Cement Cold and Warm Big Brother Talk | Give up illusions to go further! Recognizing the situation is the first barrier for Henan Cement in the New Year!

2024-01-19 09:18:51

The person in charge: "Large enterprises also have to survive, stop too many kilns, the loss is too great, large enterprises can not stand, has been unable to retreat, continue to go on like this, the market environment in 2024 will only be worse.". The person in charge also pointed out that the downward trend of cement demand is inevitable, and it is impossible to return to the past in the future. Overcapacity will only become more and more serious, which is the basic aspect of the current cement industry.

Once, Henan was a model for structural reform of cement supply side in various provinces in China. Thanks to the implementation of off-peak production and the establishment of market competition and cooperation in the platform period, Henan cement industry as a whole has maintained a relatively good development trend from 2017 to 2021.

However, in 2023, Henan cement completely ushered in a low ebb. Cement prices in some areas once fell below 200 yuan/ton. Especially from late May to early August 2023, Henan cement prices almost showed a downward trend all the way. After entering the traditional peak season, the overall cement price has been raised several times, but the difficulty of implementation has increased significantly compared with previous years. The head of a

local cement group market admitted that the prominent contradiction between supply and demand is the root cause of all the problems in the current Henan cement market, but at the same time, some cement enterprises failed to recognize the industry dilemma, still had illusions and serious specula tive mentality, which made the market situation worse.

According to its introduction, Henan cement market relies heavily on real estate demand, accounting for more than 50%, while the cement demand brought by key projects only accounts for about 17%. In the civil market, rural construction and policy support will play a more stable role, but lack of increment, the downward trend of Henan cement demand is irresistible.

In fact, according to relevant statistics, from January to November 2023, the cement output of Henan Province was 89.791 million tons, down 5.8% from the same period last year, which was much higher than the national average. It is

also understood that in 2023, 67 general cement clinker production lines in Henan Province stopped kilns for 14389 days, an increase of 21.8% over the 11818 days of the same period last year, an average of 214.8 days, an increase of 38.4 days over the same period last year; Clinker production was 60.22 million tons, down 18.3% from 73.7 million tons in the same period last year.

While demand is declining, production capacity is still increasing. The person in charge of the above-mentioned enterprise market said that in recent years, local enterprises have increased their efforts to increase production and transformation, resulting in serious overproduction, and the actual production capacity is far greater than the design capacity. Moreover, at present, there are still many cement production lines in Henan that are being transformed to increase production.

Talking about the situation of Henan cement market in 2024, the person in charge said, "In 2023, the cement industry made a profit of 31 billion yuan, but this includes aggregate, commercial mixing and overseas profits. After deducting this part, the profit of the main cement industry of the national cement enterprises is only about 15 billion yuan, which is more than half of that in 2015.". Henan's situation is similar, aggregate has played an important role in reducing book losses for some enterprises, but aggregate and cement demand complement each other, facing serious overcapacity, downward pressure on prices, if according to the current rhythm, if the industry environment can not be significantly improved, it is estimated that one third of the enterprises will turn around. Industry losses will be more serious than in 2023.

So, how should Henan cement meet the sharp contradiction between supply and demand in 2024? The person in charge believes that the key is to give up illusions and recognize the situation.

According to the introduction, the situation of Henan cement market is quite special. Zhonglian Tongli and Tianrui Cement , which rank the top two in production capacity, do not have absolute voice in the market, on the contrary, the cement enterprises in the second echelon have greater influence in various regional markets. In the past, due to the demand, Henan, under the leadership of large enterprises, actively promoted peak staggering production, and large enterprises were able to stabilize the market situation to a certain extent after sacrificing part of the market share.

Nowadays, with the deterioration of the market situation, the original model has lost the basis for implementation, even if the two leading enterprises give up all the market, Henan cement is still surplus. It can be said that the leading enterprises have been unable to retreat.

However, even so, some cement enterprises still have illusions that they can "charge ahead" as before, while the rest of the enterprises pick up leaks behind their backs, which leads to the chaos of Henan cement market, the continuous bottom of market prices and large-scale losses of enterprises.

The person in charge: "Large enterprises also have to survive, stop too many kilns, the loss is too great, large enterprises can not stand, has been unable to retreat, continue to go on like this, the market environment in 2024 will only be worse.". The person in charge also pointed out that the downward trend of cement demand is inevitable, and it is impossible to return to the past in the future. Overcapacity will only become more and more serious, which is the basic aspect of the current cement industry.

In this context, only by giving up illusions can we go further and recognize the situation will be the first barrier for Henan Cement in the New Year! The same is true for the national cement industry.

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Correlation

Recently, due to the persistent cost pressure in the south, the price of concrete has risen slightly with the raw materials, but the growth of market demand is limited, and the overall quotation is still stable. From October 31 to November 6, the national concrete price index closed at 112.47 points, up 0.31% annually and down 10.11% year-on-year.