On May 14, the Ninth Congress of China Cement Association was held in Hefei, Anhui Province, and Yan Xiaofeng, President of China Building Materials Federation, delivered a speech. Yan Xiaofeng said that the building materials industry is the cornerstone of a big country, and the cement industry is the cornerstone of the building materials industry, and focused on sharing the views on the capacity management of the cement industry.
Yan Xiaofeng analyzed the cement industry data from 2018 to 2024, pointing out that during this period, cement production capacity did not decrease but increased by nearly 8%, cement production decreased by more than 23%, the utilization rate of industry capacity was about 50%, the main business income of regula Ted enterprises decreased by 38%, and the profit margin of sales decreased from 18.4% to 4.2%. The overall profit of the industry has fallen sharply.
Thus, the decline in profits is far greater than decline in sales, and in recent years, coal prices have gradually declined, cement production costs have been reduced as a whole, even so, industry profits have been greatly reduced, why is this so? Yan Xiaofeng believes that there are many factors. 1. The peak period of infrastructure and real estate development has passed, and the speed of shrinkage has exceeded expectations; 2. The construction cycle of existing projects has slackened, and the downstream is no longer eager to buy cement; 3. Developers are short of funds, and the stage of selling cement at a high price has passed.
Yan Xiaofeng pointed out that macroscopically speaking, the market environment has changed. Faced with this situation, in recent years, the cement industry has thought a lot of ways to restore this situation, taking measures such as peak staggering production, going out, diversification, merger and reorganization.
About going out. Yan Xiaofeng believes that the direction is right, manufacturing enterprises must be two markets, one domestic and one foreign, while the world's large manufacturing enterprises are the same, must be two markets. However, it is very difficult to go to sea, especially the current external situation is more severe, some uncertainties are more, going to sea is to test whether enterprises have all-round international competitiveness.
About diversity. This needs to be determined by the enterprise, from the foreign situation, many large international enterprises are now doing things and the beginning of the establishment are very different, but to achieve this level must have real ability, for example, to have the ability to switch to scarce products; must have the technical support of self-help innovation; It can develop diversification and so on on the basis of the relatively strong main business.
About off-peak production. Yan Xiaofeng said that the effect was obviously better in the past few years, but now it is not as good as expected. First, the production capacity has risen instead of falling, and the contradiction between supply and demand has intensified. Second, the economic environment has changed, and the industry is still using the same method to cope with the changing situation; Third, the key is that it should be achieved in the process of curing the symptoms. The process of curing the symptoms is to leave time and space for curing both the symptoms and the root causes. The industry is a little too optimistic to stick to the original action for a long time without changing it; Fourth, off-peak production is not a means of marketization. If we continue to do so for a long time in the future, the contradiction between supply and demand will be difficult to change. If we continue to do so and do not seize the time to get to the root of the problem, there may not be much improvement in 10 years. Now some better enterprises may also be exhausted. It is very worrying for the industry to go on like this for a long time, so that the industry will be made worse and worse by ourselves. When we go to production, we should seize the time to go to production capacity.
On mergers and acquisitions, improve concentration. From the industry as a whole, it is very difficult to achieve capacity management through mergers and acquisitions, and the role of market coordination. Reasons: 1. The per capita demand for cement in our country must be declining year by year, which is an international general rule. Therefore, the current value of assets and the expected value of future wealth creation have no room to rise, and they are declining, so the willingness to buy assets will not be too strong; 2. At present, when the enterprise benefit is generally at a low level, few enterprises have the ability to expand; 3. From the perspective of the whole industry, it will be a relatively slow process to achieve the ideal concentration.
Yan Xiaofeng believes that the current domestic competition in all walks of life is very fierce, facing the same situation, in addition to the cement industry, the development of few industries still rely on enterprises to stop production and limit production to maintain. We can not use the thinking habits and behavior of planned economy to deal with the problems under the conditions of market economy for a long time, which will not be effective or lasting.
Yan Xiaofeng believes that the future development of the cement industry needs to start from two aspects of demand and supply, of which the supply side is the focus, and the task of the supply side is to do everything possible to reduce production capacity, and put forward the general idea: three perseverances.
First, it calls on relevant departments to adhere to the principle of legalization and put in place in accordance with existing laws, regulations and policies, such as building small and large, double control of energy consumption, license management, carbon market, ultra-low emissions, product quality and so on. At the same time, we should oppose the monopoly of artificially manipulating the market, the dumping of vicious competition, and the flow of substandard counterfeit and inferior products into the market; With the help of the three forces of the government, associations and enterprises, we should establish a variety of data lists, such as the list of overproduction, the list of non-replaceable, the list of expired licenses, the list of substandard energy consumption, the list of substandard products and so on. We should put these in place and really manage them in place, so that we can remove 20-30% of the production capacity.
The second is to advocate and restrain the association enterprises to abide by the law and regulations, perform the contract in good faith, compete in a civilized manner and benefit each other. Call on and urge associations and enterprises to be the defenders of rules rather than destroyers of rules.
Third, encourage enterprises to adhere to market-oriented operation, in accordance with the law and regulations, follow the law, survival of the fittest, good money drives out bad money, support enterprises in line with the capacity policy, benign free competition, rather than binding competition, but also encourage enterprises to internationalize.
Yan Xiaofeng finally stressed that the problem of the market is mainly solved by the market.
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