As early as 2009, the State Council approved the "Several Opinions on Restraining Overcapacity and Repeated Construction in Some Industries to Guide the Healthy Development of Industries" (Guofa No.38) issued by the Development and Reform Commission and other departments, which clearly put forward that the new cement production capacity should be strictly controlled and that the new cement production capacity should be strictly controlled. All cement projects that had not been started before September 30 of that year were suspended and carefully cleaned up. Over the past
decade, although the industry has created brilliance during the period, it has not really solved the problem of overcapacity, so that the cement industry is facing more difficulties in the face of the decline in market demand.
The content has nothing
to do with this article, so why has the problem of overcapacity not been solved?
1. Profit-seeking is the nature of capital. No matter what industry, as long as there are good investment returns, it will inevitably attract capital to enter, and then expand production capacity and share the market. The same is true of the cement industry. In the past ten years, although the industry has experienced a low ebb in 2015, the overall profitability of the cement industry is strong. In terms of
sales profit margin, it has been maintained at about 8% for a long time, and has exceeded 15% for four consecutive years from 2018 to 2021. Since 2015, there is little difference in the output of cement clinker , and the fluctuation of the utilization rate of cement production capacity is limited, while the profit continues to rise and remains at a high level. For the traditional industry of cement, it has become a leader in the field of traditional industry and is very proud.
2. Characteristics of cement production line. Cement production lines speed up the iterative updating of production technology. Generally speaking, in the cement industry, new production lines have more competitive advantages than old production lines, and large production lines have more scale advantages than small production lines. Therefore, even if the cement production capacity in the regional market has been saturated, as long as there is a large space between the market price and the cost, the latecomers can still gain market share by virtue of the advantage of backwardness. There is also the courage to demolish and rebuild the production line of "working age" for about 10 years, and there is no initiative to withdraw.
3. Characteristics of cement products. Cement product characteristics. Cement is a short-leg product with rigid demand, no alternative products, and strong regional, the longest radius of highway economic transportation is generally not more than 300 kilometers, the correlation between market demand and production capacity is relatively high, and overcapacity often shows regional differences. Under the guidance of the policy of public transit railway and public transit water, some enterprises with obvious cost advantages can extend their legs farther, but on the whole, cement is still short legs, regional market restrictions on competition are relatively easy to occur, and monopoly risk is rising.
4. Reducing output is not equal to reducing production capacity. In the past few years, to a certain extent, production has replaced the position of capacity removal in resolving overcapacity. Although the industry has gained good profits and ushered in a good period of development, it also weakens the influence of cost differences on the operation of enterprises. Capacity with weak competitiveness can also obtain considerable profits, resulting in weak willingness to withdraw from capacity with weak competitiveness, reducing the motivation to withdraw, and weakening the decisive role of the market in the allocation of resources. The decisive role of the market in the allocation of resources can be strengthened by means of differentiation such as environmental protection and energy efficiency, and the "one size fits all" can be generally implemented in practice, which affects the enthusiasm of enterprises to pursue high-quality development. At the same time, high profits have further stimulated investment enthusiasm within and outside the industry.
5. Difference between actual capacity and design capacity. The root of cement overcapacity is the overcapacity of clinker, which can be divided into design capacity and actual capacity. In recent years, with the progress of cement production technology and the surplus of the original design, the difference between the actual capacity and the design capacity has been increasing. Taking the clinker production line with a designed capacity of 5000t/d as an example, the actual capacity may reach 7500t/d, which further aggravates the excess cement clinker production capacity.
6. Emission permits, energy consumption indicators and other means that could have strictly controlled the production capacity of the production line did not play their due role. On the contrary, it has become a new production and management concept for enterprises to expand production and increase clinker storage facilities, and the normal production and marketing system has been disrupted. All the
people in the world come for profit, and all the people in the world go for profit. Based on the above reasons, under the pressure of strict restrictions on new production capacity, taking advantage of some "loose" policies, the enthusiasm for building new production lines is still not low. In the past, the emergence of zombie production capacity, small construction, construction without approval, more sales on the first line, exotic kiln paths and so on also interfered with the cement industry to a certain extent.
At present, with the decline in the growth rate of real estate investment, the demand for cement market is declining. Since this year, the recovery of demand in most parts of the country has fallen short of expectations, and the demand for cement market in some areas has fallen by more than 50% year on year. Facing the decline of market demand, the problem of overcapacity is further highlighted. Price wars have broken out in many popular markets, and many regions have lengthened the time of kiln shutdown and increased the frequency of kiln shutdown on the grounds of off-peak production, which has become more and more intense and has neglected the effective use of resources. It is an objective fact that
market demand fluctuates, and it is also an objective fact that competition intensifies when demand declines. However, it has to be said that under the serious contradiction of excess capacity, orderly competition has evolved into a price war, or the occurrence of organizations reaching restrictions on competition and being punished by the market regulatory authorities should be a big probability event.
In the future, the problem of overcapacity in the cement industry will become more prominent, and an industry shuffle may be inevitable. Dr. Ma Weiping, former chairman and president
of Yaobai Cement Group, also lamented that the current cement production capacity is about 3.5 billion tons, and the probability will drop to about 1 billion tons in the next 10 years. If substantial results can not be achieved in resolving overcapacity, the capacity utilization rate will be less than 30%. Resolving overcapacity is imminent, and the industry will become more and more difficult and the market situation will become worse and worse.
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