According to the estimates of China Cement Network Cement Big Data Research Institute, the annual profit of the cement industry in 2023 was about 32 billion yuan, down 51% from the same period last year, a 16-year low. The sharp decline in
industry profits is a microcosm of the plight of the cement industry. Under the market washing, what is the way for cement enterprises to survive? You might as well turn your eyes to conch cement .
In 2023, the revenue of Conch Cement was 141 billion yuan, and the total profit was about 13.6 billion yuan. In such a severe industry situation, Conch Cement not only accounts for nearly one fifth of the total revenue of China's cement industry (about 743 billion yuan), but also takes more than 40% of the total profits of the national cement industry. How
does conch cement do it? The "T-shaped strategy" has contributed a lot!
"When demand goes down, it is the time for the T-shaped strategy to shine." An industry insider said. The horizontal of
"T" represents the coast and the vertical represents the riverside. "T-shaped strategy" refers to the construction of large and medium-sized clinker bases in places with abundant limestone resources along the Yangtze River, the construction of grinding stations in coastal areas with scarce resources but large cement market, the local production of cement, the direct sale of the eastern market with strong demand, and the formation of a "clinker base-Yangtze River-grinding station (core consumer market)" model.
Relying on the "T-shaped strategy", Conch Cement has an advantage in the three core issues of market, cost and inventory. When the demand is high, the price is raised to increase efficiency, and when the demand is low, the price is reduced to stabilize the volume. This mode makes Conch Cement appear calm in the current market environment.
The market is the key, and the market layout will largely determine whether the enterprise can survive in the future. Only when
cement is sold out can it produce benefits. If cement enterprises want to sell cement well, they have to think about the consumption capacity of cement in various regions. Economically developed areas, such as the Yangtze River Delta and Dawan District, have a large population influx and strong demand for cement, so cement enterprises in these areas will naturally be able to enjoy the dividends of the market.
Layout, one is to build local lines, the other is to build wharfs and transit depots, relying on convenient transport conditions and freight transit resources, to put "short-leg" cement into the target market. Conch Cement has successfully integrated the eastern market and the resources along the Yangtze River
through water transportation. While controlling the core market by using the grinding stations, transit depots and marketing departments widely distributed along the eastern coast, Conch Cement perceives market trends, coordinates sales scheduling, raises prices to increase efficiency when the demand is good, reduces prices to stabilize the volume when the demand is poor, and firmly controls the market initiative.
Cost is the core, and the competition of cement enterprises is ultimately the competition of cost.
From upstream raw material mining, to midstream production, and then to downstream sales, there are many channels for cement enterprises to reduce costs, among which production cost control is the first and basic pass for enterprises to reduce costs and increase efficiency.
Conch has a large number of high-quality and low-cost limestone resources along the Yangtze River, and has built a large number of large-scale clinker production bases, combined with the technical advantages of the production side, to achieve resource advantages + scale advantages + technical advantages, so that Conch Cement can produce high-quality clinker at a very low cost.
Transportation link, the way of Yangtze River + sea greatly reduces the cost of cement transportation, expands the sales radius, and greatly changes the "short leg" attribute of cement.
Cement grinding link, close to the market, near the power plant, wharf and other supporting facilities, the market response is fast, and the cost of admixture is low. In terms of
energy costs. Conch Cement has strategic cooperation with large coal enterprises to expand direct supply and import channels, comprehensively reduce the procurement cost of raw materials and fuels, accelerate the use of clean energy, and optimize the fuel energy structure. At the same time, we will continue to promote energy-saving and consumption-reducing technological transformation, continuously improve the fine management level of production lines, tap the potential of optimizing coal and electricity consumption indicators, and reduce the cost of coal and electricity use.
Inventory is the key link, the faster the inventory turnover, the higher the operation rate of the production line, the more initiative can be grasped.
Cement needs to be produced continuously, otherwise the kiln will have to be shut down when the warehouse is full. As the market demand continues to shrink, the inventory pressure of cement enterprises is very high, so reducing or alleviating the inventory pressure is crucial for enterprises to adopt flexible price strategies. The advantages
of Conch Cement's "T-shaped strategy" have emerged again. Make use of the large clinker warehouse in the clinker base to increase the storage capacity; make use of the time difference of water transportation to disperse the inventory pressure; make use of the grinding stations and transit warehouses widely distributed in the coastal market to digest the inventory, which can be described as "interlocking, watertight".
Faced with the dilemma, Conch Cement has achieved breakthrough in the three core areas of market layout, cost control and inventory management by virtue of its forward-looking and excellent "T-shaped strategy", showing an excellent way of survival and development.
At the same time, this strategic model also provides an effective reference for other cement enterprises, enabling them to find a way out in the face of industry difficulties and drive sustainable development and progress. How should
China's cement industry get out of the predicament and face the new cycle? On March 28-29, China Cement Network will hold the "13th China Cement Industry Summit and TOP100 Award Ceremony" in Hangzhou, during which awards will be given to top 100 cement and supplier enterprises, and experts and scholars will be invited. China Railway and other construction units jointly discuss the new development trend of the cement industry in the future, and work together to create the future!
