early years, Guangxi was recognized as a profitable highland in the national cement industry. Relying on the water transportation of Xijiang River to the Pearl River Delta, it has unique geographical advantages, balanced market supply and demand, and considerable profits for enterprises.
In just three years, the industry has completely reversed. More than a dozen new clinker production lines have been added in the whole region, and seven new clinker production lines have been set up in Laibin alone in just three years from 2021 to 2023. Massive production capacity is released centrally, which directly breaks the stable market supply and demand balance for many years.
First, the former Guangxi: the most stable and profitable fertile
land in the country. Before 2021, the advantages of Guangxi cement are irreplaceable. The plants
along the Yangtze River are exported to the Pearl River Delta, and the logistics cost is extremely low; Guangdong has a strong consumption capacity, and the new production capacity is very small, and it relies on Guangxi clinker and cement supply for a long time; the market demand is stable, and the whole industry chain continues to make stable profits, and Guangxi holds a good brand, which is the real profit highland of national cement.
Two or three years of crazy expansion of production, direct overdraft of the ten-year market
from 2021 to 2023, the industry is at the end of the last round of dividends, Guangxi ushered in the largest production tide in history. A total of 13 large-scale clinker production lines have been set up in
the region, with an additional capacity of more than 24 million tons, and the total capacity of the region has exceeded 120 million tons.
Among them, Laibin alone has concentrated on putting into production seven production lines along the Yangtze River: Jinglan, Jinxiang, Zhenzhu, Beijiang and Wuxuan Huarun Phase II.
All new production lines are close to the Xijiang Golden Channel, and the core export market is directed at the Pearl River Delta. The new line has advanced equipment, lower energy consumption and obvious advantages in water transportation cost. In order to dilute the high fixed investment cost, the enterprise basically maintains full production operation after putting into operation.
Huge quantities of clinker and cement poured into the Guangdong market along the Yangtze River, completely changing the stable supply and demand pattern in South China for many years.
Third, after
2022, the national real estate and infrastructure have weakened synchronously, and the consumption of terminal cement has shrunk year by year.
On the one hand, market demand continues to shrink, on the other hand, new production capacity is concentrated. Under the two-way extrusion, Guangxi cement completely bid farewell to the era of high profits. The new production capacity
along the Yangtze River relies on the cost advantage to keep the shipment at a low price; the logistics cost of the old inland factories is high, so they can only passively follow the decline to make profits. The whole cement price system in South China has completely collapsed.
At present, the capacity utilization rate of the whole industry in Guangxi is less than 50%, which has completely become one of the regions with the most fierce price war and serious losses from the first echelon of national profits.
Fourth, the poor market is the commonness of the industry, and the disorder of production capacity is the unique dilemma
of Guangxi. The downward demand for cement and the contraction of industry profits are the common environment faced by all provinces.
However, the market fluctuations in other provinces are relatively flat, but Guangxi has turned from sustained high profits to large-scale losses and deep involution in an instant, the core reason is very clear. In the
vast majority of provinces in China, new production capacity is effectively controlled, and policy regulation is used to hedge the downside risk of the cycle. However, in the peak stage of the industry boom, Guangxi has opened up the threshold of investment, and all regions have independently landed industrial projects, lacking a unified overall planning of production capacity in the whole region. All kinds of capital are concentrated in the market, which has directly overdrawn the profit margin of the industry in the next ten years in just three years.
Fifth, the general trend has been set, and the industry has entered a long-term digestion cycle
. Today, the advantages of Xijiang water transport in Guangxi and the basic situation of Dawan District still exist, but the supply and demand structure of the industry has been completely irreversible.
In the next few years, the cement industry in Guangxi will be in a deep adjustment period of overcapacity, competition, low profit and continuous destocking for a long time.
This round of ups and downs, but also to the entire building materials industry on a profound lesson: the cycle is most likely to allow blind expansion, the downward cycle to let people learn to revere the balance of supply and demand. Behind
the final
industrial expansion, it is worth pondering that the original intention of introducing cement projects in
various places is to stimulate local industrial growth, promote employment and broaden fiscal tax sources, which is a pragmatic choice based on local development.
However, no one expected that the industry cycle would reverse rapidly, and the hidden dangers buried by short-term extensive expansion would begin to bite back in an all-round way, which is worth pondering at the level of industrial planning. During the boom period of the
industry, cement is a solid and high-quality tax source for local governments, and enterprises make stable profits and continue to pay taxes to transfuse blood for local finance. After over
capacity piled up, the endless price war made a large number of factories lose money all the year round, no profit, no income tax, a large number of enterprises break even, or even lose money. The once stable industrial tax sources have shrunk dramatically and almost dried up.
The more far-reaching impact is that excessive low-price cement continues to pour into Guangdong, directly disrupting the local cement price system in Guangdong, resulting in the overall profit contraction of the building materials industry chain in Guangdong and Guangdong. Under
the cross-provincial internal volume, the profits of enterprises in Guangdong and Guangxi are both under pressure, and the finance and taxation of the two places are damaged synchronously, forming a lose-lose situation.
Regional industrial development should not only focus on short-term investment increment and GDP data. More importantly, we need to take into account the balance of local supply and demand and consider the impact of cross-regional market linkage.
Nowadays, the dilemma of cement in Guangxi, whether for investment capital, production enterprises or local industrial planning, is an industry review lesson worth savoring. The ebb and flow of the
tide is a cycle. After the ups and downs, we finally see clearly that the core of the long-term and stable development of the cement industry is always the balance of supply and demand, rather than uncontrolled expansion of production capacity.
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