Raw material prices continue to soar and bearing prices will become helpless

Time:2021.08.30  Source:Roller Bearings Suppliers

Raw material prices continue to soar and bearing prices will become helpless

The continuous soaring of bearing steel prices in the past six months has caused great difficulties to the production and operation of bearing enterprises.

At the beginning of 2020, the operating income of major enterprises in the bearing industry dropped by 21%, a record low. In August, the revenue turned from negative to positive and began to grow steadily. Since the second half of the year, bearing raw materials have risen sharply due to multiple factors. The price increase of bearing steel by the end of the year is close to 30%. The net increase of bearing steel is 1,300 yuan per ton, while the increase of 2800 yuan per ton of bearing steel. By the end of January 2021, bearing steel has risen by 300 yuan per ton, an increase of 35.6%. Coupled with the continuous increase in the prices of various raw materials, it has also caused the increase of various related materials such as transportation and packaging. Bearing companies are struggling.

"Currently, the price of bearing industry chain products is in the process of transforming from transmission to balance. The first quarter of this year may be a critical time point. This year’s Spring Festival is a special situation. In order to prevent the spread of the epidemic, company employees responded to the call. Do not go home, do not return home, companies do not stop work, off-season is not weak, and the demand for raw materials shows no signs of weakening. If the price of bearing steel remains high at this time, or increases unabated, then the effect of price transmission will be It appears that rising tides will become a helpless choice. The increase in bearing prices is a phenomenon that we do not want to see, but it is also a reality that we have to face." Niu Hui, secretary general of the China Bearing Industry Association, said in an interview with China Industry News.Niu Hui reminded that because the laws of the market are irresistible, companies must be fully mentally prepared for the increase in the price of bearing products to ensure the stable operation and balanced development of the bearing industry chain.

Midstream companies are struggling

Bearing is a basic mechanical product, and the demand for the product is determined by the market size of the main engine, and the development of the industry is closely related to the main engine. Therefore, in the process of bearing matching, both the right to speak and the right to price are in a weak position.  WSBC 21319 E bearings online , pls click here :

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Some company related personnel said that for ordinary bearing companies, under normal circumstances, the profit margin is very limited. Affected by bearing size and structural complexity, the direct cost of bearing materials generally accounts for about 50%-70% of the total cost. Therefore, the direct cost increase of the bearing caused by the price increase factor is about 18%-24%, which does not include the increase of auxiliary materials such as lubrication, packaging, and transportation.   

In this case, most bearing companies are overwhelmed and are on the verge of loss. The order that the enterprise happily accepted has now become a hot potato. I'm sorry for customers if we don't produce; I'm sorry for ourselves if we produce. The reason why some companies can maintain their operations at the same sales price is because they are still digesting the stock of the previous period, which includes the stock of raw materials and the stock of products. After this buffer period has passed, the consequences will be predictable. In terms of the ability to withstand the price increase of raw materials, it is obvious that large enterprises are more capable than small and medium-sized enterprises. This is related to small enterprises' weak foundation, pursuit of short-term stability, and advocacy of zero inventory.  WSBC 22208 E bearings online , pls click here :

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Some corporate personnel said that the long investment cycle of the bearing industry and slow results are also a reality that must be faced. The transformation and upgrading of enterprises requires investment, including investment in technology, information, personnel, assets, and so on. Investment is a prerequisite for business to enter a virtuous circle, and profit is a necessary condition to support investment. Without profits, operations will be restricted and development will stagnate. Without the stamina for development, the matching of high-end equipment will be out of the question. One enterprise has a problem that affects one point, and if multiple enterprises are stranded, it will affect the safety of the industrial chain.

Together in the same boat is the first choice

Bearing raw materials, bearing products and bearing users are all important nodes in the upstream and downstream of the bearing industry chain. Everyone has me in you and you in me. It is impossible to be alone in any link.Niu Hui said that at such a special moment, there is no other choice but to help each other in the same boat. Solidarity and cooperation is a weapon for enterprises to overcome difficulties, which has been fully proven in the development of the industry in the past. This will be further proved in the process of resisting various challenges in the future. The outbreak of the epidemic has not stopped the bearing industry from moving forward. Although the increase in raw material prices has made enterprises worse, the unity and cooperation of the industrial chain will surely help the bearing industry resolve conflicts and overcome challenges.He also suggested that upstream and downstream enterprises in the bearing industry chain should strengthen coordination and communication, enhance understanding, optimize resources from the perspective of the industry chain, and resolve risks. Bearing companies must strengthen their confidence, rationally treat the increase in raw material prices, tap the potential through innovation, and reduce costs through tapping the potential. Reduce the impact of material price increases by reducing costs. Under special circumstances, we can obtain the understanding of customers and make necessary choices through flexible business models to alleviate the pressure of rising raw material prices. The upstream and downstream of the industrial chain are in the same boat to tide over the difficulties .

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