The main raw materials of our products, coming from major steel factories in the world, include iron coils/iron plates, iron pipes/iron bars, aluminum ingots, etc. All steel suppliers are required to provide certification documents and to gurantee that any metal used for their products or packaging, such as tungsten, tin, tantalum, gold, are not from Democratic Republic of the Congo and its neighboring countries or any mines controlled by the juntas in these areas. By implementing source control with the primary steel suppliers, we can effectively identify and trace the origin of our raw materials, thereby eliminating the use of conflict minerals.
Regarding raw material risks, our company has established a Risk Management Committee to regularly assess raw material risks. Major risks for our company include significant fluctuations in steel prices and material scarcity. Our risk mitigation strategy involves maintaining low price levels, establishing appropriate safety stock, and being flexible in responding to production demands. When facing material shortages, we promptly procure and urge suppliers to deliver goods. We also negotiate with customers to consider alternative materials, thereby reducing risks associated with critical raw materials.
