Cement industry should not only do a good job in peak staggering production, but also promote "rational capacity reduction"!

On May 23, C8 Cement Enterprises held a conference on high-quality development of the cement industry to jointly promote anti-involution in the industry. At the

meeting, some professionals proposed that the cement industry should not only do a good job in peak staggering production, but also promote "rational capacity removal". People

in the industry said that at present, the cement industry is facing a severe situation of continuous decline in demand, the effectiveness of the traditional peak staggering production mode is declining, but the negative effects are constantly highlighted. In this context, if the cement industry wants to achieve healthy and sustainable development, it needs to increase the industry concentration to more than 70%, while increasing the operation rate of production lines of 5000 tons and above to more than 70%. To achieve this goal, the key is to choose the appropriate path to capacity.

At present, there are three main ways to reduce production capacity in the cement industry:

First, if we rely entirely on market competition and abandon off-peak production, although it is expected to complete capacity reduction in 2-3 years, in this process, only a few highly competitive enterprises can make profits, and the vast majority of enterprises will fall into a loss predicament;

Second, continue the current peak-staggering production mode , the industry will continue to maintain the status quo in the next 5-10 years, backward production capacity is difficult to effectively withdraw, and the overall efficiency of the industry will decline year by year;

Third, the implementation of rational capacity , that is, by the strong competitiveness of enterprises to invest, to help the weak competitiveness of enterprises to obtain reasonable returns after the orderly withdrawal from the market.

Rational capacity removal is undoubtedly the only feasible way to achieve win-win situation for all enterprises in the cement industry. In order to advance this process smoothly, we need to work together in many ways:

First, we need to open up a reasonable channel for advanced production lines to purchase and withdraw production capacity. On the one hand, enterprises should actively strive for the support of the industry authorities to set up merger and acquisition funds for the acquisition of exit capacity and write-off; on the other hand, efforts should be made to solve the technical problems of exit capacity valuation, establish a valuation method recognized by the market, and provide a scientific basis for the evaluation of merger and acquisition transactions.

The second is to formulate a clear policy requiring production lines with a daily output of less than 2500 tons to be phased out in the next 3-5 years.

Thirdly, we should improve relevant regulations and further improve standards in environmental protection and energy consumption, so as to accelerate the withdrawal process of production lines with weak competitiveness and promote industry concentration. Although

rational capacity reduction is the key to breaking the situation of the industry, the real implementation can not be separated from the overall pattern and wisdom of the whole industry. Only when all parties reach consensus and work together to promote, can cement industry achieve healthy development and win-win situation.