On August 25, the Ministry of Industry and Information Technology, the Development and Reform Commission, the Ministry of Finance and other eight departments jointly issued a circular on the Work Program for Steady Growth of the Building Materials Industry, which clearly put forward the requirements, objectives, measures and safeguards for the steady growth of the building materials industry in 2023-2024. What should the cement industry do around the Plan? In 2023-
2024, the added value of the building materials industry will rise
steadily. According to the Plan, the main goal of the steady growth of the building materials industry in 2023-2024 is to "maintain steady growth of the industry, and strive to increase the industrial added value by 3.5% and 4% respectively in 2023 and 2024". From January to July this year, the industrial added value of non-metallic mineral products industry fell by 0.1% year-on-year, and even more than 2% year-on-year in May and July. The growth rate of the industrial added value of the non-metallic mineral products industry is basically the same as that of the building materials industry. In 2023, the growth rate of the added value of the building materials industry will achieve the target of 3.5%. From the current node, it means that a significant growth will be achieved from August to December compared with the same period last year. At the same time, if the target of 2024 is achieved, it means that the growth of building materials industry will be more stable next year, in order to avoid the ups and downs of the industry.
Figure 1: The growth rate of industrial added value of building materials industry will rebound
in 2023-2024 Data source: cement big data (https://data.ccement.com/)
Steady growth of building materials The cement industry should take the lead. In
2022, the operating income of the cement industry accounts for 14% of the building materials industry, and the total profit accounts for 14% of the building materials industry, both of which are lower than proportion of total assets (20%), and the profit margin of the industry sales has also been lower than average level of the building materials industry. In 2023, the prosperity of the cement industry declined further, with the total profit falling by 60% in the first half of the year, which is an important reason for the significant slowdown in the growth of the added value of the building materials industry this year. As the second largest sub-industry of the building materials industry, the stable operation of the cement manufacturing industry is crucial to the steady growth of the building materials industry. From the historical data, large fluctuations in the profits of the cement industry will cause large fluctuations in the profits of the building materials industry (Figure 2). Therefore, the author believes that in order to achieve the goal of steady growth in the building materials industry, the cement industry must take the lead. Only when the cement industry stabilizes and achieves a certain growth, can building materials industry achieve the goal of increasing the value added in 2023-2024.
Figure 2: Significant impact
of large fluctuations in cement industry profits on changes in building materials industry profits Source: Cement Big Data (https://data.ccement.com/)
How does the cement industry help the building materials industry grow steadily 0 HTML0 https://data.ccement.com/ In view of the steady growth of the building materials industry, the Plan proposes four major measures: (1) expanding effective investment to promote the transformation and upgrading of the industry; (2) enhancing effective supply to stimulate new growth momentum of the industry; (3) promoting green building materials to cultivate the concept of green consumption; and (4) deepening international cooperation to achieve high-level mutual benefit and win-win results. The first two items undoubtedly need to increase expenditure in advance for the cement industry, which means cost, and stable benefits are the premise for the transformation and upgrading of the industry; the latter two items have relatively limited demand for the cement industry. This also highlights the basic principle of the Plan, that is, traditional industries should adhere to transformation. 0 HTML 0 UNK1 1 How can cement industry really take the lead on the basis of insisting on transformation and help the building materials industry grow steadily. The author believes that the key lies in further improving the supply-side reform measures and implementing the safeguard measures for steady growth. The Plan has put forward a series of safeguard measures to ensure the steady growth of the building materials industry, involving the key contents of the cement industry, which the author believes mainly include: 0 HTML 0 UNK1 2 (1) Guiding the industry to strengthen self-discipline. HTML0 UNK1 3 Strengthen industry self-discipline, industry is the industry of all enterprises, enterprises should be the builders of the industry rather than destroyers, the defenders of the policy, the perfecters rather than ignoramuses. To strengthen industry self-discipline is to strictly implement the relevant policies of the building materials industry, and at the same time to prevent enterprises from monopolizing the operation, but also to prevent enterprises from vicious competition to destroy the industry ecology. 0 HTML 0 UNK1 4 (2) Key enterprises should put steady growth in a more prominent position 0 HTML 0 UNK1 5 In the first half of the year, the loss rate of the cement industry is expected to be nearly 50%, and the profits of major leading cement enterprises have also shrunk significantly. Enterprises such as Jidong Cement, 0 HTML 0 UNK1 6 Shanshui Cement 0 HTML 0 UNK1 7 even suffered losses. Although most of the cement listed companies have made profits by virtue of diversified advantages, in this downturn cycle of the cement industry, the loss pressure faced by small and medium-sized enterprises has been very great. 0 HTML 0 UNK1 8 The author believes that key enterprises, especially state-owned enterprises of central enterprises, should improve their political standing, put the steady growth of the industry in a more prominent position in accordance with the requirements of the Plan, maintain rational competition and stabilize the efficiency of the industry. 0 HTML0 UNK1 9 (3) Accelerate the revision of capacity replacement policy and highlight the role of market regulation 0 HTML0 UNK2 0 Capacity replacement is an important means for the industry to resolve overcapacity, and the revision of capacity replacement policy should continue to focus on the original intention of "resolving overcapacity". At present, the rigid capacity of the cement industry is imminent. The Plan proposes to give more prominence to the role of market-oriented regulation, while requiring strict capacity replacement, curbing new capacity, and prohibiting the expansion of capacity in the name of technological transformation. This will help speed up the process of rigid capacity reduction. In view of the expansion of production capacity since the implementation of the capacity replacement policy, it is suggested that a good investigation should be done. 0 HTML0 UNK2 1 (4) Research to promote the cement industry into the national carbon emissions trading market 0 HTML0 UNK2 2 Cement industry into carbon trading is gradually approaching, but the allocation of carbon quotas around the industry is still inconclusive. From the point of view of the pilot areas, most of them adopt the benchmark method, but the benchmark values of 0 HTML 0 UNK2 3 clinker 0 HTML 0 UNK2 4 carbon emission intensity vary greatly from place to place. The allocation of carbon quotas should take full account of regional characteristics, peak staggering production policy, production line size, co-disposal facilities, approval capacity and so on. With the acceleration of the incorporation of the cement industry into the national carbon market, the dual control of energy consumption has gradually shifted to the dual control of carbon emissions, and the transformation and upgrading of the cement industry is expected to accelerate in the future. 0HTML0UNK25
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