"There are some small glaze companies. You haven't heard of them when they exist, and you don't know when they disappear..." In 2021, it will be difficult for ceramic companies to survive, and it will be even more difficult for ceramic chemical raw material companies to develop. Facing raw materials Due to rising prices and pressure from ceramic companies to reduce costs and suppress prices, some chemical raw material companies describe themselves as "people without a voice struggling on the edge of life and death."
Recently, "Ceramic Information" visited a number of ceramic chemical raw materials and color glaze companies in Foshan to reveal the survival status and operating pressure of the upstream supplier groups under the current situation. A supplier said, "Last year, we sold RMB 100 million worth of raw materials and the profit was only two to three million yuan. This year, the bottomless price war among peers has become more intense. Now we have orders but no profit."
Price war without bottom line
Supplier profits are “as thin as paper”
“The most significant pressure in recent years is that shipments have not changed, but profit margins have dropped sharply.” Many ceramic chemical raw materials and color glaze companies in Foshan unanimously told "Ceramic Information" that this is expected to be the case in 2021. The pressure will be greater.
"After the Chinese New Year this year, we rarely receive consultation calls from ceramic factories, or even if we receive inquiry calls, there is usually no follow-up." Cheng Sheng (pseudonym), the person in charge of a zinc oxide company in Foshan, told "Ceramics" information".
According to interviews, most ceramic chemical raw material and color glaze companies have been in a relatively "deserted" state since the start of construction this year, which is a common phenomenon in the industry. On the one hand, the production of bricks in Guangdong production areas this year is generally later than in previous years; on the other hand, after the Spring Festival, raw material prices continue to rise, leaving ceramic companies hesitant to wait and see. Most of them choose to digest early stockpiling and wait for raw material prices to fall back. Make a purchase.
Because chemical raw materials and color glaze companies have always been in a state of low concentration of "small, scattered, chaotic, and chaotic", they are a typical weak party and "one without a say" in the process of cooperation with ceramic companies. Ceramic companies have so many choices for their upstream suppliers that their fellow suppliers are competing for the market in a "bottomless price war."
“For the same product, there are always peers who offer lower prices than yours.” Cheng Sheng said that the prices of chemical raw materials are now too transparent, and ceramic companies are very smart and will inquire in the industry before placing an order. Circle the price trend, as long as the price is slightly more expensive than peersNot cooperative at all.
Cheng Sheng told "Ceramic Information" that due to extremely fierce competition among suppliers, different chemical companies call and send messages to ceramic factories every day, or go to the factory to promote their products, and the prices are " "One is cheaper than the other", so sometimes ceramic companies can grasp the latest raw material price trends faster than chemical and color glaze companies.
In addition to fierce market competition and intensifying price wars, another major challenge for colored glaze suppliers is that the ceramic industry is becoming more and more mature, glaze formulas and technology are becoming more and more transparent, as well as technological development and testing instruments With the progress of the times, most ceramic companies have mastered the formula technology of glaze production and then produced it independently, further seizing the market share of glaze suppliers.
"For example, I have worked in the ceramic chemical industry for more than 10 years. As long as I am given the formula, basically all glaze products can be prepared." Cheng Sheng told "Ceramic Information".
A senior person in the industry pointed out: "Many ceramic companies now produce their own glazes. Even if they use glazes provided by suppliers, they are only used on some production lines. Other production lines use their own glazes. , This is the real fatal thing for glaze companies."
"Actually, suppliers are doing very hard now, but the company must survive first. As long as it is not a loss, no matter how low the profit is, it must be done, otherwise it will easily cause the loss of customers." A glaze company in Foshan The person in charge, Long Gang (pseudonym), explained that the market share is getting smaller and smaller, and a large number of glaze companies can only rely on "low prices" to compete for the market, in order to "hardly resist" to the end and become the strong one.
Of course, there are also some ceramic companies, and cooperation with them is not possible just because they are cheap. Some well-known ceramic factories have higher quality requirements for raw materials and require suppliers to have corresponding qualifications. This is also the advantage of large-scale color glaze companies.
Rising raw material prices
Ceramics factory demands price reduction
"Preliminary analysis shows that glaze companies will have a very difficult time this year." Regarding this year's market, many chemical raw materials and colored glaze companies said they were not optimistic. The pressure to survive this year may be greater, while last year, The business the year before last may have been relatively good in recent years.
“The prices of various raw materials are rising this year, but ceramic companies are asking us to lower product prices.” Mr. Wang (pseudonym), the sales manager of a well-known glaze company in Foshan, reflected. For example, at the end of last year, a well-known real estate developer gave TaoA company put forward a price reduction request. In order to reduce costs, the ceramic company passed on the cost pressure to its upstream ceramic chemical glaze suppliers and directly asked the suppliers to reduce prices. “The price of raw materials has skyrocketed since the beginning of this year. As a glaze supplier, if we continue to reduce the price of our products, Supply price, it is very likely that the order will be completed at a loss.”
It was revealed that many chemical and glaze companies were struggling to survive due to the unexpected surge in raw material prices this year. In order to maintain customer relationships, they even completed orders at a loss.
Many suppliers said that at present, the entire ceramic chemical raw materials and color glaze industry hopes that ceramic companies can allow them to increase prices within a reasonable range in line with market changes, so that companies will not survive at a loss. Mr. Wang said, "After the Spring Festival, the price of raw materials increased, but when we sent the products to the ceramic factory, the ceramic factory refused our request to increase the product price."
"Although production costs have increased, we now dare not easily ask them for price increases when we go to ceramic factories. We may even lower prices in order to maintain business relationships." Cheng Sheng said helplessly.
"If the early inventory in the market has not been fully digested, a price increase at this time is equivalent to cutting off the road. Even if it increases slightly, the ceramic factory will immediately cut the order." Cheng Sheng told "Ceramic Information" 》, because the market competition is too fierce, in order to survive in the industry, most chemical raw materials and color glaze companies adopt the business model of "giving profits but not customers", preferring to lose money to keep customers.
Not only are profit margins getting smaller and smaller, ceramic companies have also extended the payment cycles for chemical raw materials and color glaze companies. "It is very difficult to collect the accounts of ceramic companies now. The promised payment period is three months, but it may take half a year to receive the payment." Cheng Sheng said that chemical raw materials and color glaze companies not only need strong financial support, It is also necessary to have strong market prediction ability and risk resistance ability.
“There are orders, but no profits” is a true portrayal of most chemical raw materials and color glaze companies in recent years. Cheng Sheng joked that the current status of the industry is that companies that can stand firm, maintain no losses, and pay employees normally are already good companies.
(The article is reproduced from Ceramic Information)
