On February 20, Zhenjiang Conch Cement Co., Ltd. was established with a registered capital of RMB 200 million. The company is wholly owned by Conch Cement. Conch Cement did not explain the reasons for the establishment of the subsidiary, which caused great concern in the industry. When the industry is in the doldrums, what is the intention of Conch's action and what signal does it release to the market?
In recent years, contracts have been signed to continuously plan the construction
of industrial parks. Since 2021, Conch has accelerated the layout and investment of green building materials industrial park projects, with investment ranging from billions to tens of billions. In February 2024, Zhenjiang Conch Cement Co., Ltd. was established. Although Conch did not specify the main investment projects, according to the Zhenjiang Conch Green Building Material Industrial Park project signed by Conch Cement in December 2023, the author speculated that Conch's move was intended to accelerate the landing of the green building material industrial park project, which may have the following important significance.
Table 1: Conch has planned some industrial park projects
in the past three years Source: Cement Big Data Research Institute
I. Improving the "T" layout and enhancing terminal control
Conch Cement has only one cement clinker production line in Jiangsu, with an annual capacity of 1.55 million tons. However, the influence of conch in Jiangsu market is not small, which is mainly due to its "T" strategic layout advantages. Zhenjiang conch green building materials industrial park project mentioned, The project after production unit energy consumption decreased by 25%, Is the Dantu open area traditional industrial upgrading development demonstration project. So the main product of the project may still be cement products, And the cost advantage. Zhenjiang is located near the Yangtze river, Water convenient. Is expected to be the project after production will further improve the conch "T" So as to enhance the control of the Yangtze River Delta terminal market.
Figure 1: Conch "T" Strategic Chart
Data Source: Cement Big Data (https://data.ccement.com/)
II.
Jiangsu Province is the largest cement production province in China, second only to Guangdong, ranking second in the country, and the market demand is relatively strong. According to the big data of China Cement Network, the cement production capacity of Conch Cement in Jiangsu is 45.4 million tons, accounting for 17.2%. From the distribution of cities, Zhenjiang is only 1 million tons, accounting for 5.9%, which is much lower than the overall proportion in Jiangsu. Through the construction of Zhenjiang Green Building Material Industrial Park Project, Conch Cement will choose the opportunity to build or acquire grinding enterprises, establish transfer stations, expand cement production capacity, and explore the southern Jiangsu and Shanghai markets with the help of "T" strategic layout, so as to increase product sales and expand market share.
Table 2: Distribution of
Conch's Grinding Capacity in Jiangsu's Cities Source: Cement Big Data Research Institute
III. Extending the Industrial Chain and Tamping the Profit Base
Conch Cement has said that during the "14th Five-Year Plan" period, The company will continue to focus on the main cement industry, make the leading industry bigger, stronger and better, and make the related industrial chain longer, wider and higher. Affected by the industry environment, Conch Cement's profits have been declining year after year since 2021, and the company urgently needs to find new profit growth points. From the perspective of Conch Cement's layout and construction of building materials industrial park projects, although it still focuses on cement business, it also involves high-quality aggregates, high-performance concrete, fabricated components, terminal logistics and transportation industries. The construction of building materials industrial park and the extension of industrial chain are conducive to the comprehensive utilization of resources and the increase of added value of products, thus speeding up the transformation and upgrading of the company and consolidating the profit base.
Figure 2: Conch's profits have fallen sharply in recent years
Data source: Cement Big Data (https://data.ccement.com/)
