In 2024, the market share of Conch Cement will reach 14%, and the utilization rate of cement clinker production capacity will reach 98. It drew a lot of scolding from all around. Conch has become the "culprit" in the price of cement industry. A
similar scene appeared more than 20 years ago.
In 2002, Conch Cement, which has realized the localization of 5000t/d new cement clinker dry process production line with low investment, plans to build a 5000t/d new cement clinker dry process production line in Jiande, Zhejiang Province. This has caused year, the cement output of Zhejiang Province is 58 million tons, basically vertical kiln cement, and Conch new dry process cement comes in." It is bound to have a greater impact on the cement market in Zhejiang.
At that time, Zhejiang cement enterprises United to resist the entry of conch into Zhejiang, shouting the slogan "to eat, not conch". And petitioned the relevant superior departments. The problem was placed in front of Chai Songyue, then governor of the province, "We call for reform and opening up every day, the introduction of foreign capital, now domestic capital comes in, we have to shut people out, it is not justified.". With the hammer of Governor Chai, Conch Cement entered Zhejiang. The first 5,000-ton cement clinker production line
of Conch Cement was started in July 2002 and put into operation in May 2003; the supporting 1.2 million-ton cement production line was started in February 2002 and put into operation in October 2002.
Although the calculating Zhejiang businessmen are not necessarily willing to be the first to eat crabs. But in the face of business opportunities, it is their strong point to move and dance. One flower attracts a hundred flowers to blossom. Between 2002 and 2005, Zhejiang had 70 new dry process production lines all of a sudden. Zhejiang the end of the year." Zhejiang Province took the lead in eliminating all vertical kilns in the country, becoming the first province in China to achieve 100% new dry process cement.
For a long time, the cement industry has a lofty proposition that "the interests of the industry are higher than those of the enterprise, and the interests of the enterprise are bred in the interests of the industry". However, in the face of market competition, no enterprise will put the interests of the industry above the interests of the enterprise.
Water goes down, money goes up.
In 2019 , cement prices rose, and the profits of cement enterprises above the national scale reached 186.7 billion yuan, with an average profit margin as high as 18. Conch realized a profit of 45.22 billion yuan in that year, with a net profit margin of about 21. More funds are invested in the cement industry. Two years later, in 2021, the production capacity of the cement industry increased by more than 40 million tons, and conch alone increased by 16 million tons.
Imagine if profits in the water industry had stayed at about 20%, there would have been overcapacity even if there had not been a real estate crash. The adjustment of
product structure and the upgrading of industry technology are all achieved in the situation of overcapacity. Survival of the fittest, when the small cement was eliminated by the big cement, it went through a similar scene. The shortage economy can only cause the radish to wash the mud quickly and become the umbrella of backward production capacity and inferior products.
Some people worry that too low sales prices will lead to a decline in product quality, which is unnecessary. The original product is not easy to sell, and if it is shoddy again, it can only be self-destructive. We should believe that consumers have a discerning eye. Konosuke Matsushita, a
world management master, has a "tap water philosophy". He believes that full market competition can promote enterprises to continuously improve product quality, reduce costs and prices, so that more people can enjoy high-quality and low-cost products, thereby improving living standards. When all kinds of products in society can reach such a state, the material will be greatly enriched, and people's needs can be fully met, thus realizing communism as he understands it. In
2024, US Treasury Secretary Yellen visited China and criticized China's overcapacity. She believes that China's overcapacity is driven by the government.
It's not. Taking the building materials industry as an example, as early as 2016, the General Office of the State Council issued the Guiding Opinions on Promoting the Steady Growth of Building Materials Industry, Adjusting Structure and Increasing Benefits to reduce excess capacity, including strictly prohibiting new capacity. By the end of 2020, cement clinker and flat glass construction projects with expanded production capacity shall be strictly prohibited from filing and new construction; backward production capacity shall be eliminated, and enterprises that fail to meet the standards of pollutant discharge, energy consumption and product quality shall be shut down and withdrawn according to law; joint reorganization shall be promoted, and superior enterprises shall be supported to build a platform for capacity integration; A series of policies and measures have been taken, such as the implementation of peak-staggering production, the trial implementation of peak-staggering production of cement clinker during heating period in heating areas, and the advocacy of reasonable production restriction in flat glass industry. Prior to this, the former State Bureau of Building Materials had already issued regulations on glass production restriction, and even forced the elimination of glass enterprises and the shutdown of kilns to release glass water.
However, in the past ten years, the production capacity of the building materials industry has risen instead of falling. The building materials industry faces many difficulties in the process of capacity reduction, which are mainly manifested in the following aspects:
First, the constraints of local interests and employment pressure. Local governments, out of tax and employment considerations, do nothing or do little to reduce the production capacity of local enterprises, but actively expand the production capacity.
Second, the industry homogenization competition is serious. In the building materials industry, cement, flat glass and other products have a high degree of homogeneity, and enterprises rely more on price competition, resulting in low profits in the industry. Enterprises lack the motivation to withdraw from excess capacity on their own initiative, but may survive by expanding production and aggravate excess capacity.
Third, there are loopholes in policies such as capacity replacement. Individual enterprises may evade supervision by means of false capacity replacement and splitting projects, and add new capacity in disguised form, which weakens the actual effect of the policy of capacity removal.
4. In order to prevent environmental pollution, the peak-staggering production in heating areas tends to expand to the whole country under the slogan of protecting the overall interests of the industry. Originally, the level of equipment operation rate is directly related to the production efficiency, cost control and market competitiveness of enterprises, but now it artificially reduces the equipment operation rate in the name of peak staggering production. The consequence of doing so is nothing more than making some backward enterprises linger on and delay the time
to withdraw from the market. Is there excess capacity? How much surplus? Hundreds of restaurants across the country are closing down every day, and large supermarkets at home and abroad are closing down. There is no problem of capacity, who made the choice at the beginning, who will bear the consequences now, natural selection, survival of the fittest. Just like buying stocks, chasing the wind and buying high, you may be trapped.
The so-called orderly exit is just empty talk. Because no one will pay for it. Although the market competition is full of bloody storms, only the market can cut the Gordian knot.
In such a fierce competition situation, we are glad to see that some building materials enterprises, in the case of extreme overcapacity and distress, have accumulated a lot, innovative products, and demand exceeds supply. Gansu Kaisheng Daming Light Energy Technology Co., Ltd. often pays liquidated damages for products that fail to meet customer needs in time. Less than two years after its completion and commissioning, the company has grown into a comprehensive large-scale high-tech new energy equipment enterprise based on upstream raw material silicon mining and mineral processing, which integrates research and development, manufacturing, processing and sales of concentrating materials for solar photothermal and photovoltaic power generation. In order to meet the market demand, the company is preparing for the second production line.
This is differentiation and scarcity, creating new demand, new tracks and new consumer markets.
From 2019 to 2024, the overall market concentration of China's cement industry showed an upward trend, from 56% in 2019 to 58% in 2024. In 2024, leading enterprises such as Conch Cement and China Building Materials accelerated mergers and acquisitions, and the market concentration increased to 58%. The top three enterprises accounted for 37.7% of the total capacity, and the top ten enterprises accounted for 60%.
It is believed that in this cruel market competition, the concentration of the industry will be further enhanced. The energy-saving, low-carbon and intelligent level of building materials enterprises will be further improved. In mid-May
2025, Yan Xiaofeng, Secretary and President of the Party Committee of China Building Materials Federation, at the Ninth Congress and the Ninth Council of China Cement Association, made an in-depth analysis of the cement industry's production capacity in recent years, and the contradiction between supply and demand was still intensifying, saying that the industry had not yet taken the initiative to change, and that the cement industry was still in the process of development. In the process of curing the symptoms, effective measures have not been found, and the contradiction of surplus has not been fundamentally solved. Enterprises should be supported to carry out healthy and free competition so as to achieve the survival of the fittest and the expulsion of bad money by good money. "Market problems are mainly solved by the market".
This may be the conclusion drawn by the building materials authorities after years of experience and lessons.
Faced with the pressure of overcapacity, recently, many places have appeared the strange phenomenon of curing the symptoms but not the root causes. Originally, enterprises should be encouraged to increase production and expand capacity through technological innovation, strengthening management, and upgrading through digitalization and intellectualization. However, some cement enterprises have been constantly reported that their actual production capacity exceeds the design capacity when their equipment meets the design specifications. Become a scapegoat for cutting overcapacity. In the
face of disaster, only to envy others to prepare for a rainy day; dig a well in the face of thirst, can not change the fate of being eliminated.
Opening up a new track, taking one step to see two steps, and constantly innovating are the magic weapon for enterprises to remain invincible.
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