The first quarter is over. Magnetic component manufacturers have been plagued by the price increase of raw materials in the first quarter of this year, dispersing their efforts in market development. The high raw material prices have caused magnetic component manufacturers and their downstream manufacturers to make prices. Game.

At the beginning of the Year of the Ox, the price of industrial metals led the raw material market. The entire industrial manufacturing industry was anxious and panicked. It was difficult for anyone to be alone. Each link in the industrial chain was conducted one by one. Internal emergency meetings and business negotiations were all for the purpose of Industry linkage, jointly bear the difficulty of price increase.

　　 When the price of raw materials is rising!

　　 After the festival, with the steadily rising global oil prices, various chemical raw materials have jumped. According to the research media, domestic bulk commodities have continued to rise since June last year. As of the end of February, integrated circuits have soared by more than 100%, paper prices by 50%, zinc alloys by 48%, stainless steel by 45%, copper prices by 38%, aluminum prices by 37%, plastics by 35%, and iron prices by 30% , Glass rose 30%.

　　According to incomplete statistics on global plastics, the current price increase in the domestic chemical industry has become an overwhelming trend. The price of some products has increased by more than 10,000 yuan/ton year-on-year, and the price increase has reached more than 153%. DuPont, SK, Nanya Plastics, BASF, Songyuan Group, Changchun Chemical and other engineering plastics companies issued price adjustment announcements at the end of February, with varying price increases.

　　 Dongguan Nanjida Industrial Co., Ltd. specializes in the production of high/low frequency transformer cores (also known as "framework" in the industry), power supply housings, LED lamp housings and other products. These products are injection molded products, and the basic raw material is plastic. Li Xiang, deputy general manager of the company's marketing department, told reporters that the purchase price of raw materials for their products such as skeletons has increased by 20% in recent times.

　　 Magnetic cores are the supply chain of magnetic component manufacturers, and the raw material purchase prices of magnetic core manufacturers have also increased to varying degrees. Encore Magnetic Devices Co., Ltd. independently develops, produces and sells sendust, sendust, super sendust, and iron-nickel products. General Manager Wang Liping said that the total purchase price of these products has increased by 30% recently.

　　Compared with the above-mentioned raw materials, rising copper prices have hit the electronics manufacturing industry the most deadly. The data shows that since the copper price rose from a low of US$4,371/ton in March 2020 to a high of US$9,617/ton in February this year, copper prices have risen by more than 100%. Spot copper prices in February hit a new high in the past ten years.

　　 Copper futures are also rising all the way. As of 15:00 on April 2, the main Shanghai copper futures contract was reported at 67,090 yuan/ton, which is down from the previous high of 70,800 yuan/ton, but the overall trend is still high. Even if it is scrap copper, the price has risen. Just after the Spring Festival, many scrap copper purchase station owners made overnight profits. The "worth" of scrap copper that was forced to hoard due to epidemic prevention and control a year ago has skyrocketed, and even "a piece of copper is hard to find" situation.

 In the domestic market, due to the full recovery of China's economic production, commerce and tourism have also been fully opened up, which has promoted the improvement of the economy and stimulated the demand for copper and other industrial metals. Starting from the third quarter, the growth rate of investment in power grids and power sources will continue to increase in order to achieve the goal of the full-year investment plan.

In foreign markets, the rate of new crown pneumonia vaccination in developed countries has gradually increased, and investment in the global communications field has increased the demand for copper materials in 2021. Major mining countries are still facing the impact of the epidemic, and the operating rate of mining facilities has always been difficult to return to normal. The gap could not be filled. As a result, economists have analyzed that the LME copper price for the entire year of 2021 can at least increase by more than 10%.

The price increase has been transmitted to the consumer terminal

In this surge of raw material prices, the electronics manufacturing industry bears the brunt of the impact of rising raw materials. Whether it is upstream electronic transformers or downstream consumer electronics, home appliances, industrial equipment and other terminal products, metal materials are the most important One of the raw materials. my country is also a major global manufacturing country and is in a price-sensitive area in the global industrial chain.

Take the Apple mobile phone as an example. As a global product, it involves more than 100 global suppliers in the production and assembly process, and my country is a link in its manufacturing chain.

According to the US market research agency, for every iPhone sold, Apple monopolizes nearly 60% of the profits, while Chinese companies only get about 1/20 of the profits.

As we all know, Apple’s exclusive profits are mainly the profits generated by R&D, which are almost unaffected by the price increase of raw materials. However, my country is in a meager link, and it is difficult to negotiate and ask for prices from the terminal. It is precisely because of these disadvantages that, under the wave of rising prices of raw materials, companies in magnetic components such as inductors and electronic transformers appear to be quite embarrassed and even injured. There are many more complete supply chains for technology companies like Apple in China.

Of course, many domestic terminal manufacturers can't resist the pressure of increasing prices from upstream, and they have also increased their prices one after another. Home appliances are one of the industries most affected by the price increase of raw materials. According to data, the cost of raw materials in the home appliance manufacturing industry, especially large appliances, can account for more than 70% of the cost.

According to AVC monitoring data, offline, in February this year, the average price of washing machines increased by 6.4% year-on-year. Among them, the average prices of pulsator, drum single washing, and washing-drying integrated machines increased by 5.0% and 6.9% respectively. , 12.3%; In February, the online retail volume of air conditioners was 551,000 sets, a year-on-year decrease of 10.8%. The retail sales were 1.61 billion yuan, an increase of 11.0% year-on-year. The industry average price was 2925 yuan, a year-on-year increase of 24.5%.

On February 28, Midea’s Refrigerator Division issued the “Notice of Price Increase of Midea Refrigerators”, announcing that starting from March 1, the price system for Midea’s refrigerator products will be increased by 10%-15%.

Prior to this, brands such as TCL, Haier, Hisense, and Chigo also raised the prices of some products. It is reported that TCL announced a 5%-15% price increase for refrigerators, washing machines, freezers and other products.

In the impression of many consumers, home appliances are getting cheaper and cheaper, but now the prices are increasing! A salesperson in the market said that the raw materials of home appliances now account for about 70% of the cost, so prices can only be increased. However, the vast majority of consumers did not pay for such a substantial price increase. Mr. Chen, who was planning to renovate his new house this year, told reporters that he saw the overall price increase of materials, soft furnishings, and home appliances needed for the renovation of his new house.

Plastics, textile raw materials, copper, energy, electronic components, industrial base paper and other industrial raw materials have increased their prices wildly, completely disrupting the production plans of terminal brands, and some production lines were even forced to press the pause button.

Magnetic enterprises can hardly be alone

Magnetic components are one of many electronic components of various colors, involving magnetic cores, inductors, electronic transformers and other products. The raw materials of these products include soft ferrite magnetic materials, wire frames, wires, insulating tapes, and gears. Strong tapes, casings, copper foils, etc., copper foils have increased their prices as a whole in the first quarter of this year.

Since March last year, copper-based metal materials have experienced three price hikes. Most manufacturers have used self-cutting methods to benefit customers and bear the pressure of price increases on their own without letting the price increase pass through. With the third wave of price hikes, many magnetic component manufacturers have withstood the pressure of the previous two price hikes, and there is no more profit margin to bear the price pressure of raw materials. For magnetic component manufacturers with difficult capital chains and relatively small companies, this is the last straw that crushes the camel.

In view of the above situation, in the past few days, many magnetic component manufacturers have held frequent internal meetings, and at the same time, they frequently go back and forth between customers and upstream material suppliers to negotiate on product price increases, price increases, and delivery cycles.

Under high cost, the reporter learned from interviews that many magnetic component companies are currently raising prices to varying degrees to survive. Zhao Wanjun, general manager of Zhejiang Dongmu Keda Magnetoelectric Co., Ltd. said: "As far as I know, these large and small magnetic component companies have been negotiating with their customers for a long time to discuss a floating price mechanism. Now They have basically talked about it."

Respondents also said that this move is a last resort: "It's okay to earn less, but not to lose money." But they are also worried that excessive price increases will cause loss of orders and loss of customers.

Zhejiang Dongmu Keda Magnetoelectric Co., Ltd. is a soft magnetic material supplier for magnetic component manufacturers. Lu Qing, the company’s market development director, told reporters: “Our ordinary magnetic cores have not increased in price, but we have made adjustments to iron-nickel products. , We mainly increase the price of nickel-based materials. Since most of our products rarely increase prices, communication with customers is relatively smooth at present."

But in fact, the increase in the price of raw materials has not and has no effect on Dongmu Keda, and it is not that they do not want to increase prices along with the trend. Lu Qing said: "In fact, the current form of price increase has a great impact on us and the entire industry chain. Considering that customers are under great psychological pressure on costs, and in order to revitalize our transaction vitality, we will do our best. , Bear the pressure, make profit to the customers, and protect the customers on the premise of not losing money as much as possible."

Zhao Wanjun, general manager of Dongmu Keda, said: "As an upstream company, to be honest, we can only ensure a certain profit margin if we reduce the cost internally. In the tide of price increases, we can provide convenience to customers and benefit them. Convenience with others is also convenient for ourselves. I also hope that in the future cooperation process, if there is a wave of price cuts, customers can also consider us in turn and reduce the price." He said, "Our customers are some magnetic component companies. Although we basically did not increase the price, it does not mean that they will not increase. More of their costs come from copper wire. Copper is also a futures product. Due to the large market fluctuations, the price of copper will increase, and magnetic component manufacturers will inevitably need it. Raise the price, or you can't bear the cost pressure."

The magnetic core suppliers such as Tiantong and Ankeyuan interviewed by the reporter also stated that their magnetic core products have not increased their prices. In fact, they didn't want to go up, it would be helpless if they didn't move. Ankeyuan general manager Wang Liping said that since the magnetic core industry generally did not increase prices in a coordinated manner, they were unable to make price adjustments.

Gui Yuhong, general manager of Hangzhou Pujing Electronic Technology Co., Ltd., said: “After in-depth communication and negotiation with customers some time ago, most of our products have increased in price with the customer’s consent. ."

"In fact, customers are also facing great difficulties. It is very difficult for us to negotiate price increases." Gui Yuhong said that at present, the entire supply chain is under great pressure on price adjustments. "Some of our products have really reached the point where they must rise, and they must rise. If they don't rise, they will lose money. Even after the price rises, our previous prices may still be lower."

Ouyang Yunhua, general manager of Huizhou Sanshengyuan Electronics Co., Ltd., told reporters that they have negotiated with customers and that many products have basically increased prices by about 10%. "Our customers are also very cautious about price increases, but based on the current market The status quo, we must increase prices, this is a last resort.

The industry-wide price increase has been a fixed trend, but there are still some downstream manufacturers who are reluctant to increase prices or are not able to increase prices, which really gives suppliers a headache.

Tong Dongfang, general manager of Shenzhen Chuangshifuer Electronics Co., Ltd., said that because the price increase must be unified with customers, but some of their customers are still unwilling to increase. And the reason why customers are unwilling to increase is also due to their difficulties: their customers are reluctant to increase, and they cannot increase. "We have basically no profit now. If the customer's downstream manufacturers disagree, then for our upstream manufacturers, it is not just a problem of low profit, but no profit at all. It is difficult to do, and our peers are very It’s hard to deal with it, and the increase in raw materials is indeed too great."

Regarding the question of price increases, McGee Technology’s Southern China Sales Director Zhou Jianhua’s answer was rather conservative. He said that they will determine their subsequent product price trends based on the specific market conditions.

Profits are declining, and there is a single risk response method

As a physical manufacturing company, it is steadfast in production and research and development. When facing new demands for products in the market, they can solve them one by one by introducing equipment, talents, and capital; when new products are on the market, they can open up the market and develop customer sources. But for the impact of three price increases in a year, businesses such as magnetic components are really "difficult"!

"This year, the electronics industry is indeed more difficult, one is the price problem, and the other is the supply chain of the industry." Zhao Wanjun said.

Ouyang Yunhua believes: "For the increase in the price of raw materials, in addition to the simultaneous increase in the price of raw materials, our industry has not actually responded to many measures. It is not only the magnetic component companies that need to face, but other electronic manufacturing companies will also face this problem. "He said, "To be honest, there is no other better way. After all, we are a manufacturing industry and we are not speculative and hedge like futures products."

Therefore, for companies like this, at present, they can only pass on the impact of price increases to customers, and postpone it layer by layer. For some products that are ultimately oriented to the C-end, consumers can only pay for the price increase. "We are now also in discussions with some customers, and try to link with customers in quotations. When the price of raw materials has a new increase or decrease to a certain extent, we will also make corresponding price adjustments." Ouyang Yunhua said.

Sanshengyuan Electronics mainly produces magnetic components such as inductors and electronic transformers. It requires a large amount of manganese-zinc, nickel-zinc magnetic materials, as well as wire materials such as enameled copper wire and ultra-fine enameled copper wire, and such materials are still in use. The price is high and stays high. Ouyang Yunhua said: "The price of copper materials is still unstable. We don’t do long stocking when we stock up. Basically, it will last for a month. If there is a sudden drop in the future, we will naturally lose money. In fact, the entire chain It’s all the same, including our suppliers, they will also take the materials very cautiously."

Many interviewees said that in fact, there are still many raw materials that have increased prices, such as packaging materials, blister discs, and auxiliary materials or tools such as pliers. For the core raw materials of magnetic components, the cost of those auxiliary materials accounts for a relatively small proportion, and the impact is not significant.

Ouyang Yunhua: "In fact, we have delayed the price increase for a few months. Although the price increase, our profits have been lost a lot. In the past few months, we have been under the pressure of rising prices of raw materials. Our first quarter The profit margin will decline by at least 5%-10%, and the specific degree of decline will not be determined until the statistics of our first quarter corporate statements come out."

Gui Yuhong said that their profit pressure in the first quarter of this year was also relatively high. On the one hand, the number of employees in the first quarter did not meet expectations. Of course, this is also a common problem in the manufacturing industry; on the other hand, it is naturally related to the price increase of raw materials. "At present, we have no specific statistics, but based on these circumstances, our profit in the first quarter will definitely decline."

Tong Dongfang, general manager of Chuangshifuer estimates: According to the current situation, they estimate that profits will fall by about 20% in the first quarter of this year.

Under heavy pressure, look forward to a new look in the market

The price increase of raw materials will eventually be paid for by someone. If the terminal is a C-end product, it will eventually pay for the consumer; if it is a B-end product, the company will naturally have to pay more for the purchase.

Through interviews and telephone interviews with many magnetic component companies, the reporter learned that the industry has been relatively consistent in responding to the price increase of raw materials. Regardless of the size of the company, prices have been increased to varying degrees, and some manufacturers are facing cost pressures. It will also be eased.

But the price increase varies greatly, and the degree of relaxation is also different. Magnetic component companies vary in size, and there are few companies that are truly confident, capable and daring to make large-scale price increases. Although many small-scale magnetic component manufacturers have negotiated with their customers, they have determined Prices increase, but compared with the increase in raw materials, they have risen very little, and will eventually suffer in this zero-sum game.

"We have no shortage of orders, but the cost pressure is too great." This is the most frequently heard sentence by a reporter from "Magnetic Components and Power" magazine interviewing a number of magnetic component manufacturers. Tong Dongfang said: "Our main situation now is that there is no shortage of orders, but it is difficult to continue to use the original price in terms of prices."

Recently contacted with these magnetic component manufacturers, the anxiety caused by price increases is generally permeated. Fortunately, there are also some important positive signals being transmitted: some orders are abundant, even out of stock, and order schedules are extended!

Mike Technology South China sales director Zhou Jianhua said that for 5G related products such as 5G mobile phones and 5G base stations, their demand for some components is rising rapidly, which has broken the original balance between supply and demand.

According to a report from CCTV Finance, an inductor manufacturer in Shenzhen had more than 2,600 people staying at the production line during the Spring Festival due to a large increase in orders and a shortage of products, which was twice the number of last year's Spring Festival.

Wu Tao, deputy general manager of the bottom welding product line of Sunlord’s electronic winding business department, said, “The equipment is now in full production, and the entire workshop’s daily production capacity is 16 million. From March 2020, it has continued to the present. And during the Spring Festival, we have They are working overtime, and all orders are now scheduled to June 2021."

Obviously, however, companies with a steady stream of large orders are more influential or larger in the industry. They not only have more room for bargaining in the price increase of raw materials, but they also have brands in terms of attracting large customers and large orders. The advantages. However, some magnetic components are inferior to the echelon, with insufficient bargaining power, weak brand influence, and lack of qualifications to attract large orders from the market. The danger of inversion is still difficult to crack, and the subsequent development of the enterprise appears to be restrained.

Price hikes are coming fiercely. Due to different levels of strength, differentiated price hikes are still difficult to restore vitality to the entire magnetic component industry. Manufacturers in the industry, regardless of size, are still striving for product quality, service level, and supply speed in the healthiest and most ideal state. Starting from other aspects, differentiated price increases are actually tantamount to a price war in disguise. This is a relatively bad industry development phenomenon. I hope that the industry can return to the right track as soon as possible and overcome the difficulties together! Together, become the "old scalper" of the sustainable development of the industry. Be brave to be a pioneer in product development and market development, accumulate strength for the follow-up development of the company, and move forward with determination.