by the decline in demand, the cement industry experienced a very difficult year in 2022. In 2023, various favorable policies continued, but the demand for cement is still difficult to recover the courage of that year. How should the cement industry respond to stabilize the market situation? Ccement. Com/richtext/IMG/0evz6r49mme91681091096868
I. Five Points of Consensus
for the Current Cement Industry 1.
The utilization rate of cement production capacity has reached a record low. Statistics show that the utilization rate of cement production capacity is 61% in 2022. At the same time, the actual " cement industry has been promoting capacity reduction for many years, why is the capacity still increasing?
2. The pressure of rising costs has increased
unprecedentedly, especially in terms of coal costs. From 2020 to now, the fluctuation of coal prices has intensified. Coal price/cement price once exceeded 3; meanwhile, a large number of coal mines were closed after 2016, and it is difficult for coal price to return to the "cheap era" in the future.
In addition, unit energy consumption and carbon emissions control requirements continue to improve, with the promotion of the "double carbon target", cement enterprises not only need to invest a lot of transformation funds, but also face the possible cost increase brought by carbon trading.
3. The marginal utility of supply-side reform is decreasing
, taking peak staggering production as an example, starting from the north. It has roughly gone through the following stages: peak-staggering production in Northeast China in November 2014, peak-staggering production in Pan-North China in January 2015, peak-staggering production in 15 provinces and cities in North China in 2016, and peak-staggering production in southern provinces from 2017 to 2021. At the same time, peak-staggering production in summer in North China began in 2022, and the industry further extended the peak-staggering production time. The production time of 21 provinces is more than 100 days.
In recent years, the off-peak production time has continued to increase and the scope has been expanding, especially in 2022, the off-peak production time has increased significantly, and the implementation is stronger than before, but ultimately affected by the decline in demand, the stabilizing effect of off-peak production on the market is weakening. In the future, under the background of weakening demand, the role of supply-side reform may be further reduced. Since the
founding of the People's Republic of China, the development of the domestic cement market can be roughly divided into five periods, and now the industry is about to enter a downward period. The characteristics of the planned economy period of
cement (1949 ~ 1977)
are as follows: ① the total amount is low: the total consumption of cement is 500 million tons (17 million tons per year); ② the per capita is low: the annual per capita is less than 60 kg; ③ the number of enterprises is from small to large, and the number of cement enterprises is about 3400.
Small cement development period (1978 ~ 1995)
Urbanization rate: 18% ~ 30%
Characteristics: ① Rapid increase in total amount: total consumption 35.
High-speed development period (1996 ~ 2014)
Urbanization rate: 30% ~ 55%
Characteristics: ① Significant increase in total consumption: 23.8 billion tons of cement (annual average of 1.2 billion tons); (2) The per capita demand exceeded 1.
The characteristics of the demand platform period (2014-2025)
: (1) The total volume fluctuated in a high range: 2.2 billion tons fluctuated by 10%; (2) The production capacity remained stable; (3) The competition pattern remained stable; (4) The number of enterprises was relatively stable.
Downward period: 2025 ~ trough (before 2060)
Characteristics: ① The platform period is broken, and the cement demand is long. Downward period: It is expected that the trough of cement demand will occur before 2060; ② The per capita demand will fall; ③ The number of enterprises will decrease.
5. Reasonable profit is the premise
of transformation and upgrading. Data show that in the second half of 2022, the sales profit margin of cement industry is 5.4%, which is lower than industrial average of 0.
The reasonable profit margin of the cement industry should exceed the average level of the industry, and it is better to maintain a fluctuation around 10%, and the reasonable profit of the industry should be 80-120 billion yuan. At present, the cement industry is in the stage of demand decline, so we should pay more attention to the quality of life, and reasonable profit is the premise of transformation and upgrading.
2. Prospects for
the cement market in 2023 1. Investment in China's economic recovery is still the main driving force
. Zheng Jianhui believes that in 2023, with the liberalization of the epidemic, China's economy will usher in a recovery. From the perspective of provinces, in 2022, none of the provinces achieved the GDP target. In 2023, compared with the GDP growth rate in 2022, the GDP growth target of 31 provinces will be increased by 1 (Shaanxi) ~ 9.
Based on the realization of the economic growth rate of all provinces, it is predicted that: (1) in 2023, China's economic growth rate will be 5. (The government's target is 5%) (2) The contribution rate of Guangdong and Shanghai to the economy will increase. Guangdong (7% → 9%), Shanghai (2% → 4%).
In the process of achieving economic growth, investment is still the main driving force.
In recent years, through government investment and policy incentives, the policy level has effectively stimulated the investment of the whole society, accelerated the implementation of the "14th Five-Year Plan" major projects, and strengthened inter-regional infrastructure links. At the same time, the amount of special debt issued in advance has increased: in November 2022, the Ministry of Finance issued 2.19 trillion yuan of new special debt in 2023 ahead of schedule, compared with the 1 yuan issued in advance at the end of 2021. The Report on the Work of the Government also points out that in 2023, it plans to add 3.8 trillion yuan of local special debt. Compared with the 3.2 of the
2022 plan, the fluctuation of cement demand throughout the year was narrowed: the recovery of real estate fatigue the pre-development
of infrastructure construction. In terms of real estate, under the influence of the policy of guaranteeing the completion and delivery of buildings, the real estate industry gradually completed the construction, but due to the drag of land acquisition and new construction, the probability of real estate investment continued to grow negatively. The trend is low before and high after. In terms of
infrastructure, the construction project database of China Cement Network shows that in 2022, the amount of winning bids for construction projects nationwide increased by 27% year on year. In 2023, infrastructure construction will obviously form a physical volume, with a trend of high before and low after.
Based on the trend of real estate and infrastructure investment, Zheng Jianhui put forward two neutral and optimistic assumptions for cement demand in 2023. Neutral assumption: the decline of cement demand is narrowed to less than 3%; optimistic assumption: the policy intervention exceeds the expectation, and the demand is stable or slightly positive;
In 2022, affected by the market situation, some domestic production lines chose to postpone production. In 2023, with a large number of new lines put into operation, the pressure of domestic cement overcapacity may further increase.
Zheng Jianhui estimated that the new ignition clinker production capacity in China is expected to be 47 million tons in 2023, of which more than 80% is located in the south, 35% in the southwest, 25% in the east, 24% in the central and southern regions, and more than 3 ignition production lines are expected in Yunnan, Anhui, Guizhou and Hunan.
4. It is expected that the average price in the fourth quarter 5. The cost per ton of cement is expected to fall again, and the profit of the whole industry is expected to improve . The rising cost is an important reason for the sharp decline in the profit of the cement industry in 2022, and the cost problem is expected to be improved in 2023. Zheng Jianhui said that in 2021-2022, the cost of cement per ton increased by 60 yuan per ton, an average increase of more than 30%, and the cost increase far exceeded the price increase, resulting in a decline in gross profit. In 2023, the cost is expected to decrease: (1) the impact of fuel price fluctuation on cost fluctuation is weakened, and the fuel price is expected to decrease steadily and slightly; (2) the use of alternative raw materials/alternative fuels will further increase, and the proportion of cement kiln collaborative disposal line will increase to more than 25%. (3) Reduce profits, reduce expenses and reduce costs. From the perspective of the first and second half of the year, the first half of the year: in the first quarter, the cost of cement is still rising (the coal price is still high at the beginning of the year), the price is falling, and the profit is shrinking; in the second quarter, the price is rising, and the profit decline is gradually narrowing. The second half of the year: With the further improvement of cement demand, the price will rise, and the industry profit is expected to improve significantly year-on-year. Finally, Zheng Jianhui believes that collaborative self-discipline is the premise of maintaining industry efficiency, and whether industry profits can return to a reasonable range depends on industry consensus. In order to further promote the green, digital and intelligent development of the cement industry, China Cement Network will be launched on April 24-25, 2023. The "China Cement Industry Green Development Summit Forum and Ultra-clean Emission Technology Exchange Conference" 
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