On May 18, the national cement price index closed at 289.73 points, which not only hit a new low this year, but also fell by more than 20% compared with the same period last year, and the industry continued to be depressed.
Take Henan for example, as a major province of cement production and marketing, local enterprises have tried to push up prices for six consecutive rounds since January this year, and the previous five rounds have fallen into the cycle of "falling after rising". Whether the latest round of price increases can be landed remains to be seen.
From a nationwide perspective, cement prices in many regions have repeatedly tried to rise but repeatedly encountered obstacles, behind which is the triple attack of weak demand side, prominent contradiction between supply and demand on the supply side and fierce market competition.
1. The decline in demand is the core cause of the fatigue of rising prices.
As the two main areas of cement consumption, the real estate and infrastructure markets are not as good as expected. The real estate industry is in a period of deep adjustment, the area of new commercial housing construction continues to grow negatively, the tight capital chain of real estate enterprises leads to the slowdown of project construction, and the pull of rigid demand for cement is greatly weakened. Although the infrastructure investment is supported by the underpinning policy, the slow pace of capital in place and the insufficient efficiency of project construction make it difficult to fully hedge the demand gap caused by the downturn of real estate. The continued weakness of the demand side makes the price increase lack of actual support and naturally difficult to land.
2. The prominent contradiction between supply and demand intensifies the price pressure from the supply side.
After years of rapid expansion, the production capacity of China's cement industry has already far exceeded the actual market demand. Even in recent years, many regulatory measures such as peak staggering production, kiln shutdown and production restriction have not fundamentally changed the pattern of loose supply. The data show that the capacity utilization rate of the cement industry has been at a low level for a long time, the imbalance between supply and demand is particularly prominent, and the digestion of excess capacity has become a difficult problem for the industry. In the context of the continuous decline in demand, the market supply has always been in a state of "oversupply", and the space for enterprises to raise prices has been severely compressed.
3. The fierce market competition has further squeezed the profit margin of the industry.
It is worth noting that with the intensification of the industry's predicament, the industry's "anti-involution" awareness is gradually strengthened, and some leading enterprises have begun to advocate coordinated development and rational competition in an attempt to break the price war deadlock. But in reality, there are still many enterprises driven by short-term interests, in order to seize the limited market share, still fall into the vicious competition of "price for quantity". In order to withdraw funds, some enterprises do not hesitate to lower their quotations and grab orders, which leads to the intensification of the price war in the market. This kind of disorderly competition not only leads to the continuous low price of cement, but also makes the overall profit margin of the industry decline, and the pressure of enterprise operation increases sharply. The price dilemma of
cement industry is the inevitable result of the imbalance of supply and demand structure. In the short run, the pattern of weak demand and prominent contradiction between supply and demand is difficult to reverse quickly, and cement prices may remain low. In the long run, the industry needs to speed up the clearance of production capacity, optimize the market structure, reduce costs and increase efficiency through green intelligent upgrading, superimpose infrastructure and new urbanization to cultivate new demand, in order to break the deadlock and realize the transformation from "scale competition" to "quality competition".
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