According to a report released by the National Information Center, excessive investment in the chemical industry has exacerbated excess production capacity, which has led to a decrease in the profit margin.

The chemical industry report of the National Information Center Economic Forecasting Department, which was released yesterday by the reporter, showed that due to the sustained and rapid growth of investment, the production capacity of some chemical products in China has far exceeded the growth rate of domestic demand, and the investment risk in the chemical industry. Is gradually accumulating.

The excessive growth of investment is mainly reflected in the following aspects: First, the actual investment in the fertilizer and pesticide industry has grown too fast. In 2005, the basic chemical raw materials, synthetic materials, and fertilizer manufacturing industries collectively accounted for more than 75% of the planned investment in the entire industry. Second, there are too many construction projects for chemical raw materials and fertilizers. In 2005, the number of construction projects for basic chemical raw material manufacturing, special chemical product manufacturing and fertilizer manufacturing accounted for more than 60% of the entire chemical industry. Third, new projects for the start of pesticides and rubbers have grown significantly, with a year-on-year growth rate of more than 45%. This indicates that capacity will be further expanded in the next few years. Some products that were in short supply in the past will tend to be balanced, and some products will even oversupply. Fourth, rubber, special chemical products and coatings, inks, dyes and other industries have started many projects in previous years, and the number of completed projects has increased at a faster pace.

According to the analysis of the report, excessive investment growth has caused the profit margin of the chemical industry to decline. Due to the overcapacity in basic chemical raw materials manufacturing, the profit rate of product sales dropped rapidly. In 2005, it was 3.58%, a year-on-year decrease of 2.3%. The composite material industry experienced negative growth in profits. In 2005, the sales revenue of finished products of the composite materials industry increased by 27.1% year-on-year, total profit decreased by 11.7% year-on-year, and the profit margin of product sales revenue was 5.32%, which was a decrease of 2.6 percentage points from 2004. While the profit margin of the fertilizer manufacturing industry increased by 1.5 percentage points year-on-year to 7.65%, the loss of the newly started enterprises was 20.32%, an increase of 1.2% over the same period of the previous year.

In addition, the report also pointed out that China's chemical industry investment is shifting from the coastal areas to the central and western regions, and the investment in the chemical industry in the economically underdeveloped regions is growing rapidly, while the ability of the water-rich regions to undertake chemical investment is strong. This shows that in addition to market and capacity factors, the investment in the chemical industry is also constrained by many conditions such as resources and environment. If you do not conduct a comprehensive inspection, the investment risk will further increase.

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