On May 20, Zheng Shanjie, Director of the State Development and Reform Commission, chaired a symposium on private enterprises, and "rectifying involution competition" was included in the agenda of the meeting. In the
cement industry, in recent years, with the decline of demand and the intensification of the contradiction between supply and demand, "vicious competition of involution" has occurred from time to time. It is not uncommon for the price of cement to fall below 200 yuan/ton, and more cement prices have fallen to about 160 yuan/ton.
Prices fell, triggering a sharp fall in industry profits, which fell from a peak of 186.7 billion yuan to 26 billion yuan in 2025, shrinking by 86%. Entering 2026, the industry market competition is still fierce, when 18 listed companies lost more than 1.4 billion yuan in the first quarter, the real torture is no longer the cement industry "roll or roll", but the cement industry "how long can it carry". The root cause of involution in the
cement industry is that it is too difficult to
withdraw from normal market competition, inefficient enterprises are eliminated, efficient enterprises survive, and the industry completes metabolism. But the cement industry has fallen into another logic: a large number of 1300 clinker production lines are in a state of shutdown and semi-shutdown, and the national capacity utilization rate is less than 50%, but none of the production lines are willing to take the lead in withdrawing.
This is not because enterprises "want to roll up", but because they "can't afford to retreat".
Withdrawal requires money-the closure of a clinker line involves bank loan liquidation, employee placement, equipment dismantling and land restoration, with a comprehensive cost of hundreds of millions of yuan. Withdrawal also means permanent abandonment of market share, in a stock market where demand continues to shrink, once withdrawn, it is almost impossible to come back. Withdrawal also means handing over a "negative growth" answer sheet in front of local governments-GDP, tax revenue, employment, three figures falling together.
As a result, a paradox has been formed: enterprises know that every extra ton of cement is worth one ton, but no one dares to stop the kiln first and stop more kilns. If you don't stop, you will lose cash flow; if you stop, you may lose the market. In the stalemate, prices continued to drop, the Yangtze River Delta and Pearl River Delta once fell below 200 yuan/ton, and some provinces appeared "one word head".
Obviously, almost all of them are losing money, but they still seize the non-peak time to produce hard, or even overproduce , which is the real background of vicious competition in the cement industry. The
deeper problem is that the cement industry has earned nearly trillion yuan in profits over the past decade, but has not established any effective compensation mechanism for capacity withdrawal. In 2016, the State Council No.34 proposed to explore the establishment of special funds for industrial restructuring, but at that time, the industry was at the peak of profits, and no one felt that "withdrawal" was an urgent matter.
Today, when the whole industry is in a loss and really needs to exit, there is no money to come up with. The cement industry has spent more than ten years trapping itself to death .
Administrative measures can not solve the vicious competition
in the cement industry in the past few years, the effect of off-peak production, industry self-discipline, synergy and other attempts is not lasting-once the peak demand season comes, or some enterprises take the lead in "jumping the gun", synergy will quickly collapse. A
truly effective path requires a three-pronged approach.
First, establish a capacity withdrawal mechanism with compensation. The concept of capacity removal fund has been discussed repeatedly, and the key lies in where the money comes from and what standard of compensation. The most realistic path is that the leading enterprises set up a fund according to their market share, and give one-time compensation to the enterprises that voluntarily withdraw from production capacity according to each line. At the same time, the government can try to provide supporting support such as discount or tax deduction, so that the investment enterprises feel that this is a "rewarding investment" rather than a pure expenditure.
Second, let the carbon market become the "booster" of capacity reduction. Carbon quota is directly linked to clinker production, the cost of high-carbon production line continues to rise, low-carbon production line gains competitive advantage, and the pressure of carbon cost differentiation is more lasting and difficult to avoid than any administrative order. When the carbon price rises to a certain extent, the economic account of "continuing production is better than withdrawing from compensation" will naturally be established.
Third, break the prisoner's dilemma of "who retreats first and who suffers losses". This is not a problem at the level of enterprises, but a design defect at the level of market mechanism. There are at least two ways to solve the problem: at the provincial level, the exit of production capacity should be linked to the environmental capacity index, so that the surplus environmental protection and energy consumption indicators of the exit capacity can be turned into tradable resources; and banks should be encouraged to give appropriate debt restructuring space to the enterprises that withdraw voluntarily, so as to reduce the financial threshold for exit.
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