Due to the rising prices of raw materials and accessories, and the increase in labor and transportation costs, many motor manufacturers have recently raised their motor prices, and the rate of increase is generally between 5% and 10%. This price increase covers more than 80% of the motor supporting supply in the whole industry, and the comprehensive price increase of the motor, box and rear axle is around 30 yuan.

1. The price increase at the end of the year is becoming the norm in the industry

Starting in September 2020, a group of mechanical and electrical companies such as Xuzhou Jusong, Xuzhou Nanpu, and Jiangsu Mengtian took the lead in issuing price adjustment letters, and then more news of electromechanical price increases came one after another. The consistent reason given by manufacturers is that the price of raw materials has increased, resulting in increased costs.

As a leading domestic motor manufacturer, Wolong Electric Drive has also issued a price adjustment notice. The notice shows that the price of general motors is adjusted by 5%-8%, the price of energy-efficient motors is adjusted by 8%-10%, and the price of explosion-proof motors is more than 10%. The other party stated that the price adjustment is a normal business behavior.

By mid-December, companies such as Leibo Electric, Dongyuan Degao, Shanxi Electric, and Belden Electric also issued price adjustment letters, and the price increase was even higher, reaching 10%.

Considering the situation in recent years, the price increase of motors at the end of the year has become the norm in the industry.

2. The price of raw materials such as silicon steel sheets has risen sharply

The rise in raw materials is the main reason for this round of motor price hikes. Since June this year, the price of raw materials for motors has risen sharply, the price of enameled wire has risen by about 10,000 yuan per ton, the price of silicon steel sheet has risen by about 1,500 yuan, and the price of castings and steel has risen by about 1,000 yuan.

On December 21, according to statistics from China Steel Network, 41 steel mills have recently adjusted their prices, and all steel prices have risen, with a maximum increase of 500 yuan/ton. A domestic silicon steel dealer revealed that at the end of 2019, the price of non-oriented silicon steel was only about 4,000 yuan per ton. By the end of 2020, it had soared to more than 8,000 yuan, and the price almost doubled.

Affected by the epidemic and international trade relations this year, the output of copper and silicon steel in the market has been tight. In terms of iron and aluminum, there is also a situation of tight supply.

Industry insiders have analyzed that the northern region has entered the heating season, and the pressure on environmental protection has increased. The operating rate of enterprises in the steel and other industries has remained at 65% to 70%. In October, large domestic steel and other enterprises and manufacturers basically stopped accepting large orders. In the context of the relatively high operating rate of the downstream motor industry and the urgent need to replenish steel stocks, the prices of steel, copper and aluminum are expected to continue to rise.

3. Cost pressure increases, will it rise or not?

Since September, some motor companies have begun to adjust prices, and many companies have followed suit. However, some companies have chosen to digest by themselves out of consideration of market stability and have not raised their ex-factory prices. Now, as some core supporting prices rise again, companies that did not raise their ex-factory prices at that time are facing more pressure from rising costs.

From the source point of view, the market price of silicon steel in January 2021 is still at a high level. The base prices of non-oriented silicon steel of Baosteel, Taiyuan Iron and Steel, Maanshan Iron and Steel, Benxi Iron and Steel and other steel mills have all been raised by 800 yuan/ton, Shougang by 900 yuan/ton, Anshan Iron and Steel Co., Ltd. Raised by 1400 yuan / ton, the spot resources of first-tier steel mills are not much. The price of WISCO's 800 grade is as high as 8,600 yuan/ton, and the price of Baosteel's 470 grade is as high as 9,000 yuan/ton. The futures price of non-oriented silicon steel in February continued the sharp rise in January, and the futures of steel mills in February were basically fully booked. The February futures price announced by Baosteel Group rose by about 1,500 yuan/ton on the basis of January.

In the face of rising raw material prices, the next test faced by motor manufacturers may be even more severe than now.

4. To reduce the impact, what should electromechanical manufacturers do?

For motor companies, raw material prices and cost increases are inevitable. How to reduce the impact of raw material prices on companies? Production costs can be reduced in other ways. There are three main aspects, one is to do in-depth docking with customers, produce motor products according to customer requirements, and avoid waste of materials in all aspects; the second is to upgrade the production management system, strictly control the production process, and avoid unnecessary waste; the third is to do Good resource integration and establishment of a stable supply chain system.

In addition, by improving technical strength and innovating production processes; upgrading product lines, increasing production and sales, reducing the loss of raw materials; reducing logistics and labor costs to improve added value such as products and services, which can make the products of motor companies more competitive in the market , thereby increasing market share.