capacity is a long-standing problem in the cement industry.
In recent years, domestic cement demand has continued to decline. Since the beginning of 2023, domestic cement prices have been under great downward pressure, and price wars have broken out in many places. Even in hot areas such as East China, cement prices have fallen to a historical low, and industry losses have continued to increase. Why the current situation, many industry insiders believe that the growing contradiction between supply and demand is the main reason, demand decline, the problem of overcapacity is more prominent.
How to treat overcapacity? How will the industry reduce production capacity in the future? Zhang Xiaohua, chairman and general manager of Red Lion Holding Group, shared his view that
in the past five years, the industry efficiency has been greatly improved by "reducing production" through peak staggering, which has benefited most enterprises and brought a large amount of capital into the industry, aggravating the degree of overcapacity.
In the future, the industry will shift from "de-production" to "de-capacity". "Capacity" is divided into two kinds, one is competitive capacity, when demand goes down, 30% -40% of capacity will be withdrawn through market competition, but this way of capacity will make the industry efficiency low, many enterprises are difficult to withdraw, few winners; The other is to rationally remove production capacity and unify our understanding so that those who withdraw from production capacity can withdraw in return, which can not only improve the concentration but also make the industry achieve good benefits.
From now on, the possibility of competitive "capacity removal" is far greater than that of rational "capacity removal". To achieve rational "capacity removal", industry peers need to have a profound understanding of the general trend of the industry, but also need a big pattern and great wisdom.
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