In recent years, the domestic demand for cement has continued to decline. Since the beginning of 2023, the downward pressure on cement prices has been enormous, and price wars have broken out in many places. Even in popular areas such as East China, cement prices have fallen to a historical low. How should
the industry view the current situation? How to deal with it next? Li Qunfeng, executive director and general manager
of Conch Cement , said that market share is the basis for sustainable development of enterprises. Next, Conch will adhere to the idea of "share is the foundation, profit is the purpose", maintain a reasonable market share, and strive to improve operating efficiency.
In the past two years, the demand for cement has declined, and the performance of related listed companies has been sluggish. According to the semi-annual report disclosed by Conch Cement, from January to June this year, the company realized operating income of 65.436 billion yuan, an increase of 16.28% over the same period last year, and realized net profit of 6.468 billion yuan, a decrease of 34.26% over the same period last year. The comprehensive gross profit rate of products was 26.81%, down 6.3 percentage points from the same period last year.
In this regard, Li Qunfeng said that the company will continue to do a good job in production and operation, implement precise and effective investment, strengthen innovation drive, and continue to create value for the majority of shareholders.
Li Qunfeng said that market share is the basis for sustainable development of enterprises. Next, Conch will adhere to the idea of "share is the foundation, profit is the purpose", maintain a reasonable market share, and strive to improve operating efficiency.
In Li Qunfeng's view, Conch Cement has certain competitive advantages in the aggregate industry: first, the company has rich mining resources and experience in mining and comprehensive management; second, the company has built a large aggregate production base along the Yangtze River, with convenient waterway logistics and low transportation costs; Third, aggregate, cement and commercial mixing industry have industrial synergy effect. In the
first half of this year, the mixed sales volume of Conch Cement increased by 41.5% year on year. In this regard, Li Qunfeng said that the company will speed up the layout of commercial mixing industry, while focusing on the core market of cement and aggregate industry and regional central cities, adhere to the strategy of new construction, mergers and acquisitions, leasing simultaneously, strengthen the construction of terminal market, and will continue to strengthen the management and control of accounts receivable of commercial mixing business to ensure risk control.
For off-peak production, Li Qunfeng expects that the number of off-peak days in the second half of the year will exceed the same period last year.
According to the monitoring data of cement network, many places have recently announced the implementation plan of peak staggering production in the third quarter. Hunan Province requires that the base number of off-peak production days from September 1 to December 31, 2023 should not be less than 55 days, and Sichuan Province requires that each clinker production line should be off-peak production for more than 10 days in September 2023.
As for the role of peak staggering production, Li Qunfeng believes that the marginal effect of peak staggering has been weakened because the current market demand has not been further released and there is a certain degree of imbalance between supply and demand.
Generally speaking, the role of peak-staggering production in stabilizing cement prices is not obvious. This is because the market is in the off-season, and demand is still declining, which leads to an increase in inventory. For most cement enterprises, it is difficult to distinguish whether the occurrence of this situation is the active peak staggering of the internal companies in order to reduce supply or the passive shutdown of the kiln under the pressure of reducing inventory. Therefore, the off-peak of the supply side is unlikely to cause a tight supply situation, and it is impossible to talk about the supporting role of prices. Only in some provinces, the price of cement is very close, even lower than cost line, and the space for price reduction is relatively small.
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