VIGA faucet tell you that Indonesian nickel prices skyrocket
Indonesian officials have finally confirmed that they will impose a ban on nickel ore exports on January 1, 2020, two years earlier than previously announced. The analysis indicates that if the ban is implemented in advance, Indonesia ’s current nickel iron production capacity will completely fail to digest Indonesia ’s nickel ore output, which is expected to cause a serious shortage of global nickel resources by 2022. A narrow gap has already occurred in the global nickel market Under the market, nickel prices have risen sharply.
As early as July of this year, rumors of a ban on Indonesian mines have been raging, and nickel prices have risen sharply. Among them, the main contract of Shanghai nickel increased by 11.09% and 16.13% in July and August respectively, and the increase of LME nickel in July and August was 14.70% and 23.57%.
According to the Shanghai Futures Exchange, China is the world ’s largest nickel consumer, with consumption of 1.14 million tons in 2017, accounting for approximately 53.4% of global consumption. As China’s nickel resources are relatively scarce and its external dependence on raw materials is very high, a large amount of nickel ore needs to be imported.
According to the General Administration of Customs data, the total imports of nickel ore and concentrates in China in 2018 were 46.923 million tons, of which 15.017 million tons were imported from Indonesia and 30.082 million tons were imported from the Philippines, accounting for 31.96% and 63.86% respectively. If Indonesia implements a ban on mining, China will be severely affected, and production companies will face further pressure on rising costs.
Stainless steel faucets are most affected
The kitchen and bathroom industry has a large demand for metallic nickel, and the largest amount is stainless steel faucets. National standard GB / T 35763-2017 “Stainless steel faucet” implemented in July 2018. It is understood that stainless steel faucets mainly use 304 stainless steel as the main raw material. 304 stainless steel has a nickel content of 8% -11%, and the price of nickel will rise, and the price of stainless steel will increase simultaneously, which will increase the price of related finished products.
At the same time, because nickel has good corrosion resistance and ductility, it is often used in electroplated surfaces of bathroom hardware to improve wear resistance and corrosion resistance. Some high-end products can have nickel layers as thick as tens of microns. Therefore, some sanitary ware companies that mainly take faucets and showers as their main products, often mention nickel in the column of pollutant emissions in their annual reports. For example, a recently listed sanitary ware company has seen an increase in total nickel emissions in recent years. The total nickel emissions in 2017 were 0.0231 tons, and in 2018 they reached 0.0382 tons.
In addition, in recent years, more and more companies have started to produce stainless steel bathroom cabinets, and stainless steel is also used as accessories in traditional bathroom cabinets. The rise in nickel prices is expected to bring certain cost pressure on these enterprises.
Four ways to effectively reduce production costs
With rising raw material prices and increasing labor costs, sanitary enterprises need to take a number of measures to reduce production costs. In addition to adjusting product prices, signing long-term contracts, establishing linkage mechanisms, and improving the production system, all are often implemented by enterprises.
1. Adjust product prices
Since the second half of 2018, many sanitary ware companies have adjusted the price of their products, mainly based on price increases. It is understood that the price increase is an enterprise must not do so, if the internal adjustment still does not achieve the expected results, it will take price increases.
2.Signing long-term cooperation agreements with raw material suppliers
Based on the different characteristics of raw materials in different regions, in order to ensure the quality of sanitary products and the supply of raw materials, sanitary manufacturers usually sign long-term cooperation agreements with raw material suppliers and reserve a certain amount of raw materials to ensure production and supply. The influence of the industry on the production and operation of the enterprise is minimized.
3. Establish a linkage mechanism for raw material prices
In order to avoid the risk of raw material price fluctuations, some sanitary ware companies and major customers have established a linkage mechanism between product prices and raw material prices to enable customers and the company to share the risks of raw material price fluctuations.
Fourth, improve the production system and increase production efficiency
In accounting, production costs usually consist of three parts: direct materials, direct labor, and manufacturing costs. With the high price of raw materials and the gradual disappearance of the demographic dividend, reducing manufacturing costs has become a major decompression method for enterprises. For example, enterprises can promote product standardization and minimize the number of mold openings; introduce advanced production technology to improve production efficiency; pursue scientific and efficient product design, not only to capture customers, but also to save redundancy.