Raw material prices are upside-down copper processing enterprises, homogenization competition is intensified

The main reason for copper processing enterprises to fall into the "production loss, no production and loss" dilemma is the inversion of copper prices. A person in charge of a copper processing company told the reporter of "Daily Economic News" that since 2014, market demand has been light, inventory has been backlogged, and prices have been inverted.

Copper price continued for 4 consecutive years

The person in charge listed the market of the copper market in April last year. At that time, the domestic price of scrap copper was about 43,000 yuan/ton, while the international price was 6,600 dollars/ton, equivalent to about RMB 40,000/ton, plus the tariff was about 4500. yuan / tonne. "In the absence of freight, the cost of scrap copper entering the country has exceeded the domestic scrap copper price, and the upside down is obvious. The scrap copper shipped by traders to China is at a loss, so domestic scrap copper imports are weak." "Price is the industry." The weather vane, the best period of the copper market from 2011 to 2012, the domestic scrap copper price reached 64,000 yuan / ton, but then has been falling." The person in charge said that in 2014, scrap copper prices all the way down, the lowest 40,000 yuan / ton, the price continues to decline, indicating that the entire industry is more difficult.

The main cost of copper processing is “copper price + processing fee”. It is reasonable to say that the impact of copper price will not be too great, but a copper processing listed company’s board secretary told reporters that the enameled wire is used as an example. Both can be sold at the price of copper, and the price of copper is falling. Naturally, this layer of profit is reduced.

In addition, after the copper processing enterprises purchase, as the copper price continues to decline, the cost of processed copper is higher than the market spot price, which also causes the company to lose money. High pressure oil pump slide

The company faces a shuffle

Ma Zhihui, director of the Economic Research Institute of Jiangxi Academy of Social Sciences, believes that the current downward pressure on the economy is still relatively large. It is expected that the copper processing industry will continue to maintain a downward trend this year, industry competition will intensify, banks' willingness to lend will decline, and polarization will become increasingly serious.

As for copper dismantling, Ma Zhihui said that the increase in the cost of scrap copper imports due to the weak US economy and the low price of domestic refined copper, the profitability of copper dismantling enterprises is still not optimistic, and the pressure on enterprises is huge.

In an interview with the reporter of "Daily Economic News", Zhuo Chuang analyst Sun Kewen believes that the sharp shrinkage of profit margins has led many copper processing enterprises to choose to flee the industry. When looking for some high value-added industries, they will often fall into the choice. Sexual errors, coupled with the pressure of the capital chain, ultimately made these copper companies even worse.

The low efficiency of the copper processing industry is also closely related to the increase in processing costs. According to a person in charge of a copper enterprise in Yingtan Industrial Park, the overall and continuous rise in raw materials, energy, labor and environmental costs has caused most copper processing enterprises to linger on the edge of profit and loss, and the loss is expanding.

At the same time, the investment in the copper processing industry has not been effectively controlled, and the investment project product plans are similar, which has intensified the homogenization competition of copper processed materials in the domestic market. Moreover, copper processing fees continue to fall, processing companies meager profit or even loss, causing great difficulties for the sustainable development of the industry.

"Homogeneous competition will inevitably eliminate a batch of backward production capacity. Copper processing enterprises are faced with a process of reshuffle. This is an inevitable law of economic development." Zhuo Chuang analyst Sun Kewen said that in the future, international copper prices will remain In the weak and volatile pattern, the fundamentals should change, at least until 2016.