What is the reasonable profit of the cement industry?

2024-06-28 09:36:54

"Reasonable efficiency is the basis and prerequisite for the high-quality development of the industry, and it is necessary to promote the return of industry value." So, what is the reasonable profit of the cement industry?

In the past two years, the cement industry has encountered severe challenges, the contradiction between excess capacity and shrinking demand is prominent, the industry competition is intensified, the effectiveness of off-peak production is weakened, and the price competition is fierce, which makes the cement price fluctuate at the bottom, and the enterprises in the industry fall into a large area of losses.

Relevant data show that the cement industry lost more than 5 billion yuan in the first quarter of this year, and the industry profit in the first half of this year was about 3.5 billion yuan (about 16.5 billion yuan last year), down about 76% from the same period last year.

In this area, some cement enterprises said: "Reasonable benefit is the basis and prerequisite for the high-quality development of the industry, and it is necessary to boost the return of industry value." So, what is the reasonable profit of the cement industry? In this regard, there are different views in the industry, reflecting different interpretations and trade-offs of the word "reasonable".

Viewpoint 1: Of course, the higher the industry profit, the better . In 2019, it is also overcapacity, but it has created a new high profit of 186.7 billion yuan. We should strive to approach this goal. Moreover, the high-quality development of the industry can not be separated from the support of funds, only to make money. Only in this way can we maintain the income of employees, the development of the company and the progress of the industry.

Viewpoint 2: It is reasonable to maintain the industry profit at 80-100 billion yuan. Excessive industry profits will lead to blind investment, resulting in increased supply. In this profit range, enterprises can not only obtain the necessary profits to maintain operation and investment, but also promote the effective operation of the market mechanism, avoid blind expansion and waste of resources, thus laying a solid foundation for the long-term healthy development of the industry.

Viewpoint 3: Under the current situation, it is reasonable for the industry to make a profit of 30-50 billion yuan. In the face of factors such as declining demand for cement and increasing pressure on environmental protection, maintaining a low profit will help enterprises focus on internal management optimization, cost control and technological innovation, and will also be conducive to the survival of the fittest in the cement industry.

Viewpoint 4: The overcapacity of the cement industry is severe and should be "put to death". Over the past few years, the industry has experienced a golden period of high profits, with a large influx of capital and the emergence of new production capacity, which has directly aggravated the contradiction of excess capacity. In this context, only through the cruel shuffling of the market, can those enterprises with weak competitiveness, lagging technology and substandard environmental protection standards face severe financial pressure until they are difficult to sustain, can they start the process of eliminating backward production capacity and optimizing the industrial structure. The short-term "pain of loss" is for the long-term healthy development of the industry. What level

do you think is reasonable for the cement industry to maintain profits? Feel free to leave a comment.

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Adani is also a big man in the Indian cement industry and is the second largest cement producer in India. He entered the industry in 2022 with the acquisition of Holcim's cement business in India, which acquired about 70 million tons of cement per year for $10.5 billion. Adani plans to expand its annual cement production capacity to 140 million tons by 2028. Adani has previously invested $1.6 billion to acquire Sanchi Cement and Penna Cement, and is expected to acquire an additional 21 million tons of production capacity.