On July 30, Shao Jun, Chairman of China Cement Network, and his delegation visited Hongshi Holding Group Co., Ltd. and were warmly received by Zhang Xiaohua, Chairman of Hongshi Group. The two sides had in-depth exchanges on the current situation and future trend of the cement industry.
Zhang Xiaohua said that the contradiction between supply and demand in the cement industry is becoming more and more prominent. In the short term, it is necessary to "stagger the peak to reduce the output" and improve the efficiency of the industry; in the medium and long term, it is necessary to "rationally reduce the capacity" and improve the concentration of the industry to achieve the healthy development of the industry. At present, the cement industry needs to accumulate strength through "peak staggering to output", so as to be able to achieve "rational capacity removal" in the future. "Promoting the normalization of cement peak staggering production" is an important policy of the State Council's Action Plan for Energy Conservation and Carbon Reduction from 2024 to 2025, which also points out the direction for the healthy development of the cement industry.
Zhang Xiaohua said that in 2024, the demand for cement dropped by about 10%, and the utilization rate of production capacity dropped to about 50%, which will decrease year by year in the future. Cement production and sales are basically the same, and 50% of cement production capacity "must stop" is certain. There are two ways to "stop". The first way is to "passively stop" high-cost enterprises through low-price competition because they reduce more cash flow when they start than when they stop. The second way is to "actively stop" through off-peak production. Only by "actively stopping" can the cement industry maintain normal profits.
As the capacity utilization rate continues to decline, the way of off-peak production in the past is facing more and more challenges. In the future, off-peak production needs to be adjusted to the way of "one stop in January, one stop in the month". "One stop in January, monthly stop and monthly settlement" means that the number of days of kiln shutdown of kiln enterprises in a region is calculated in the current month and settled in the current month, and the number of days of kiln shutdown in the next month is determined at the end of each month according to demand and market conditions. "One stop in January, monthly stop and monthly settlement" is highly operable and easy to verify.
In the medium and long term, the cement industry should shift from "de-production" to "rational de-production". "Rational capacity" is a competitive enterprise, through trusteeship, leasing, stock exchange, mergers and acquisitions and other ways, so that the relatively weak competitive capacity can be withdrawn in return, improve the operation rate of advanced production lines and industry concentration, so as to make the cement industry develop healthily.
Zhang Xiaohua believes that large enterprises have the responsibility to lead the healthy development of the industry, so that the majority of small and medium-sized enterprises generally benefit; the majority of small and medium-sized enterprises should also actively participate in industry self-discipline and jointly safeguard the interests of the industry.
In addition, the two sides also conducted in-depth discussions on the merger and reorganization mode of the cement industry and the development of different regional markets.
