How did Ningxia become a "price depression" in the northwest? Where will it go?

2024-02-01 15:26:59

Compared with other provinces in the northwest, the price of cement in Ningxia is much lower, so how did the "price depression" in the northwest of Ningxia come into being?

When investigating the cement market,

China Cement Network found that the price of cement in Ningxia is much lower than that in other provinces in the northwest, with a difference of 300 yuan/ton and 20 yuan/ton. So how did Ningxia, the northwest "price depression" come into being?

Ningxia is located in the northwest corner of China, the whole area is mainly plain, backed by Helan Mountain, the Yellow River runs through the area from southwest to northeast, and the cement clinker production line is also spread out. According to the data of China's Top 100 Cement Clinker Production Capacity List, the production capacity of cement clinker in Ningxia Hui Autonomous Region in 2023 is 22.444 million tons.

However, the production capacity in Ningxia is very excessive. Ningxia has a small area, a small population and limited market demand, and the contradiction between supply and demand is very prominent in this area. "Ningxia's overcapacity is very serious," said Li Yongjin, president of the Ningxia Cement Association. A large local cement company said: "Overcapacity is at least more than 60%, and there are cement companies with production capacity of 2 million tons per year, but the actual shipment volume is only 800,000 tons per year."

In this way, the high storage position has become a common phenomenon in Ningxia cement enterprises for many years, so the local cement enterprises have formed a "tradition" for many years. Foreign cement enterprises said that every year there will be a large number of cement clinker from Ningxia to the outside world. According to a person in charge of a cement enterprise in Jinwu, Gansu, "Every year there will be 100,000 to 150,000 tons of cement clinker from Ningxia to Jinwu."

It is understood that local cement is generally sold to Gansu, Inner Mongolia, Shaanxi and other places around Ningxia, and its annual export sales account for 30%-40% of the total sales. Ningxia Building Materials has previously revealed that more than half of its products are sold to markets outside Ningxia. Recently

, however, the road of Ningxia's export has gradually become impassable. In recent years, the demand of the national cement market has been very cold, and the price of cement in the surrounding markets of Ningxia has dropped one after another. The price advantage of Ningxia's cement coming from afar plus transportation costs has disappeared, and the road of Ningxia's cement export has begun to be difficult. A cement company in Ningxia said: "I can't make money at all, and there are not many people going to other places this year." The road of

export is impassable, the market demand has been declining, and the internal market competition in Ningxia has become increasingly fierce. In the past two years, the price of cement has fallen from nearly 500 yuan/ton to about 300 yuan/ton. In the first year of 2024, the pressure on cement manufacturers in Ningxia has doubled. According to its disclosure: "The ex-factory price of cement in the first year of this year has dropped by 30% -40% compared with the same period last year." Some enterprises even sell cement at a loss: "At present, the ex-factory price is only 180 yuan/ton, far below the cost price." Under the influence of

many factors, Ningxia has become a "price depression" in the northwest.

For the late 2024 market, Ningxia cement enterprises are very confused, in general, the local cement manufacturers formed a "price, demand may be difficult to rise" consensus. Some enterprises said that Ningxia has a trend of price war, price war, to seize market share seems to be the only way out for Ningxia cement enterprises. However, some enterprises said that they would not fight a price war unless they had to. The person in charge of the enterprise said bluntly: "Fighting a price war and seizing the market is also for enterprises to survive.". Where will

Ningxia cement market go in the future? How to resolve overcapacity, make the total capacity of cement industry in the region adapt to environmental carrying capacity, market demand and resource security, coordinate the spatial layout with regional economic development, and achieve a reasonable level of capacity utilization? This should be an unavoidable question for every cement enterprise!

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Correlation

Recently, the overall domestic demand has declined steadily, coupled with the weakening of local cost support, and the price of concrete has been stable and small. From November 14 to November 20, the national concrete price index closed at 112.35 points, down 0.13% annually and 10.08% year-on-year.