Raw materials skyrocketed, industrial metal prices soared, the first wave of post-holiday price hikes hit! Fasteners or will usher in a big rise!

Release time:

2021-02-25

Core tip: After the festival, the price of raw materials began to rise again!

Raw materials skyrocketed, industrial metal prices soared, the first wave of post-holiday price hikes hit! Fasteners or will usher in a big rise!

Core tip: After the festival, the price of raw materials began to rise again!

As soon as the Spring Festival holiday is over, many fastener manufacturers have entered the stage of opening and resuming work. Just when I thought that after the price hike years ago, the market would not fluctuate too much after the holiday, the price of raw materials began to rise again!

In the first week after the holiday, domestic steel prices continued to rise. Most steel varieties increased by more than 200 yuan/ton compared with before the holiday. In particular, the price of steel billet soared. The price of steel billet in Tangshan reached 4140 yuan/ton, which rose nearly 300 yuan in three consecutive days, setting a record high in recent years.

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Stainless steel prices have skyrocketed, and Len Nickel has continued to soar, breaking $20000, a 7-year record high! A new high since 2014.

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On February 22, the domestic steel market rose strongly, and the ex-factory price of square billet in Changli area rose 70 to 4250 yuan/ton. After the festival billet prices, black futures market continued to pull up, enhance the steel spot market bullish atmosphere. Considering that the large-scale resumption time of downstream projects will be after the Lantern Festival, the steel market volume is still recovering in the short term.

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A total of 22 steel mills nationwide have released price adjustment information, with a cumulative increase of 30-150 yuan/ton.

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Industry insiders said that the post-holiday project will usher in a wave of construction, traders to replenish inventory demand release, steel-making raw materials iron ore, coke prices remain strong and so on to drive a strong rebound in steel prices after the holiday. Short-term steel prices are expected to run at high levels, and we still need to be alert to the risk of adjustment due to insufficient demand follow-up after the spot is pulled up too quickly.

　　Non-ferrous metal prices soar in short supply

As the economy recovers from the epidemic, a global push for greener energy will unleash new demand, and industrial metals prices are rising to their highest levels in years, as global production capacity has not kept pace due to the epidemic.

Goldman Sachs, which has long been singing about commodity prices, especially metal prices, pointed out that metal prices will continue to rise, while JPMorgan Chase pointed out that energy prices will also set sail.

After the Spring Festival, under the stimulus of bullish sentiment, a variety of major industrial metal prices soared. Iron ore hit a nine-year high of more than $175 a tonne. Copper prices continue to soar, rising nearly 15 per cent so far this year and 7.3 per cent in the past week alone, surpassing the previous nine-year high, and Goldman Sachs has raised the price to more than $10000 in the future.

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Iron ore has become a hot commodity in the global economy, and iron ore company Haomai pays dividends. In the context of its best performance since 2011, Rio Tinto paid the highest dividend in its 148-year history, with a full-year dividend of US $9 billion billion. BHP Billiton and Glencore also announced that they will return a total of $6.7 billion in cash to shareholders.

The logic behind the rise in copper prices is simple: as the economy emerges from the epidemic and begins to invest more in infrastructure, which cannot be built without copper wires and cables, Citi estimates a copper shortfall of 500000 tons this year. The rebound in copper prices has also pushed up valuations of related stocks, with BHP Billiton, the world's largest miner, up more than 20 per cent this year.

Not only copper, from some precious metals to key components of household electronics, the new crown after the crisis began to appear in short supply, which led to a variety of non-ferrous metal prices rose.

On the one hand, non-ferrous metals benefited from the overall recovery of overseas markets, Biden launched an economic stimulus plan, and the United States entered the real estate start cycle; on the other hand, global liquidity was flooded, and there was a consensus on this year's hyperinflation, which was good for the rise of non-ferrous metals; finally, non-ferrous metals also benefited from the strong demand of the new energy industry chain, which played a continuous role in driving the demand for non-ferrous metals. Therefore, under the joint promotion of the three factors, non-ferrous metals into the industry boom cycle.

　　Uncertainty over global refined copper supply and demand

Although there may be a surplus in global refined copper supply in 2021, the surplus is only 70000 tons, accounting for only 0.3 per cent of total global demand. As the supply of refined copper will be affected by the interruption of mine production and the slower-than-expected progress of smelters, there is uncertainty about the supply of refined copper, and we believe that the global supply and demand of refined copper will be tightly balanced in 2021, which will inevitably lead to a sustained rise in copper prices.

copper futures price

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　Market warming drives up prices

With the improvement of the epidemic situation at home and abroad, various industries began to return to temperature, especially the industrial market, metal materials in the industry consumption is huge, stimulating the rise of metal prices. For example, the global automotive industry has steadily returned to temperature, and a large number of parts suppliers in the automotive industry have increased their purchases of metal materials. Demand has driven growth and is also a stimulus to the rise in the price of metal raw materials.

At the same time, the new energy layout will greatly stimulate the demand for metal. Governments and businesses around the world have announced net-zero emissions targets, Europe is rolling out a package of environmental initiatives as part of its growth plan, and U.S. President Joe Biden has pledged $400 billion billion over the next 10 years for clean energy research and development. This will expand the demand for metals and drive unprecedented demand.

The continued rise in metal prices will stimulate large capacity inputs, so will metals have a long-term price rise, as some investment banks have suggested?

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Karin Birch, global economist at the Economist Intelligence Unit, said that this does not necessarily mean that metals will have a multi-year super growth cycle. She argues that, with the exception of a few areas, the conditions for a super-cycle do not exist. The current surge in prices only constitutes a wave of rebound. Due to the economic rebound and the optimism of quantitative easing, the market is currently flooded with a large amount of short-term crazy profit-seeking capital. The recent price changes are likely to be driven by this round of funds.

　　Fastener Industry Costs Rise

Judging from the market situation in recent years, after the Spring Festival, fastener prices have shown a pattern of steady rise, and the driving force behind it is basically the increase in the prices of upstream raw materials. This year's post-holiday fastener price rise is also a high probability event, the specific increase depends on the rise in raw material prices.

As metal prices soar and raw material costs rise, fastener companies as a high-energy-consuming metal-based raw material industry, manufacturing costs will also rise sharply.

Sister Jin saw in the circle of friends that many fastener companies directly summarized the reasons for the price increase with several data in the notices sent to customers: copper rose 30%, iron rose 30%, plastic rose 35%, aluminum rose 37%, stainless steel rose 45%, zinc alloy rose 48%... Upstream raw materials are in short supply or prices are continuously rising. In order to continue to provide products and services, can only helpless price increases.

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It is worth mentioning that Jin Meizi expects that the production of environmentally friendly products will still occur frequently in 2021. Some small and micro fastener enterprises that rely on low prices to survive will face the risk of survival difficulties or even bankruptcy. However, the market demand for fasteners is large, but under the pressure of environmental protection, the production capacity is compressed and the cost of raw materials and energy is rising, so the price of fasteners will also rise sharply.

Fastener industry profits more and more thin, "up and not up" is the most test of the enterprise a problem. Rise, afraid of very not easy to find the loss of customers.

However, in the face of rising costs of raw materials, labor, processing fees and other aspects, price increases are also inevitable.

(Source: Reprinted from Golden Spider Fastener Net)