How were Fujian cement enterprises beaten down by conch?

In recent years, the price of cement in Fujian has continued to decline, and now it has reached a historical low, and there is still no sign of improvement. In addition to the decline in local market demand year after year, the impact of foreign cement represented by conch cement is the key factor. It can be said that Fujian cement enterprises have suffered conch for a long time. The terrain of

Fujian Province is high in the west and low in the east. Most of the terrain is mountainous, and very few plains are distributed in the coastal areas, thus forming several economic center cities. Such terrain and economic layout have caused great disadvantages to the local cement enterprises.

From the supply side,

there are abundant limestone resources in the western mountainous areas, which are suitable for the establishment of large-scale clinker production bases. As a result, western Fujian, represented by Sanming and Longyan, has become the main clinker production area in Fujian Province. The distribution map of national cement clinker production lines of China Cement Network shows that there are 44 cement clinker production lines in Fujian Province, of which 37 production lines are located in Longyan and Sanming. Distribution of production lines

in Fujian Province

According to China Cement Network, the annual production capacity of Fujian Province in 2022 is 55.8 million tons. Longyan and Sanming account for about 90% of the province's production capacity, and Longyan alone accounts for about 50% of the province's cement production capacity. Distribution of production capacity

in Fujian Province

From the demand side,

the main cement consumption markets in Fujian Province are in coastal cities. According to the data of China Cement Network, Xiamen, Zhangzhou and Quanzhou are the largest cement consumption market in Fujian Province, accounting for half of the total consumption of the province; Pufuning, as the second largest cement consumption market in the province, accounts for about one third of the province's consumption; The consumption of cement in Longyan, Sanming and Nanping accounts for only one sixth of the province's total.

From the map, there are 41 cement grinding stations in Fujian Province, of which 26 are located in Funing, Xiamen, Zhangzhou and Quanzhou along the coast. This means that Fujian cement enterprises need to transport the cement clinker produced in the west to the eastern coast to produce and sell cement locally, but there is no large-scale water system in Fujian Province, and there is no convenient means of shipping, so it can only be solved by land transportation with high cost.

However, Conch Cement can rely on the T-shaped strategy to occupy absolute advantages in production, transportation and market, and firmly control the initiative of the cement market in Fujian.

Specifically, Conch Cement has nearly 20 limestone mines for cement in Chizhou, Tongling and other areas along the Yangtze River. Relying on the construction of large-scale clinker bases along the Yangtze River with abundant limestone resources, Conch Cement has brought its resource advantages into full play and produced high-quality cement clinker;

Then, using the southward route of "Yangtze River + Sea", cement clinker will be transported by the cheapest waterway to Fujian coastal cities with scarce resources but huge demand for cement market, such as Funingpu, Xiamen, Zhangquan and other places. It is estimated that it costs 0.02-0.05 yuan to transport one kilometer of cement per ton by waterway, 0.12-0.15 yuan by railway and 0.3-0.5 yuan by highway;

Finally, transit depots will be established in areas with large cement consumption to sell cement locally. It is understood that Conch Cement has large transit depots in Ningde and Zhangzhou, with storage capacity and transit capacity exceeding 100,000 tons at the same time.

Conch has a cost of about 30 yuan/ton lower than industry level. Taking into account the transportation costs, the cement imported into Fujian by Conch is even cheaper than that of local enterprises in Fujian. Therefore, Conch can quickly occupy the market share of Fujian cement with high-quality and low-cost cement clinker.

It is reported that conch cement imports more than 10 million tons of cement into Fujian market every year, so that whether the price can rise successfully depends on "conch's opinion". In the past two years, Conch Cement seems to have increased its efforts to control cement in Fujian.

According to China Cement Network, Conch Cement took over Fuzhou Taiwan Cement and Yangyu Wharf in August 2023, and added three grinding stations with an annual output of 1 million tons in Fuzhou market. Not only that, Conch Cement will also plan to build two cement clinker production lines with a daily output of 5000 tons in Youxi, Sanming. Youxi County is backed by Sanming and faces Fuzhou, occupying the dominant position of Sanming's important railway station. If these measures of Conch Cement are successfully implemented, they will block the door for Sanming Cement to be sold to the eastern coastal markets such as Fuzhou.

So it seems that the pressure from Conch Cement has not yet reached its peak, and can cement enterprises in Fujian receive this "challenge"? Let's wait and see..