“The situation of the small hydropower equipment industry is very difficult!†On the other end of the phone, Wang Hangwei, deputy director of the Hydroelectric Equipment Branch of the China Electric Appliance Industry Association, said with urgency and emphatically. On August 11th, he told the China Industry News that in recent years, the domestic small hydropower market has shrunk dramatically and the industry is facing a grim situation. “The order of enterprises is obviously insufficient. In the first half of this year, the order volume decreased by 50% compared with the same period of last year. The future market situation It's not optimistic."
Severe decline in the domestic market
It is understood that although China’s hydropower construction is still in an ascending period of development, the “hydropower fever†in previous years, especially the lack of orderly development and management of small hydropower, has led to the construction of hydropower without rules and the destruction of the ecological environment. The industry's production capacity has expanded significantly. Since 2005, the state has intensified its macro-control efforts, and the investment enthusiasm for the construction of small hydropower has gradually subsided, causing the market to shrink seriously.
According to Dong Yuqing, the deputy secretary-general of the branch, most of the hydropower resources in Guangdong, Fujian, and Zhejiang with good natural conditions have been developed. It is difficult to develop the existing resources, and there are fewer and fewer economic and suitable development resources. Some hydropower resources are in remote areas, natural conditions are harsh, and development costs are too high. "In recent years, the Ministry of Water Resources has stepped up the reorganization of the "four-nothing" small hydropower project that has no project, no design, no acceptance, and no centralized management, and has standardized various examination and approval procedures for small hydropower development," said Dong Yuqing. At the same time, the country began to strictly control land use indicators and gradually tightened the scale of credit, which made it more difficult to build small hydropower projects.
“The prices of raw materials such as steel and cement have gone up again and again, and labor costs have also increased significantly. Coupled with unpredictable costs such as policy processing and coordination, investment costs for small hydropower construction have risen sharply, and the payback period for project investment has also been extended.†Wang Hangwei told reporters.
In addition, the on-grid electricity price of small hydropower in China is generally not high, and the Internet is restricted. “All these have a direct impact on the enthusiasm of the investment and construction of power plants and restrict the development of the small hydropower industry.†Wang Hangwei said.
Raw material prices are hard to bear
“The situation of the small hydropower equipment industry is grim and enterprises are struggling.†Referring to the current situation in the industry, Wang Hangwei summarizes in one sentence. According to him, hydropower equipment manufacturing companies have obviously had insufficient product orders this year, and the order volume in the first half of the year has dropped by 50% compared with the same period of last year. As this situation continues to develop, the company's life will become more and more sad.
Under the stimulation of the strong momentum of small hydropower construction in previous years, many host plants invested heavily in technological upgrading and increased production capacity. At the same time, some non-industry manufacturers also scrambled to enter the field of hydropower equipment. According to Dong Yuqing, between 2004 and 2006, more than a dozen new members joined the Hydropower Branch every year. “The highest number of member units had reached 158.â€
Today, the small-hydro market is getting hot and cold. There are only a few new projects launched. The number of contracted orders is small, and many companies are caught in a situation of “no rice cookerâ€. However, the most difficult for companies to bear is the pain of raw material prices. This year, raw material, energy prices, and the appreciation of the renminbi have brought unprecedented pressure on SHP equipment companies.
Since the beginning of this year, ordinary medium-sized steels and crude oil have risen by 41.1% and 37.9%, respectively, and the prices of various matching materials, outsourcing parts, and labor costs also have increased in varying degrees. Because raw materials for hydropower equipment products account for a large proportion of the cost and the production cycle is long, companies and users often sign closed contracts. With the passage of time and rising prices, many orders have not only lost profits but also suffered losses.
"The company can hardly absorb the pressure of rising raw material prices. The days are very bad." An insider from Zhejiang Jinlun Electromechanical Industry Co., Ltd. told reporters.
Dong Yuqing said: “Now there are more than 140 members in the branch. Under the pressure of survival, some companies that cannot afford to do so have already converted and no longer participate in the activities of the club.†On June 2nd, the hydropower equipment sub-committee issued an open letter to users and asked “the user fully understands the current plight of the hydropower equipment manufacturing enterprise and gives full understanding and necessary support to the negotiation request made by the companyâ€. In addition, some rushed power plant construction projects due to incomplete preliminary approval procedures, etc., the loan is difficult to implement for a while, leading to project deadlines, so that manufacturers' inventory increases. According to the incomplete statistics of the hydropower equipment branch, five of these companies stocked 366,600 kilowatts of turbines in the first half of the year; seven companies had 6.6,600 kilowatts of hydroelectric generators in stock; and 13 companies had 6,616,100 kilowatts of hydroelectric generators in stock.
International market risk is not small
Under pressure, "manufacturing companies must adapt measures to local conditions, adjust to the conditions of plants, increase technological innovation, improve product quality, strengthen cost management, and do a good job of after-sales service to form their own unique advantages." Wang Hangwei said.
It is understood that in recent years users have repeatedly asked for supporting production of main and auxiliary engines. As the capacity of turbines produced has increased and specifications and models have increased, some special motors have become difficult to support. In addition to the generator-based production, Jinlun Electromechanical Co., Ltd. has been producing generators based on special specifications since 2007. “It not only optimizes the product structure, satisfies the market demand, but also compensates for the lack of production tasks.†Wang Hangwei Introduction.
As a leading company in the small hydropower equipment industry, Jinlun Electromechanical also worked hard to upgrade the core technology of Xiaohui Electric's components and accelerated technological innovation. Last year, its self-developed 2m9 tubular units were identified as the first set of products in Zhejiang province to accelerate the development of key equipment manufacturing areas. At the same time, the company has also developed more than 20 new products such as axial-flow and impact-type hydraulic turbine generator sets.
Wang Hangwei told reporters that many manufacturers are also actively seeking new economic growth points, such as the development and production of mechanical and electrical products such as wind power generation equipment, in response to the ever-changing market, seeking new space for development.
At present, the domestic market for SHP equipment is relatively saturated, and all manufacturers are doing everything possible to “go global†and actively develop international markets. According to Jinling mechanical and electrical personnel, the company exported more than 6.6 million U.S. dollars of hydropower equipment in the first half of this year, which has doubled compared to the same period last year.
Wang Hangwei reminded: From drawing design to technical standards, from process requirements to manufacturing, from follow-up services to project management, domestic hydropower equipment manufacturers have a long way to go in keeping with international standards. "Although some developing countries have very rich hydropower resources, there is also the risk of delays in the construction period, and due to the lack of funds, the timeliness and creditworthiness of their payment payments are worrying."
An industry source told reporters that the vicious competition in the domestic market has spread to the international market, and the increasing exchange rate risk has also directly affected the export efficiency of small hydropower equipment. He reminded: "Correlate companies should pay attention to avoiding risks, settle in RMB or judge the trend of exchange rate changes in advance."
Severe decline in the domestic market
It is understood that although China’s hydropower construction is still in an ascending period of development, the “hydropower fever†in previous years, especially the lack of orderly development and management of small hydropower, has led to the construction of hydropower without rules and the destruction of the ecological environment. The industry's production capacity has expanded significantly. Since 2005, the state has intensified its macro-control efforts, and the investment enthusiasm for the construction of small hydropower has gradually subsided, causing the market to shrink seriously.
According to Dong Yuqing, the deputy secretary-general of the branch, most of the hydropower resources in Guangdong, Fujian, and Zhejiang with good natural conditions have been developed. It is difficult to develop the existing resources, and there are fewer and fewer economic and suitable development resources. Some hydropower resources are in remote areas, natural conditions are harsh, and development costs are too high. "In recent years, the Ministry of Water Resources has stepped up the reorganization of the "four-nothing" small hydropower project that has no project, no design, no acceptance, and no centralized management, and has standardized various examination and approval procedures for small hydropower development," said Dong Yuqing. At the same time, the country began to strictly control land use indicators and gradually tightened the scale of credit, which made it more difficult to build small hydropower projects.
“The prices of raw materials such as steel and cement have gone up again and again, and labor costs have also increased significantly. Coupled with unpredictable costs such as policy processing and coordination, investment costs for small hydropower construction have risen sharply, and the payback period for project investment has also been extended.†Wang Hangwei told reporters.
In addition, the on-grid electricity price of small hydropower in China is generally not high, and the Internet is restricted. “All these have a direct impact on the enthusiasm of the investment and construction of power plants and restrict the development of the small hydropower industry.†Wang Hangwei said.
Raw material prices are hard to bear
“The situation of the small hydropower equipment industry is grim and enterprises are struggling.†Referring to the current situation in the industry, Wang Hangwei summarizes in one sentence. According to him, hydropower equipment manufacturing companies have obviously had insufficient product orders this year, and the order volume in the first half of the year has dropped by 50% compared with the same period of last year. As this situation continues to develop, the company's life will become more and more sad.
Under the stimulation of the strong momentum of small hydropower construction in previous years, many host plants invested heavily in technological upgrading and increased production capacity. At the same time, some non-industry manufacturers also scrambled to enter the field of hydropower equipment. According to Dong Yuqing, between 2004 and 2006, more than a dozen new members joined the Hydropower Branch every year. “The highest number of member units had reached 158.â€
Today, the small-hydro market is getting hot and cold. There are only a few new projects launched. The number of contracted orders is small, and many companies are caught in a situation of “no rice cookerâ€. However, the most difficult for companies to bear is the pain of raw material prices. This year, raw material, energy prices, and the appreciation of the renminbi have brought unprecedented pressure on SHP equipment companies.
Since the beginning of this year, ordinary medium-sized steels and crude oil have risen by 41.1% and 37.9%, respectively, and the prices of various matching materials, outsourcing parts, and labor costs also have increased in varying degrees. Because raw materials for hydropower equipment products account for a large proportion of the cost and the production cycle is long, companies and users often sign closed contracts. With the passage of time and rising prices, many orders have not only lost profits but also suffered losses.
"The company can hardly absorb the pressure of rising raw material prices. The days are very bad." An insider from Zhejiang Jinlun Electromechanical Industry Co., Ltd. told reporters.
Dong Yuqing said: “Now there are more than 140 members in the branch. Under the pressure of survival, some companies that cannot afford to do so have already converted and no longer participate in the activities of the club.†On June 2nd, the hydropower equipment sub-committee issued an open letter to users and asked “the user fully understands the current plight of the hydropower equipment manufacturing enterprise and gives full understanding and necessary support to the negotiation request made by the companyâ€. In addition, some rushed power plant construction projects due to incomplete preliminary approval procedures, etc., the loan is difficult to implement for a while, leading to project deadlines, so that manufacturers' inventory increases. According to the incomplete statistics of the hydropower equipment branch, five of these companies stocked 366,600 kilowatts of turbines in the first half of the year; seven companies had 6.6,600 kilowatts of hydroelectric generators in stock; and 13 companies had 6,616,100 kilowatts of hydroelectric generators in stock.
International market risk is not small
Under pressure, "manufacturing companies must adapt measures to local conditions, adjust to the conditions of plants, increase technological innovation, improve product quality, strengthen cost management, and do a good job of after-sales service to form their own unique advantages." Wang Hangwei said.
It is understood that in recent years users have repeatedly asked for supporting production of main and auxiliary engines. As the capacity of turbines produced has increased and specifications and models have increased, some special motors have become difficult to support. In addition to the generator-based production, Jinlun Electromechanical Co., Ltd. has been producing generators based on special specifications since 2007. “It not only optimizes the product structure, satisfies the market demand, but also compensates for the lack of production tasks.†Wang Hangwei Introduction.
As a leading company in the small hydropower equipment industry, Jinlun Electromechanical also worked hard to upgrade the core technology of Xiaohui Electric's components and accelerated technological innovation. Last year, its self-developed 2m9 tubular units were identified as the first set of products in Zhejiang province to accelerate the development of key equipment manufacturing areas. At the same time, the company has also developed more than 20 new products such as axial-flow and impact-type hydraulic turbine generator sets.
Wang Hangwei told reporters that many manufacturers are also actively seeking new economic growth points, such as the development and production of mechanical and electrical products such as wind power generation equipment, in response to the ever-changing market, seeking new space for development.
At present, the domestic market for SHP equipment is relatively saturated, and all manufacturers are doing everything possible to “go global†and actively develop international markets. According to Jinling mechanical and electrical personnel, the company exported more than 6.6 million U.S. dollars of hydropower equipment in the first half of this year, which has doubled compared to the same period last year.
Wang Hangwei reminded: From drawing design to technical standards, from process requirements to manufacturing, from follow-up services to project management, domestic hydropower equipment manufacturers have a long way to go in keeping with international standards. "Although some developing countries have very rich hydropower resources, there is also the risk of delays in the construction period, and due to the lack of funds, the timeliness and creditworthiness of their payment payments are worrying."
An industry source told reporters that the vicious competition in the domestic market has spread to the international market, and the increasing exchange rate risk has also directly affected the export efficiency of small hydropower equipment. He reminded: "Correlate companies should pay attention to avoiding risks, settle in RMB or judge the trend of exchange rate changes in advance."