Everyone is playing the "Ming card", which cement enterprises can survive?

If the economy is compared to a high-speed train, then the deceleration of the train is not a problem of one or two wheels, but a systemic problem. There is a popular saying on the

Internet that "this is the worst year in the past ten years, but it is also the best year in the next ten years". This idea may be too pessimistic, but the economic situation is not easy to turn around, and the solution of systemic problems can not be achieved overnight. What we need to do is to prepare for the worst and strive for the best results.

For a cyclical industry like cement, it is easy to get a general idea of the future market trend, so the enterprises in the industry are playing a "clear card". In the short term, there are several forecasts of cement demand in the industry in 2030, which are between 1.3-1.8 billion tons.

If we refer to the development law of Japan's cement industry, the per capita cement consumption in Japan reached a peak of 705 kg in 1991, and gradually dropped to about 450 kg after 2000; In 2014, China's per capita cement consumption reached a peak of 1.8 tons. According to the year-on-year decline, it will drop to 1 by 2030.

In the long run, Zhang Zhenkun, CEO of Asian Cement, predicts that the per capita cement consumption will be 400 kg in 2060. According to the online forecast of about 1.1 billion people in 2060, the national cement demand will be 440 million tons. This data is related to , and the inevitable involvement of cement plants across the country in a life-and-death battle in the future." So which companies are likely to survive?

From the perspective of population flow, the core one or two cities still have a stronger attraction for young people. The 10 cities with the largest population growth in 2022 are Changsha, Hangzhou, Hefei, Xi'an, Guiyang, Nanchang, Kunming, Wuhan, Zhengzhou and Qingdao, and the provincial capitals in the central and western regions are in the forefront of the growth.

In the future, with the decline of the birth population, the aggravation of aging, and the improvement of urbanization level, the siphon effect of population and resources in the core cities will become more and more obvious. The development space of the surrounding fourth and fifth tier cities, and even the third tier cities, will be limited, while the rural areas will inevitably decline.

Specific to cement demand, cement enterprises that are close to the core city circle or can effectively radiate the core city through convenient transportation conditions have significant advantages. As the saying goes, relying on big trees to enjoy the cool, the market layout will largely determine whether the enterprise can survive in the future.

2. Mining resources bring natural competitiveness differences

. Cement is a resource-consuming industry in the final analysis, so mining is considered to be the lifeline of cement enterprises.

In the past stage of rapid expansion of industry scale, there have been many enterprises with poor mine resources or even without their own mines in the industry. These enterprises are naturally inferior in the market competition, and it is difficult for them to survive under the background of the continuous downward trend of the follow-up market demand.

Of course, owning mine resources should also consider factors such as ore quality, ore cost, transportation distance and so on. The competitiveness of some enterprises with high ore cost and long transportation distance will also be limited.

3. Market coverage is particularly important

as a large industrial product, cement has always been a "short leg", so the regional characteristics are very obvious, but there is no lack of some special cases in the industry, relying on convenient transport conditions and freight transit resources, greatly expanding the scope of market radiation. The best of them include Conch, Oriental Hope and so on.

In recent years, in order to enhance market control, many cement enterprises have begun to vigorously build wharfs and transit depots, which can also be seen as an effective means to expand market coverage. In the future, with the decline of market demand and the increasing competitiveness, who can put "ammunition" farther will be particularly important.

At that time, even if it does not make money, as long as it can guarantee cash flow, or "disgusting" (affect) competitors, it will be enough to laugh proudly in the face of the severe market situation.

4. Cost is the core

of winning competitive advantage. The core of market competition is always cost. There are many ways and channels for cement enterprises to reduce costs. In terms of

innate advantages, in addition to the mine conditions mentioned above, the size of the production line is as critical as the old and new. Usually, under the same conditions, the new production line has more competitive advantages than old production line, and the large production line has more competitive advantages than small production line.

The day after tomorrow, enterprises can reduce production costs in all aspects through continuous technological upgrading, reducing energy consumption, improving resource utilization, and reducing personnel input.

In recent years, domestic cement enterprises have also begun to try alternative fuels. Although this technology will adversely affect the working conditions and output of enterprises in the short term, it can effectively reduce carbon emissions in the long run. With the opening of the carbon emissions trading market, these enterprises using alternative fuels may have more advantages.

As for intelligent technology, domestic cement enterprises have started a lot of attempts, but the input-output ratio of some technologies is not good. Of course, from the perspective of the future, it will be the world of intelligent factories.

5. High asset-liability ratio will be very passive

. High asset-liability ratio not only means that enterprises need to bear high financial costs, but also means that enterprises lack confidence in market competition and are difficult to fight for a long time.

Taking some production lines put into operation in recent years as an example, although these production lines are not bad in terms of cost competitiveness, due to the debt construction line, the debt pressure of enterprises is high, and the liquidity requirements are high. In the market competition, on the one hand, in order to ensure cash flow, it is difficult to stop kilns and limit production synchronously with regional enterprises, which leads to the increase of market instability; on the other hand, in the low-price competition, it will also face the dilemma that the more it sells, the more it loses, and it is difficult to persist in long-term combat.

6. Environmental protection is a hard indicator

. Compared with the competitiveness of enterprises and other conditions, environmental protection requirements are hard indicators. Under the guidance of national policies, enterprises with low level of environmental protection governance not only face differences in policy support, but also may be shut down directly because of environmental protection problems.

However, it should be pointed out that the high cost of environmental protection in cement plants requires a large amount of capital. In the current market situation, enterprises also need to consider whether the investment is worthwhile. If the investment in environmental upgrading is too high, it will be difficult to recover the investment cost in a short time in the future. Then, shutting down the production line may be a good choice.

7. Don't put all your eggs in one basket

. The demand trend of the cement industry has been relatively clear for a long time. In recent years, many cement enterprises have begun to make breakthroughs in the industries of aggregate, commercial mixing, new materials and environmental protection, and have made good profits.

Taking Huaxin Cement as an example, in 2022, the aggregate business of Huaxin Cement realized a revenue of about 3.065 billion yuan, with a gross profit of 55. The annual output of aggregate was 99.8 million tons, an increase of 112.25% over the previous year; Huaxin Cement pointed out that with the Yangxin 100 million tons of machine-made sand and gravel project (Phase I), Zigui, Yichang, Quxian Phase II, Honghe and other 20 aggregate production lines put into operation successively, the company's aggregate production capacity has reached 2.

From the perspective of the development logic of foreign cement enterprises, most of them, including Lahao, are widely involved in upstream and downstream industries besides cement. It is believed that in the future, domestic cement enterprises, especially large cement enterprises, will strengthen the expansion of related industries.

Of course, "not putting eggs in one basket" also includes another dimension, that is, promoting overseas development strategy. However, attention needs to be paid to investment risks, especially geopolitics and local economic potential and stability.

Which enterprises can survive? In addition, in view of the future economic development trend, the cement industry will inevitably enter the era of regional oligopoly in the future, eventually forming a regional core market divided by multiple enterprises, forming a balanced situation.