What is going on with the cast iron in China?
In 2010, all of
cast iron prices
were increased largely. In 2011, the increasing trend is continuing.
What is going on with the cast iron in China? What is the reason for
the increasing cast iron prices?
As for the marketing manager of Dandong
Foundry in China, I have seen that the increasing prices for
the iron and steel castings in the past 2010. In the early of 2010,
the cast iron was about 970 USD/ton to 1200 USD/ton, but now, in the
early of 2011, the cast iron is about 1100 USD/ton to 1360 USD/ton.
It was about 15% increased only in one year. This is terrible! As a
buyer, you may wonder what factors have affected the cast iron
1. Increasing pig iron price
As you know, the pig iron is the main material for iron castings, so
the increased prices of pig iron will directly affect the prices of
iron castings. In the past one year, the pig iron price has
increased from 520 USD/ton to 620 USD/ton, and its price is still
2. Reducing exchange rate of USD to RMB
In the past one year, the exchange rate of USD to RMB has reduced
from 6.81 to 6.57 now. It was main because of the continuous
appreciation of RMB. Most important of all, the appreciation of RMB
did not reduce the production costs for
iron foundries in China, but on the contrary, it caused
the exporting prices of cast iron were increased largely.
3. Increasing labor costs in China
In 2010, almost all iron foundries have increased their workers'
salaries because of the increased prices of commodities. Normally,
their labor costs have been increased 30% to 35%. In 2011, most of
foundries will have to adjust their workers' salaries again. Very
likely, the labor costs will increase 50% than that in 2010. Of
course, both buyers and suppliers would not like the increased
costs, however, this is the fact.
4. Stricter control to environment control
All world have known about that China is controlling the environment
pollution caused by the industries. Of course, these control actions
benefit all people in the world. However, it really deeply affected
most of iron and steel foundries in China. As you know, the metal
foundries are the high energy consumption, high material consumption
and high emission industries. The stricter control has caused the
closed down to many small and middle metal foundries. As for the
surviving foundries, they have to invest more to improve their
pollution control equipments, therefore, they need to increase their
profit and need to choose the orders that they are more familiar
Although we knew the reasons of increased cast iron prices, we
really do not know when this condition could become stable. The pig
iron price is very fluctuant, and the exchange rate is reducing
continuously. Workers are asking for increasing their salaries every
day. As a manufacturer in China, we are very confused too.