storm.

No rules of competition in the cable industry, will inevitably have to face a major consolidation and merger era. If an enterprise's development speed and the region, the country's growth rate is almost the same, then it is not development, but not the rapid development of the tide in this round is likely to be eliminated and that cable companies should have sufficient sense of crisis!

Really a number of major projects in the country with the ability of cable companies also bid more than 50 enterprises and more small and scattered, resulting in wire and cable industry disorderly competition, the phenomenon of predatory pricing is very serious.

The face of higher raw material costs, wire and cable manufacturers to show the most is "helpless." Because they are electric power, telecommunications, transportation, or iron and steel industry, signed orders, lead times are generally located in more than one year, but wait until the day of delivery, the price of the contract costs are often beyond recovery even come. Once a contract is signed, the price can not be changed, hence the prices of raw materials cost pressures brought about only by the enterprises themselves.

Copper, aluminum and other major raw material prices, has now been seriously affected the survival of wire and cable industry, foreign cable companies is how to deal with raw material price increases it?

They have established a sound risk control system, with suppliers through the signing of the Treaty on long-term supply, hedging, long-term trade contracts, etc. to avoid the risk of price fluctuations in copper and aluminum; to take centralized purchasing department way, improve the company's bargaining position with suppliers to strengthen and improve the risk control system and mechanism of raw materials; some companies, such as Nexans company, superior telecom company plans to extend the industrial chain, in particular to the supply of copper area, weakening the copper price volatility risk; multinational companies set up control over interest rates and exchange rate fluctuation risk mechanism.

Multinational companies such as asset-liability ratio is much lower than the domestic companies are generally maintained at about 30%, relatively speaking, the company's assets more secure.
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