On March 28-29, the "2024 13th China Cement Industry Summit and TOP100 Award Ceremony" was held in Hangzhou, Zhejiang Province. At the meeting, Zheng Jianhui, chief analyst of Cement Big Data Research Institute, made a keynote report on "Challenges and Breakthroughs of the Cement Industry in 2024".
I. Five challenges
facing the cement industry in 2024 The demand for cement in the six regions has reached the peak in turn, and the demand for cement in the six regions has accelerated downward
. In recent years, the consumption of cement in the six regions has reached the peak in turn, and the demand for cement in the country has accelerated downward. Against this background, Zheng Jianhui expects cement demand to decline by at least 3% in 2024. Specifically, infrastructure construction is affected by policy restrictions, financial pressures and economic transformation. Transportation fixed assets are expected to decline by 6% in 2024, and high-debt provinces will see a larger decline, which will slow down the growth of infrastructure investment; In terms of real estate, the growth rate of construction area will continue to maintain a negative growth, the number of renewal projects and new projects will continue to decrease, and the decline rate of new projects in the second half of the year is expected to gradually narrow. In general, the first quarter starts slowly, and the pressure is the greatest throughout the year. It is expected that the decline rate of demand will be around 12%, and it is expected that the decline rate will gradually narrow in the second, third and fourth quarters. Over
capacity is further aggravated and the clearing speed is slow
. Overcapacity will be further aggravated. In 2021-2023, the number of cement enterprises will be stable and the clearing speed will be slow. At present, the capacity concentration of TOP10 cement enterprises has stagnated, but the real capacity of clinker has continued to grow, and the actual capacity utilization rate has continued to decline. Zheng Jianhui predicts that the new ignition capacity will reach 21 million tons of clinker production capacity in 2024, and points out that Chongqing, Xinjiang, Zhejiang and Guizhou will have more ignition capacity under pressure. In 2024, the industry will be under greater pressure, and the overcapacity will be more serious. On May 18, 2016, it was difficult to achieve
the goal of
steady growth policy with diminishing industry added value. The requirements for the cement industry in the Guiding Opinions on Promoting the Steady Growth, Structural Adjustment and Benefit Increase of the Building Materials Industry (GBF [2016] No.34) issued by the General Office of the State Council are as follows: reduce excess capacity: strictly prohibit new capacity, eliminate backward capacity, promote joint restructuring, and implement off-peak production; accelerate transformation and upgrading: upgrade cement products and improve technical equipment; Promote cost reduction and efficiency increase: green and intelligent development, support enterprise innovation, implement brand strategy, and carry out capacity cooperation; improve support policies: optimize industrial policies, increase financial support, strictly enforce law enforcement and supervision, and give full play to the role of associations. The requirements for the cement industry in the Work Plan for Steady Growth of the Building Materials Industry issued
on August 22, 2023 are as follows: expand effective investment, promote the transformation and upgrading of the industry: promote green transformation, promote intelligent transformation, promote coupling development, and accelerate the construction of key projects; Enhance effective supply and stimulate new growth drivers of the industry: promote the upgrading of bulk products and enhance the supply capacity of new materials; promote green building materials and foster the concept of green consumption: deepen the activities of green building materials going to the countryside, expand the promotion and application of green building materials in cities, and improve the certification system of green building materials products; deepen international cooperation and achieve high-level mutual benefit and win-win results: strengthen international exchanges and cooperation. The effectiveness of the No.34 policy in 2016 is gradually decreasing, and the steady growth policy in 2023 is insufficient to reduce production capacity, which makes it difficult to balance market supply and demand, and it is difficult to achieve the goal of steady growth. In addition to its own supply and demand reasons, the decline of enterprise mutual trust is also a very important reason for the disorderly competition price of the
industry to hit a new low
since the supply-side reform. The decline in mutual trust is mainly due to the changes in personnel and concepts of cement enterprises, the lack of awareness of stabilizers in state-owned enterprises, and the lack of consensus and leaders in the industry. In 2023, China's cement consumption is still around 2 billion tons, while the cement price is down by 20%, and the industry profit is down by 50%. From a global perspective, China's cement prices are at the bottom of the world, but overcapacity and declining demand do not mean that cement is at a low price. In
2023, the sales utilization rate of cement industry was 4.3%, which fell below the profit margin of industrial sales and returned to 2015. Even the loss of cement industry is 40%, which is higher than that in 2015, and the total liabilities of the industry have reached a record high. Among the 20 enterprises with the largest cement production capacity in the world, in addition to Chinese enterprises, almost all foreign enterprises have put forward their own carbon reduction targets, and many enterprises have put forward the goal of achieving net zero emissions by 2050. It can be said that under the circumstances that most foreign cement enterprises take the lead in occupying the commanding heights of carbon emission reduction development, China's cement high-quality development has a long way to go.
From the perspective of enterprises, first of all, we should change our concepts. Cement enterprises should deeply understand that in the case of continuous downward price, there is no winner in low-price competition, which will only hurt both sides. Enterprises should look at the world. International cement giants mainly focus on the quality of profit growth, industrial chain extension and development on the basis of stable share in mature markets or downward markets. In the future, the global market share of Chinese cement enterprises is generally downward. To achieve stability or growth in global market share, companies must explore overseas markets.
Secondly, enterprises should adopt differentiated competition, technological innovation and cooperation to replace low-price competition.
1、 differentiation competition: mature market and growth market, different seasons to treat the market strategy differentiation; north and south, domestic and foreign regional differentiation; product differentiation. Learn to conduct sufficient customer research, establish product standards with peers and downstream users for specific markets; focus on product research and development to meet the diversified needs of downstream; complement the advantages of related enterprises to provide customers with comprehensive solutions. Technological innovation in
2、: learn to reduce production capacity through technological innovation. Excellent production capacity is not necessarily excessive; use technological innovation to obtain lower cost, lower energy consumption, lower emissions, higher fuel substitution rate, higher quality, and higher management efficiency.
3、 cooperation: joint integration between regions; joint going out; industry self-discipline; joint procurement; joint promotion of new standards/products, etc.
From the policy level , rigid capacity removal should be put on the agenda as soon as possible, which is an important prerequisite for stable benefits of cement enterprises. Through the restraint ability of the policy, we should formulate the target, task decomposition and specific measures to reduce excess capacity.
Zheng Jianhui said in the report that the policy can reduce production capacity from the following four measures:
(1) Direct capacity reduction. The standard of capacity reduction needs to be improved (the proportion of alternative fuels; carbon emissions; ultra-low emissions); technological transformation is forced; and the shutdown should be withdrawn according to the development of the city.
(2) No addition is allowed. Capacity replacement should be based on the improvement of backward standards; super-large clinker kilns are not necessarily in line with the future development trend of the industry (low utilization rate; waste)
(3) Off-peak production. The utility of peak staggering is decreasing, but it is still one of the effective means to reduce production capacity. The next stage will be more market-oriented regulation by incorporating the carbon market.
(4) Violation of laws and regulations. Product quality, illegal construction or production, increase and tighten the rectification of shutdown.
