Machinery / Industrial Parts & Tools

According to recent data analysis by the Abrasives Branch of the China Machine Tool & Tool Industry Association, the abrasives industry has withstood the pressure this year and achieved steady development amidst the turbulence. The industry ushered in a new round of rapid growth in the first half of the year. According to the feedback from companies, the order volume has basically returned to the level before the epidemic.

Increased corporate resilience

As an important part of the machine tool industry, superhard materials and abrasives are the core products of high-end CNC machine tools. In the first half of 2021, the output and prices of various products in the abrasives industry have increased to varying degrees over the same period last year. There are two reasons for this. The operation has been affected to varying degrees, and the overall output is low. Second, as a major manufacturing country in the first half of this year, China's position in the global industrial chain has been further demonstrated, the order volume has risen sharply, and the product output has reached a new high.

From the statistical data of 40 Abrasives Association member units, product output and output value have both increased compared with the same period last year. Sales revenue, export value, total industrial output value and other indicators are also increasing, but the total profit has fallen by 10%, which fully shows In the first half of this year, the pressure on the operation of the industry was great. While the production and operation of enterprises were on the right track, they were squeezed by the two-way squeeze from the upstream raw material price increase and low-price homogeneous competition.

It is understood that in 2020, the output value of China's molds will exceed 300 billion yuan, supporting China's product forming manufacturing of more than 30 trillion yuan. Among them, imported molds were only 1.58 billion U.S. dollars, down 18% year-on-year, accounting for less than 5% of China's mold consumption value; export molds continued to grow, exceeding 6.2 billion U.S. dollars, and China's leading role in the international mold stage was further demonstrated.

Facing multiple challenges

Experts from the Abrasives Branch believe that although the downward trend in market demand caused by the epidemic last year has been reversed to a certain extent, it remains to be seen whether it can continue to grow, and many old problems still plague the industry. There are two main points:

First, at the World Climate Conference, China proposed to achieve carbon peaks by 2030, and the requirements for emission reduction and consumption reduction, and the construction of a high-quality ecological environment have been further improved. This not only means that the industry will have stricter environmental protection standards in the future, and enterprises need to invest more. Increasing, the deeper long-term impact comes from the reform of China's energy structure, which will change the upstream and downstream market structure of the industry.

Second, since the beginning of this year, the upstream mineral resource mining policy required for a variety of abrasive products has been further tightened, and the price of chemical raw materials required for the production of abrasives has also doubled, causing the cost of raw materials for abrasives and abrasive products to rise. Affected by overcapacity, industry product prices have risen slightly, but they are still not as fast as raw material prices, and corporate profits have been squeezed. At present, the low-end overcapacity problem of various major products in the industry has been around for a long time. When the economy enters a period of adjustment and the growth rate slows down, companies will feel the pressure of homogeneous competition.

Stable demand in sub-industry

From the perspective of different industries, the market demand for abrasive tools is basically stable. The automotive industry is the most important application market for injection molds. According to incomplete statistics from China Mold Industry Association, about 30% of the molds and products in my country's mold industry are for the automotive industry. In terms of a single application field, the automotive industry has undoubtedly become the largest market for injection molds. But other application fields, such as electronics, home appliances, information, aerospace, military industry, transportation, building materials, medical, biological, energy and other manufacturing fields, are also extensive and huge markets.

The upgrading speed of 3C and smart home appliances products is getting faster and faster, bringing new opportunities to the mold manufacturing industry. From shell structure to integrated circuit board, various parts and components manufactured by molds account for more than 70% of 3C products, and they are widely used. With the rapid expansion of the manufacturing industry of network products and electrical connector products, molds have supported their innovation capabilities and structural optimization.

90% of the parts in the home appliance industry are mould parts, and their appearance, shape and structure reflect the complexity of the mould. The change of home appliance products depends on the level of R&D and manufacturing of the home appliance mould.

In addition, the construction needs of new infrastructure have penetrated into all corners of mold and equipment manufacturing. The huge market involved in the seven fields of 5G base station construction, new energy vehicle charging piles, big data centers, artificial intelligence, industrial Internet, UHV, intercity, and urban rail transit provides new momentum for industry innovation and development.

Optimistic situation in the second half of the year

Experts in the abrasives industry are optimistic about the future development of the industry. Industry experts believe that relevant national policies point out that it is necessary to help small and medium-sized enterprises and difficult industries continue to recover. To tap the potential of the domestic market, it is necessary to coordinate and orderly do a good job in carbon peaking and carbon neutrality, and issue a carbon peaking action plan before 2030 as soon as possible. To curb the blind development of the "two highs" project. This is good news for a large number of small and medium-sized enterprises and smelting companies in the abrasives industry.

Specific to the situation in the second half of the year, macroscopically, from the July data, all major economic indicators showed a weak growth trend. Among them, the PMI index of small and medium-sized enterprises was 47.8%, which was below the line of prosperity for several consecutive months. In the industry, the peak electricity consumption period in the summer has caused electricity prices to continue to rise, and the prices of various raw materials have been hovering at high levels. The imbalance of supply and demand will not be resolved in the short term. With the gradual recovery of global manufacturing, companies may face orders in the second half of the year. Decline and profit will not increase significantly. This requires enterprises to closely follow the central policy guidance and make timely adjustments to the direction of development. The industry is currently in a critical period of industrial upgrading and structural adjustment. Enterprises must firmly grasp the main line of high-quality development, focus on the "dual cycle" strategic pattern, insist on innovation-driven, and gain a firm foothold to open up the market.