Who is the "disaster" of the market downturn?

this year, the price of cement has continued to decline, the cement industry has been in a downturn, and the market is full of people in distress. From January to October

this year, the output of cement was 1.69 billion tons, with a total decrease of 73.04 million tons. 4.

Reflected in the performance of listed companies, in the first three quarters, the revenue and profit of most enterprises declined, with a larger decline in profits.

In terms of net return to the mother, only two of the profitable companies, Tapai Group and Qingsong Jianhua, have achieved profit growth, while 17 companies have seen a decline in profits or losses, and the decline is generally high. Even though Jidong Cement and

The cement industry has come to such a difficult situation, where is the "source of disaster"?

According to the data of the National Bureau of Statistics, from January to October, the investment in real estate development in China was 9592.2 billion yuan, down 9 from the same period last year.

The real estate market has been seriously oversupplied, and the real estate industry has been greatly affected by policy changes, with many variables, in the case of slowing down the urbanization process and negative population growth. All kinds of capital are afraid of risks and naturally have little confidence in the real estate market. In the short term, real estate can not be expected to play a role in supporting cement demand.

In addition, for more than a decade, China has been engaged in "large-scale construction" and infrastructure construction, basically achieving "village-to-village" and "household-to-household". China's economy has achieved rapid growth, and the cement industry has also taken advantage of the "east wind" of the country's rapid development to make a lot of money in the past few years.

However, it is precisely because of the high development of China's infrastructure, high-speed rail, highway, airport and other transportation projects have been completed, and now it has entered a situation of almost "no road to repair, no bridge to build", and the follow-up space of infrastructure can no longer be compared with the past.

Real estate "flameout", infrastructure is no longer the grand occasion of the past, cement demand is also difficult to be hot. Therefore, the whole industry should be prepared for the continued contraction of the market, and this "severe winter" may be particularly long.

has a long history of overcapacity. The State Council approved the "Several Opinions on Restraining Overcapacity and Redundant Construction in Some Industries and Guiding the Healthy Development of Industries" (Guofa No.38) issued by the Development and Reform Commission and other departments, and clearly put forward the need to strictly control the new cement production capacity.

However, up to now, cement production capacity has increased, and "capacity removal" seems to be an "eternal topic".

Over the past decade, the overall profitability of the cement industry is still very strong, even after the industry downturn in 2015. It is the nature of capital to pursue profits. Driven by interests, a large amount of capital enters the cement industry, resulting in the phenomenon of concentrated investment. At the same time, the entry threshold of the cement industry is low, and even many investors who do not know much about the cement industry have entered the market. These factors have aggravated the chaos of the cement market and the excess capacity.

In the context of strict restrictions on new production capacity, the heat of building new production lines is still not low. Many enterprises take advantage of some "loose" policies, resulting in the revival of zombie production capacity, the construction of small and large batches, the construction of first batches, the sale of more first-line products, and the emergence of exotic kiln paths, which also interfere with the cement industry to a certain extent.

Moreover, in the past few years , to a certain extent, production has replaced the position of capacity removal in resolving overcapacity. The reduction of output has artificially changed the contradiction between supply and demand, enabling the cement industry to maintain a higher cement price and profit, which also creates space for the survival of backward production capacity, is not conducive to the elimination of backward production capacity, and further stimulates the investment in production lines, making it more difficult to clear backward production capacity.

industry largely depends on the price, and it is inevitable that the shrinking demand will lead to a decline in prices. But now the market has fallen below the cost line of the "two-word" price and even part of the "one-word" price, to a greater extent, is "hit" out, which is obviously a "man-made disaster". With the tightening of

demand, many enterprises have chosen the business route of reducing prices. Under the market economy environment, moderate competition can promote enterprises to maintain technological innovation ability, enhance the overall competitiveness of enterprises, and thus actively promote the industry to eliminate backward production capacity.

However, many cement enterprises have accumulated a lot of "family property" during the "profiteering" period in the past few years. In the face of the cruel "price war", everyone seems to have the strength to fight, and it is difficult to truly eliminate backward enterprises and production capacity in a short time. At the moment of shrinking

demand, if an enterprise plays a "truce card", its customers and market will soon be "swallowed up" by other competitors; even if it runs at a loss, as long as it can maintain its market share, when the market recovers, the enterprise will still be able to "stage a comeback".

Under the influence of this mentality, even if most enterprises suffer serious losses, they will only "break their teeth and swallow in their stomachs", resulting in the price of cement going down all the way. It can be said that the current situation of serious profit decline and market downturn in the cement industry is largely caused by many market participants. The continuous reduction of

cement demand is an inevitable trend at present, and the problem of overcapacity in the cement industry will become more prominent, and an industry shuffle may be inevitable. Resolving overcapacity is imminent, if the cement industry can not calmly and rationally judge the situation and solve the problem, I am afraid the cement industry will become more and more difficult, the market situation will become worse and worse.

With the decline of cement demand and the arrival of the peak of production capacity, the market competition is becoming increasingly fierce, and a cyclical industry shuffle is inevitable. Relying on digital and intelligent technology means, realizing technology and management upgrading, continuously reducing energy consumption, pollutant emissions and carbon emissions, and enhancing the comprehensive competitiveness of enterprises are the key for cement enterprises to meet the challenges.

To this end, China Cement Network will hold a < a href = "https://www.ccement." with the theme of "Data-driven Decision-making Intelligence Leads the Future" in Hangzhou on November 29, 2023.