Relatively low steel prices, home appliance companies can wait to purchase

Steel prices fell from more than three months from April 14 to July 15 after a retaliatory rebound. In just 10 days, the average price of hot rolled coil rose by 250 yuan per ton. After the rise in steel prices, the market turnover is not optimistic. The prices of various steel products are now stable or falling. Has steel prices picked up? During this period, how should household appliances be operated?

Home appliance steel prices are at the bottom

My steel price index on July 23 shows: this week's composite index was 149.3 points, up by 4.4% on a week-on-week basis; the HRC index was 149.2, up by 4.8% on a week-on-week basis; the cold plate index was 120.8, a week-on-week increase of 1.7%; The zinc index was 98.7, which was a 2.0% increase on a week-to-week basis. The steel prices that have been falling for 12 consecutive weeks have shown signs of recovery.
On July 20, many domestic steel companies suddenly raised their steel prices. On July 21, more than 20 steel companies continued to increase prices. A few days after the continuous rise in steel prices, the market volume rapidly decreased.
We believe that the recent rise in steel prices is mainly due to a technical rebound after oversold, and it is unlikely that steel prices will continue to rise. The price of steel is already in the bottom region. It is difficult to determine if it will be low in innovation, and there will be no demand as a support for continued rise. Therefore, the price of steel in the near future should be dominated by shocks at the bottom.
According to past experience, the largest volume of household appliances is cold-rolled steel sheet and hot-rolled sheet. Although the consumption of galvanized sheet, color-coated sheet, and stainless steel sheet is not large, it also belongs to conventional materials for household appliances.
The most declining steel prices in this round were WW600 silicon steel, which fell from 9,240 yuan per ton on April 21 to 7,480 yuan per ton on July 17, a decline of 19.0%; stainless steel prices fell 18.2% in the current round; Cold-rolled prices fell 16.9%; hot-rolled prices fell 16.0%; galvanized and color-coated prices fell relatively small, at 10.7% and 8.7% respectively.

Corporate inventory is also low

The refrigerator, the cabinet of the washing machine, the outdoor unit of the air conditioner, and the main material of the air conditioner and the refrigerator compressor casing are steel materials. Specific to the product, the cost of air-conditioning steel accounted for more than 40% of the cost of one air-conditioning material, steel for washing machines accounted for 30% of material costs, and refrigerators accounted for 25% of material costs.
According to statistics, a two-cylinder washing machine consumes 6 kg of cold-rolled plates, a drum washing machine consumes 10 kg of cold-rolled plates, a washing machine consumes between 4.2 and 7.8 kg of silicon steel, and cold-rolled stainless steel The amount of washing machines is also increasing. Generally, the consumption of cold-rolled stainless steel for a drum washing machine is about 10 kilograms.
It is estimated that steel prices will drop by 10%, which will drive down the cost of air conditioners, refrigerators and washing machines by 3.87%, 3.05% and 0.80%, respectively. Relatively speaking, in the total cost structure of washing machines, the proportion of steel products is relatively large, so the correlation with steel prices is higher, and the changes in the cost of air-conditioners and refrigerators are less correlated with the changes in steel prices.
There are two main reasons for the drop in the current round of steel prices: First, China's real estate market controls and affects the steel market, and steel demand is reduced. Second, the macro-environment of the international market has changed. In particular, the international financial crisis has caused the international steel prices to decline.
However, the international market tends to improve in the near future, and stock markets have shown signs of rising prices in various countries. The prices of commodities have begun to show signs of rising.
Buy or not buy or sell, so does home appliance companies. In the process of declining steel prices, home appliance manufacturers continue to reduce inventory and try to achieve the lowest inventory. After several months of adjustment, the steel inventory of home appliance companies has dropped to a very low level.

Can wait to purchase

Benefited from the national home appliances and home appliances trade-in policy, from January to May 2010, the growth rate of domestic air-conditioning sales reached 51.84%, domestic sales of refrigerators reached 52.3%, domestic sales growth rate of washing machines reached 19.15%, and the overall situation exceeded the expected growth. . Export performance of home appliances was also very good. From January to May, exports of air conditioners increased by 40.00%, and exports of refrigerators and washing machines increased by 23.6% and 42.66%, respectively.
With the gradual deepening of national real estate regulation, real estate sales may continue to decline in the second half of the year. This will have a certain impact on sales of large appliances. If the sales area of ​​new homes continues to decline, sales growth of air conditioners, refrigerators, and washing machines will decrease. This will also have a negative impact on home appliance companies.
Fortunately, the national policy continues to tilt toward the home appliance industry. On June 3 of this year, the relevant national authorities issued a program to promote the trade-in of home appliances. The plan was clearly set on June 1, 2010, and 19 provinces and cities were added on the basis of the nine pilot cities. The deadline is tentatively scheduled for December 31, 2011. The amount of subsidies and product categories remain unchanged. The subsidy rate is 10% of the sales price of new home appliances and the maximum subsidy limit is set. Product categories are TVs, refrigerators (including freezers), washing machines, air conditioners, and computers.
In addition, the implementation of home appliances to the countryside and the energy-saving products Huimin project continue to promote sales of home appliances.
We expect the large steel refrigerator and washing machine companies will find more consumer demand in the new round of subsidy policies. The replacement of home appliances from old ones to nine provinces and cities has expanded to more provinces and cities. It is expected that the effect of policies will be significantly enhanced.
Since May, there have been signs of losses at steel mills and signs that steel prices are at the bottom are already evident. Even if steel prices fall further, the room for decline is very limited.
From the perspective of policy and demand, the demand for home appliances will still increase in the second half of the year, while the price of steel will lose space for the downside. Therefore, we suggest that home appliance companies can increase steel stocks according to the production plan during this period.