Jul 13, 2022
The price of copper has dropped by more than 30%! Is the home appliance industry opportunity for improvement under the "three-year cold winter theory"?
In this context, the mid-stream and downstream manufacturing industries may be expected to welcome the opportunity of expected improvement in profit. The home appliance industry has also attracted the attention of the market, but how much impact does the fall in commodity prices have on the industry, and is the home appliance industry expected to usher in an inflection point? Copper prices have fallen sharply, and the home appliance industry has come to an inflection point? In February this year, the international situation was turbulent and unstable. The sanctions imposed by Western countries on Russia led to a sharp rise in the prices of oil, copper, nickel and other materials in the international market. The bulk raw materials used in the production of home appliances are steel, aluminum, copper, plastics, etc., and these raw materials account for 5-60% of the cost of refrigerator, air-conditioner and washing machine. In this regard, home appliance companies have to increase prices in order to maintain product profits. But in the face of the already low market demand, the price increase is undoubtedly aggravating. But recently, the prices of upstream bulk materials that have caused many home appliance companies a "headache" are falling. As the "leading big brother", the price of copper continued its downward trend. On July 6, the London LME copper price once dropped below $7,300 per ton, hitting a new low in a year. Compared with the high point of the year, the decline amounted to 32.77%. In the second quarter, the average price of aluminum fell by 7.1% month-on-month, and the cold-rolled sheet fell by 2.18% month-on-month. According to industry experts, the drop in the prices of the above-mentioned bulk raw materials will reduce the production costs of home appliance companies. Copper prices are falling the fastest, and companies in the air-conditioning industry chain that use more copper materials are expected to benefit first. In the context of the continuous increase in the average price, white goods are benefit the most. Today, the fall in the price of bulk materials is undoubtedly beneficial to the cost reduction of home appliance companies, but it may not be the case that the turning point of the home appliance industry has come. In fact, in May of this year, Midea Group, one of the three major home appliance giants in China, revealed the content of a conference call on the Internet. At the meeting, executives explained and interpreted the company's strategic plan for 2022. At the meeting, Fang Hongbo, chairman of Midea Group, said that the company's goal in 2022 is to achieve reasonable income and return to profitability, with the focus on improving profitability. The specific goal is to return to 2019 profitability levels. It is worth mentioning that Fang Hongbo also said, "The industry will face greater difficulties in the next three years, which is an unprecedented cold winter." The word "cold winter" may be a little exaggerated, bu...
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