Seeing the title, some people are sure to say: "This is not true. A few years ago, everyone in the cement industry ushered in six years of good times in the process of sharing happiness." Is this really the case? As a typical cyclical industry, the development of
cement industry is full of ups and downs. From the past experience, when the industry encounters a low ebb, it is easier for enterprises to form a consensus and deal with challenges together; however, after the industry recovers, it is difficult to maintain this spirit of unity.
This is like what Dynasties have experienced since ancient times, when fighting rivers and mountains, all of us are of one mind and share a bitter hatred of the enemy. When we really fight rivers and mountains, there is always intrigue and deception.
When the industry encounters a low ebb, especially after experiencing large-scale losses and bankruptcies, the "painful" enterprises in the industry can usually quickly realize the harm of vicious competition and stabilize the market by means of coordinated production restriction and price restriction.
Taking 2015 as an example, the cement industry suffered a severe blow at that time, the demand for cement showed the first significant negative growth in 25 years, and the annual cement output decreased by 130 million tons compared with 2014, a decrease of 5.0% compared with the same period last year. The profit of the whole industry dropped by 60% year on year, the volume and price of cement market fell, and the loss of enterprises reached more than 40%.
In this context, enterprises in the industry quickly realized that price war would only aggravate the plight of the industry, so they began to coordinate production restriction. At the
right time, the state issued the policy of off-peak production, and the cement industry responded positively by combining off-peak production with supply-side reform, which effectively alleviated the problem of overcapacity and promoted the market recovery. During this period, the cement industry maintained a good momentum for six years.
In 2023, the cement industry once again ushered in a low ebb, with a sharp decline in industry profits. In the first half of 2024, the losses of enterprises in the industry intensified, and the profit losses of the whole industry reached about 1.2 billion. The industry almost ushered in an unprecedented low ebb.
Therefore, in recent years, we have seen more and more cement enterprises begin to call for "anti-involution", just as the national level calls for avoiding "involution" vicious competition. Not long ago, including Conch Cement , Red Lion Cement , which used to be considered a "hardliner" in the market, also visited Huaxin Cement in Hubei to discuss anti-involution.
Two, share the joys and sorrows: the industry began to differentiate
after the recovery. When the industry recovered, the behavior of cement enterprises appeared differentiation.
On the one hand, with the recovery of efficiency, after having money, some enterprises have forgotten that "making money is to create conditions for capacity removal". What they think of is not to shut down backward production capacity and promote industrial upgrading, but to build lines on a large scale, build small ones or upgrade production, which leads to the problem of overcapacity in the industry becoming more and more serious. Statistics from
China Cement Network show that from 2017 to 2022, 185 million tons of clinker production capacity will be put into operation nationwide, which is much larger if the problem of overproduction is taken into account.
In addition, the data also show that from 2018-2023, a total of 41.3621 million tons of zombie production capacity participated in capacity replacement, and more than 30 million tons of "revival" production capacity. According to incomplete statistics, there are 40 capacity replacement projects under construction and proposed to be put into operation in 2024-2026, involving 61.93 million tons of clinker production capacity.
On the other hand, after having money in hand, some enterprises slowly forgot the bitter days before and began to float. Some cement enterprises even believe that the good times from 2016 to 2022 are achieved by their own "strength", but they do not know that this is actually the result of the joint promotion of supply-side structural reform by the whole industry. Then, they no longer actively respond to peak-shifting production, and the effect of peak-shifting production becomes worse and worse.
Taking Henan Province as an example, although the cement enterprises in the region had jointly responded to the peak-staggering production policy during the industry downturn and got out of the predicament together, after the industry recovered, some enterprises took a negative attitude towards peak-staggering production, and even appeared some phenomena of increasing production in violation of regulations. At the market level, there were also various small actions.
This behavior not only weakens the effect of market regulation, but also leads to the continuous decline of prices, which ultimately affects the stability of the local market.
3. Contradiction between supply and demand and subjective factors
The contradiction between supply and demand is the root of the problem in the cement industry, but subjective factors can not be ignored. If the cement industry can not solve the problem of "easy to share hardships, difficult to share happiness", even if the industry gets out of the current predicament in a short time, it will only be temporary, and the "good days" will be difficult to last. In order to change this situation, cement enterprises need to start from the following aspects:
1. Strengthen industry self-discipline: establish and improve industry self-discipline mechanism, strengthen industry norms, restrain enterprise behavior, and avoid vicious competition. 2.
2. to promote industrial upgrading: encourage enterprises to close down backward production capacity, invest in technology research and development and industrial upgrading, and improve the overall technological level and competitiveness of the industry.
3. Deepening the supply-side reform: We will continue to deepen the supply-side reform and strictly implement policies and measures such as off-peak production.
4. to strengthen the sense of social responsibility: to improve the sense of social responsibility of enterprises, so that enterprises pay more attention to the overall interests of the industry and society while pursuing economic benefits.
