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Since December last year, the price increase of domestic cemented carbide materials has reached 40% to 60%, and the growth rate of foreign materials has reached 20%-30%. In just half a year, what prompted this unusual price increase? After the market survey we found the answer to this question. 1. National Macro-control In order to curb the indiscriminate mining and deformed exports of the domestic tungsten mining industry, on April 1, the Ministry of Land and Resources announced the Notice on the Release of the Total Control Index of Tungsten Ore and Rare Earth Mining in 2011. According to the notice, the total mining control index of tungsten concentrate (65% of tungsten trioxide) in 2011 was 87,000 tons. This year's plan indicators have increased from last year, but they are significantly less than last year's actual production. According to the industry, the indicators reflect the government's thinking about the continued protection and restriction of rare metals. 2, hoarding speculation According to industry sources, the possibility of smashing goods is also very large. At present, the profit-seeking private capital in the market is looking for opportunities to get rich, and a large number of goods are rushing to raise prices in the market. From "garlic you are very", "beans you play" to "Ginger you army", "Ping what", Traces of their hype can be seen everywhere. If so, the price should fall once in the second half of the year, and there will be an inflection point in August and September. 3. International environmental impact In the international environment, the Federal Reserve's quantitative easing policy has caused world inflation. The external appreciation of the renminbi has depreciated internally, prices have continued to rise, and purchasing power has been low. All walks of life have risen. At the same time, the state has introduced ten measures to cope with the financial crisis and two years of 4 trillion yuan to stimulate economic programs, driving the demand of the entire market. China's W resources are abundant, and W resources are exported in large quantities in addition to domestic use. About 75 to 80% of the W used in the world today comes from China, but China's W resources are only enough for 50 years. Therefore, since many years ago, the Ministry of Land and Resources has begun to implement total control management of tungsten mines in China. This is an effective protection and scientific and rational use of China's dominant mineral resources. It can also stabilize the supply and demand relationship in the global market and effectively enhance the voice of China's dominant minerals in the international market. The impact of price increases on different tool users If the price of cemented carbide materials is used as a central point, it is really a long chain to sort out the clues from tungsten mine to the final tool user. The tungsten mine is one end of the chain and the cutter user is the other end. So, are the tool users standing at the end points already aware of the changes in the price of cemented carbide materials? Have you already felt the impact of material price increases on yourself? Mr. Tu is the deputy general manager of an auto parts company. The company uses a total of more than 200,000 tools per month, which is a fixed monthly purchase. Mr. Tu said that in the past, the company chose tool brands mainly based on the products of Shanghai Tool Factory and Harbin Tool Factory. In rare cases, other brands with lower quality will be selected as needed, so it has accumulated a certain brand loyalty. Tool manufacturers have already revealed to them that the knife has a price increase of 10% to 15%, which is considered to be a vaccination. So far, the manufacturers have sold them to the previous backlog of products, which are still at the previous price. In order to manage old customers, tool manufacturers and distributors will focus on the main and secondary, that is, while consuming inventory to meet the needs of customers with high loyalty, and shrinking the market on the other, holding a wait-and-see attitude toward raw material prices. Their argument is: "The more you do, the more you pay for it!" Mr. Tu, who has not yet felt the pressure of price increases, said: "If the next price of the tool really needs to rise, there is no way to do it. After all, this is not something that someone can control. The use of it has to be used." At the same time calm, the words are quite helpless. Compared with Mr. Tu, Mr. Yu of a machinery factory feels more about “price increaseâ€. Although the number of knives used is not very large, the unfixed procurement frequency makes him particularly responsive to tool prices. He said that if the usage is large for a period of time, it will be purchased every five or six days. Since May, he feels that the price of the tool often changes. Of course, he refers to the change in price. "Especially, the price of cutters in Zhuzhou has risen particularly sharply," Mr. Yu said with some dissatisfaction. Despite the opinions on the price increase of the tool, Mr. Yu still emphasized that the price is only one aspect. After choosing the tool, it depends on the price/performance ratio. The good material is an important indicator for his purchase of the tool. . This basically represents a mainstream view among tool users. If the tool quality is good and the service life is guaranteed, even a higher price is acceptable. As part of the tool manufacturers and distributors are doing: ensuring product quality is the premise, the tool price rises and strives to do the service well, winning the customer's understanding and trust. On the side of the tool user, as Mr. Yu said: “If you don’t accept it, you have to accept it. This is the reason why the ship is rising. I can’t control the situation anyway.†Not only that, but some companies that use foreign tools, relatively, these tool users feel There is less impact on tool price increases. As analysts pointed out, foreign tool brands are higher in technology and their added value is much higher than domestic products, so the tools are not excessively affected by the price of raw materials. Some high-end tool users also value this advantage of foreign tools. The impact of rising raw material prices on tool companies 1. Enterprises that do not pay attention to product quality These companies are often small new businesses with low added value, no quality customers, no inventory, and no market competitiveness. When the wave of rising raw material prices hits, they will first feel the pressure of price increases. Coupled with the pressure of inflation and credit crisis, these small enterprises will often choose to use low-end smuggling materials instead. Fill it up. In order to achieve short-term benefits by reducing quality, it will definitely lead to the decline or extinction of enterprises. 2, wait and see enterprises These enterprises have a certain development, there are some quality customers, but the lack of long-term planning for enterprises, vicious competition. Most companies have a certain amount of inventory before the price increase. In the face of rising prices of raw materials, they choose to compress their profit margins, retain large customers, wait for the market to buffer, and then re-enter the market. For some small customers, they will choose to compress the market without taking orders, or shoddy. Observing enterprises can not withstand continuous price increases, their old customers currently accept the price increase of about 20%, due to the low added value of products, a company said, "If last year there is a 30% profit tool, this year with the same The amount of material done is also no money to earn." 3, the brand-oriented enterprises This company is optimistic about the price increase, price increases for them, is a development opportunity. Zhang Zhengliang, general manager of Changzhou Aitefas, said that the price increase is not very big for me, but I hope it will go up. A brand is an intangible asset and a common language in the international market. The brand is the soul of the product, the spokesperson of the product, and the key to determining the outcome in a commercial war without smoke. The sublimation of an enterprise must be achieved from product to brand. 4. Foreign well-known enterprises from foreign well-known enterprises are less affected by the impact, because their original products have higher added value and higher profit margins, and the price increase of raw materials has no significant impact on them. Their customers are all high-quality customers. According to Sandvik, the cost of cutting tools is only 3% of the total cost. There are three ways to reduce the processing cost: 1) the tool price is reduced by 30%, and the processing cost is reduced by 1%; 2) Tool life is increased by 50%, processing cost is reduced by 1%; 3) High-efficiency tools are used, the price is increased by 50%, the efficiency is increased by 20%, and the processing cost is reduced by 15%. The raw material supplier "cow", less than cash does not give goods to the current warehouse with or without inventory, the raw materials said: there is cash in stock, there is no cash without cash. What's more, today's money is shipped at today's price, and tomorrow's money is shipped at tomorrow's price. Such a variable price has led many tool companies to dare not buy at will, to maintain a wait-and-see state, or to choose a lower level of material. Although the sales volume of raw materials has decreased compared with the price increase (about 10 points), it is currently in the off-season, and the impact is not obvious. Some raw materials manufacturers said that tungsten ore is a rare resource, a piece of cake is so big, it will not be eaten, and it will not be sold anyway. Inevitable result: industry reshuffle promotes industrial structure upgrading At present, many small and medium-sized tool companies in China are in a state of “low-end melee and high-end failureâ€, especially in the Xixiashu area of ​​Changzhou, where vicious competition is particularly fierce. If the owner sells 50 pieces of knives, then the West House is likely to adjust the same tool price to 48 yuan, and then the owner will drop to 47 yuan. Such a price war can only end in the end by losing the profits of the tool manufacturers of both parties. If the profit is low, the manufacturer may want to replace it with other methods, for example, shoddy. This phenomenon is particularly evident in the process of rising raw material prices. It is understood that in the past six months, most of the raw material prices have increased by 40-60%. For small and medium-sized enterprises with low added value, even if the price increases by more than 20%, there is not much profit to be made according to the original materials. Moreover, the competition for homogeneity of small and medium-sized enterprises is fierce. For large customers, most companies do not dare to raise prices. They prefer to compress their own profit margins, and they are “competitive†with their peers, and they must never run large customers. However, the inventory of enterprises is limited, and the inventory of some non-standard materials is not complete. For the question “If you continue to raise pricesâ€, most companies say that they will gradually replace them with low-end materials, and companies must have their own profits. The price hike of raw materials has a great impact on SMEs. First of all, financing is difficult, there is no stronger strength to cope with the difficulties brought about by the price increase of materials; secondly, some enterprises are forced to choose the raw materials at the bottom level under pressure, so that lowering the quality to achieve short-term benefits will inevitably lead to the decline of the enterprise or Perish. Regarding this phenomenon, the relevant experts explained that this is the inevitable development. Every big rise or fall will promote the industry to reshuffle, so don't be nervous. Only by making products and improving product quality, high value-added products will not have much impact. The middle and low-end products will have a big impact on the amount of running, and even close down. Every time a small and medium-sized enterprise goes bankrupt, its production capacity will be close to that of a big company. After experiencing market changes, companies that have developed with their distinctive products have accumulated talents, technologies, products, brands, and management to make them more competitive, and their production capacity will gradually move closer to these enterprises. New-born enterprises without core competitiveness will gradually be eliminated by the market in the industry reshuffle. The development of an industry is from the germination stage to the explosive growth stage, and then through the industry reshuffle, screening out competitive enterprises, this is the law of development. This kind of price increase will promote the development of the industry and promote the adjustment and upgrading of the industrial structure.