Chinese Experts Respond to Accusations of US Cement Shortage

The news about "the shortage of cement in the United States and the rising price of cement" has been repeatedly published in the important pages of the American media recently. It is noteworthy that some foreign media believe that one of the main reasons for this phenomenon is the rising demand for building materials in China, as well as the shortage of cement trade shipping and the increase of transportation costs caused by the rapid growth of China's economy.

In response to similar voices from foreign media, people in the Chinese cement industry pointed out that the most important reason for the shortage of cement in many States in the United States is that their domestic demand is increasing, and it is unreasonable to attribute the reason to "China's demand growth".

On August 26, the document of the National Development and Reform Commission (NDRC) "Deployment, Cleaning up and Proper Handling of Investment Projects in the Iron and Steel, Electrolytic Aluminum and Cement Industry" was published for the first time. Jointly and thoroughly investigate the investment status of projects in the "three major overheated" industries, including cement, and the final results of the clean-up and disposal. This will be directly related to the next direction of the cement industry.

In addition, sources revealed that the NDRC is preparing a guiding opinion on the development plan of the cement industry as a long-term development plan for the cement industry.

Small proportion in the world

According to a survey by the Portland Cement Association, there is a shortage of cement in at least 30 States in the United States. A survey by the National Association of Home Builders also showed a shortage of a variety of raw materials related to the construction industry, with cement the most serious shortage.

According to the survey, 41% of the companies surveyed were forced to stop production or slow down construction because they did not have enough cement.

Some American economists point out that if the cement shortage is not alleviated, the economic development of the United States will be affected. In their view, the rapid growth of China's economy has greatly reduced the amount of cement exported to the United States and satisfied the domestic demand for building materials. In addition, the rising demand for raw materials in China's rapid development has occupied too many seaborne ships, resulting in fewer ships transporting cement in the United States.

For this argument, people in China's cement industry believe that China, as the world's largest cement consumer, accounts for more than 1/3 of the world's total cement output; in this sense, the development of China's cement industry will play a key role in the world's cement industry.

However, the domestic market demand for China's cement is very large. China's cement is mainly self-produced and self-sold, accounting for a very small proportion of the world's cement trade volume, belonging to the market pattern of "large total scale and small export share". This means that China's cement will not have a great impact on the world cement market in terms of import and export.

At the same time, China is not the main partner of cement trade in the United States, and the fluctuation of the quantity of cement imported from China will not have an overall impact on the overall supply capacity of cement in the United States.

The Road to "Cement Power"

"The view that China's import and export of cement will not affect the US market" is certainly a strong refutation to the foreign media, but China is only a big cement country, not a powerful cement country.

From 2000 to 2003, China's cement exports to the United States and the entire international market showed a downward trend, one of the most important reasons is that China's cement exports are facing competitive pressure.

According to the overall situation in the first half of 2004, after the second quarter, under the influence of the national macro-control policy, the domestic cement industry has cooled down significantly, and the inventory in many areas has increased, while the demand for cement in some foreign areas has risen steadily, which is due to the obstacles to China's cement export. For example, higher transportation costs. The strong demand of foreign cement market failed to drive the growth of domestic cement export.

The weak export phenomenon of Chinese cement enterprises is quite obvious. "Therefore, it is not enough to have a relevant impact on the cement market of other countries and even the world cement market. Only by rising to the height of a" strong "country can we expand the market boundary and obtain profit sources from the international market.".

[Page]

In the view of industry insiders, China's cement enterprises are small in scale, backward in technology, and unreasonable in structure, which are obstacles to China becoming a powerful cement country.

Yu Guannan of Guangdong Cement Association told the Financial Times that the document "Deployment, Cleaning up and Proper Handling of Investment Projects in Iron and Steel Electrolytic Aluminum Cement Industry" issued by the National Development and Reform Commission provides a direction for the sound development of the cement industry. It also emphasizes the promotion of the industrial structure adjustment of the cement industry.

Disclosure of the results of liquidation and disposal

Industry insiders pointed out that the introduction of this document is very important for the development of the cement industry. This is the first time that after the introduction of various macro-control policies in the first half of the year, the NDRC has announced to the public that it will thoroughly investigate the investment situation of the "three overheated" industry projects with relevant departments, as well as the final results of the clean-up and disposal, which is a phased treatment opinion.

This document announces the current and future investment status, project capital sources, production capacity, technical level, product structure, regional layout, market supply and demand and other data of the three major industries of steel, electrolytic aluminum and cement.

"This is equivalent to laying down the basic principles for the future development of the cement industry." Relevant sources told reporters that the document also shows that although the macro-control policy has achieved some results, it is not over yet, and it is still at a critical moment to prevent a rebound.

The document emphasizes that in the cement industry, we should speed up structural adjustment, support the development of large enterprises, and focus on supporting the construction of new dry clinker projects with a daily output of 4000 tons or more in areas with guaranteed resources. Local governments and enterprises are encouraged to develop new dry process cement by eliminating backward production capacity. At the same time, new dry-process cement projects with a daily output of less than 2000 tons are not encouraged, and the construction of cement projects with backward technology is resolutely curbed.

Yu Guannan told reporters that in recent years, after the technical bottleneck of the cement industry was solved, the structural adjustment began to take a real step. However, due to the large regional differences, imperfect market mechanism and lack of supporting measures, structural adjustment is still one of the most important issues facing the development of the cement industry.

Structural adjustment will take about ten years

"The United States has a population of more than 200 million, and its land area is not much different from that of China. There are more than 110 cement enterprises in the United States, and there are nearly 6,000 cement enterprises in China." Liu Zuoyi listed such a set of data to reporters when he talked about structural adjustment.

By the end of July 2004, there were 4,960 large-scale cement enterprises in China. "Large-scale cement enterprises" refer to enterprises with a daily output of more than 5 million tons. According to the data of China Cement Association, the average daily production scale of China's cement enterprises in 2003 was 16. The largest Anhui Conch Group in the country has reached more than 40 million tons, which is also the only large-scale cement enterprise in the country with more than 10 million tons; there are only dozens of enterprises with more than one million tons.

The structural contradiction in the cement industry is also reflected in the technical differences. The proportion of new dry process cement, which represents the direction of cement development, is very small, and more than 90% of it is shaft kiln cement with backward technology. Reporters learned that although there are many drawbacks in vertical kiln technology, it is impossible to shut down all vertical kiln cement enterprises in view of the reality of large regional differences in China.

An industry insider told reporters that it will take at least 10 years to completely eliminate the backward vertical kiln cement enterprises and complete the adjustment of industrial structure, and finally "3000 to 4000 cement enterprises may be eliminated".

The ongoing reform of investment and financing system in China is very beneficial to the adjustment and development of the industrial structure of the cement industry. Originally, the government did not invest much in the cement industry. In recent years, with the increase of demand and the decrease of cost, the profits of the cement industry have increased significantly. This has attracted a lot of private and foreign capital to pay attention to or directly participate in the cement industry.

(Please indicate the source for reprinting on China Cement Net)

All can be viewed after purchase