Shanghai Baolong: Getting Down to Brass Tacks - Tire Review Magazine

Shanghai Baolong: Getting Down to Brass Tacks

(Clacton, U.K./Tyres & Accessories) Many of the conversations on the Shanghai Baolong Industries Co. Ltd. stand at the 2006 Reifen Show in Essen concerned the rising costs of raw materials and the effect that this has had on Shanghai Baolong and its products – notably brass valves and wheel balancing weights.

Since 2003, says the company, the price of copper has risen continually. By March 2006, most people thought that the copper price had reached its peak because it was at an unprecedented level after rising for such a long time. As it was, the price of copper was set to increase way beyond what most people had imagined.

Between Mar. 12-15, the price of copper jumped sharply by around 80%. This has proved a nightmare for every factory that uses brass, especially many valve producers in China, which were working on a very low profit margin on tyre valves. Moreover, their customers were reluctant to accept a price increase for valves as they were afraid of losing customers.
 
During this period, many small valve factories in China had to close their factories due to the fact that they were unable to absorb the price increase. The medium-sized valve factories chose to reduce the capacity by around 60% to 80% in order to avoid losses and the risk of price changes of raw materials. Some big valve factories also reduced their output of valves.
 
However, the market demand for valves did not diminish. As a result, there was a shortage of tyre valve supply in the world and the lead-time of all tyre valve manufacturers grew longer. At the present time, more and more valve manufacturers and big distributors realise that it is necessary to ask the tyre shops or end users to bear the increase in raw material costs – a price increase is becoming a must for Chinese valve manufacturers if they are to survive the present crisis.

When it comes to wheel balancing weights, the story is not dissimilar, says Shanghai Baolong. After the EU Directives phasing out lead wheel weights, substitute weights, such as those made from tin, weights have aroused a great deal of interest. Indeed, the zinc weights produced by Shanghai Baolong proved very popular on the stand at Essen. However, as for brass, the price of zinc is rising inexorably, which in turn means that the weight prices are having to rise also.

 

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