Jul 3 2010
Frbiz.com, one of China's leading B2B search platforms, analyzes how the drop in steel prices is affecting the home appliance market.
Although steel prices have been down for two weeks, Frbiz's industry reporters have found that changes in steel prices have no significant impact on the home appliance industry. At present, the vast need for steel in the home appliance market unifies demand despite price. Appliance manufacturers are adopting government subsidies and stimulus, which eases the impact of fluctuating steel prices on production costs.
At present, home appliances largely use cold-rolled steel, galvanized sheets, color coated steel and stainless steel, although it is not as commonly used. Frbiz analysis points to steel as the main components of refrigerators, washing machine boxes, air conditioner outdoor units and refrigerator compressor shells. Air conditioning units are approximately 10% steel.
By this measure, if steel prices fell 10% that would drive air conditioner, refrigerator, and washing machine production costs respectively down by 3.8%, 3.0% and 0.8% or so. Washing machine costs have a higher correlation to steel costs due to their steel consumption while air conditioners and refrigerators use smaller amounts of steel.
According to analysis, current steel prices have fallen due to two major factors: first, the regulation of China's real estate market has reduced the demand for iron and steel; second, the international market's macro environment has changed, especially in Europe, where the debt crisis has led to the dropping of international steel prices.
In response to concern about the trend in steel prices, the use of alternative materials has become a household appliance industry trend. In addition, the demand for high strength thin sheets has gradually increased and timber consumption has also risen.
Source: http://www.frbiz.com/