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Copper|steel aluminum plastic prices across the board crazy! Central air conditioning unit you up or not?

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2023-04-20

      Starting from the second half of 2020, the soaring price of raw material copper is destined to be one of the major hot spots in the industry. As of the end of December 2020, the price of 1# copper reached 58,000 yuan per ton, and the development momentum went straight to 60,000 yuan per ton. On January 8, 2021, the price of 1# copper finally broke through the 60,000 yuan per ton mark, reaching 60,420 yuan/ton, an increase of 990 yuan/ton from the previous day. In addition to copper, the prices of steel, iron, aluminum, and plastics have also maintained a high growth trend, which has once again brought enormous pressure on the production costs of the entire manufacturing industry.

 
  "The price increase of home appliance companies is a last resort." Jiang Feng, executive director of the China Household Electrical Appliances Association, pointed out that for a period of time, the costs of the home appliance industry, including manpower and materials, have been rising. The cost of raw materials for major home appliances accounts for more than 70% of the cost, and the sharp rise in the prices of various raw materials such as steel, copper, and MDI has directly put pressure on enterprises.

     Rising costs and market downturn are intertwined, which makes home appliance companies feel "worse". Since 2019, the price war in the home appliance industry has become increasingly fierce. The sudden outbreak of COVID-19 in 2020 brought the home appliance market to a freezing point. According to data from the Ministry of Industry and Information Technology, from January to November 2020, the operating income of the national household appliance industry was 1,303.12 billion yuan, a year-on-year decrease of 2.9%; the total profit was 103.53 billion yuan, a year-on-year decrease of 4.3%.

       According to relevant information, before the price increase notice was issued, major compressor companies had integrated internal resources in order to digest cost pressures, but measures to reduce costs and increase efficiency, including improving production efficiency and supply chain management, were still unable to alleviate The cost burden brought by constant raw material prices. More importantly, judging from the existing trend of various raw material prices, they will still be on the rise in the short term. The main reasons include: on the one hand, due to the impact of the international epidemic, overseas mining companies are underutilized, and the international logistics is not completely smooth, and the supply of raw materials is limited; on the other hand, the rapid progress of various infrastructure projects has made downstream demand very full. Especially after the epidemic drove the transfer of overseas manufacturing orders to China, the domestic demand for various bulk raw materials continued to be strong, and the contradiction between supply and demand stimulated the continuous rise of raw material prices.

Raw materials rose

     The price increase of various raw materials in 2020, in addition to the original supply and demand relationship in the market, also helps environmental protection. Parts companies for core components such as compressors, motors, and heat exchangers have increased their prices. Even refrigerants that were previously out of the limelight are starting to rise in price.

     Under the trend of rising prices of upstream raw materials, the profits of the upstream and downstream of the central air-conditioning industry will also be affected. First of all, the production cost of central air-conditioning equipment manufacturers will increase; secondly, if the price of raw materials continues to rise, it will also cause certain pressure on the company's procurement costs and capital turnover.

Mounting material rises
 
   Copper is the primary material used in central air conditioning installations. But the upsurge in copper prices has not stopped: data shows that from April to December 2020, copper prices rose by 45%. In January 2021, copper prices skyrocketed again, and on January 8, copper prices exceeded 60,000!
 

    It has never been a secret that the price of non-ferrous metals has skyrocketed this year, and there is even a situation of one price per day in the market. However, copper is used in large quantities in HVAC equipment, and its cost increase is self-evident.

Rising cost of installation process
 
    As the country advocates environmental protection and energy-saving policies, central air-conditioning equipment is constantly being upgraded. At the same time, higher requirements are put forward for the installation process of air conditioners.
 

    Stylish, beautiful and high-quality air-conditioning installation technology is the prerequisite for energy-saving, power-saving and long-term air-conditioning equipment. It also meets the needs of consumers for quality and comfortable life. The industry needs innovative installation technology, and innovative installation technology needs high-quality and leading products and technologies to realize. Therefore, the second reason for the price increase is the increase in process costs.

Labor costs rise

   As the country and the industry have increasingly standardized the installation standards of central air conditioners, the already scarce air conditioner installers have become more difficult. However, only by cultivating standardized installation technicians can the installation be standardized and standardized, and the safety of people in high-risk industries can be ensured. Therefore, the labor cost of air-conditioning installation will also rise.

   In addition, encountering the peak season for installation, the number of air-conditioning installations soared. The installation workers have a heavy workload, and the labor cost will also rise accordingly.

   It is worth mentioning that, previously affected by the new crown epidemic and the economic downturn, the price competition in the central air-conditioning industry was particularly fierce in the first half of 2020, and many companies rushed to seize the number of projects and market share at low prices. However, any industry is "easy to cut prices and difficult to raise prices." It is difficult for manufacturers and dealers affected by the low price storm to restore the original price, and they can only intensify the low price. The soaring price of upstream raw materials in the second half of the year seems to be an opportunity for air-conditioning manufacturers to increase prices. With this opportunity, the prices of air-conditioning products will return to normal order and continue to promote the orderly and sustainable development of the industry.

    In short, judging from the current development trend of raw material prices, the upward trend of product prices in the first half of 2021 is inevitable. However, judging from the current price adjustment range, although upstream and downstream enterprises in the HVAC industry have raised prices, compared with the increase in costs, the price increase range is relatively small. In the long run, as the price of raw materials is getting higher and higher, the pressure of energy conservation and environmental protection is getting bigger and bigger, labor costs are getting more expensive, transportation costs are getting higher and higher, and corporate profits are getting less and less. The survival space of small brands with advantages will become more and more difficult. Through this "price increase" reshuffle, another wave of enterprises and construction companies with poor anti-risk capabilities will fall. Therefore, there is a long way to go, and HVAC companies need to continue to strengthen their "internal strength" to improve their own competitiveness and create differentiated products as a shield, in order to survive under the waves of the HVAC industry again and again, and occupy the highest position Location.

 
In 2021, HVAC engineering friends, facing the price increase of various raw materials across the board, do you do engineering?