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The improvement of the market must not be a stumbling block to the de productivity of cement

Time:

2017-04-22

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On February 8, 2017, the Economic Daily published an article entitled "The pace of capacity reduction slowed down due to market fluctuations", which described the relationship between price fluctuations of black commodities such as coal and steel in the past year and capacity reduction. According to the article, although the prices of coal and steel fell sharply at the beginning of 2016, and the price of coal could not even sell sand, the "coal craze" has been fully launched throughout the year. According to the statistical results, the prices of both of them rose significantly at the end of the year, and in some regions even exceeded that before the sharp drop in prices at the beginning of the year.

The past year was a year of accelerated capacity reduction in the two major industries. For example, in the coal industry, the State Council issued the Opinions on Reducing Excess Capacity in the Coal Industry to Achieve Development from Difficulties at the beginning of last year, requiring that from 2016, it will take three to five years to withdraw about 500 million tons of capacity and reduce and restructure about 500 million tons. In view of the relationship between price fluctuation and capacity reduction, the article points out that although the "black" commodities have obvious price fluctuations in the short term, in the longer term, overcapacity is still the most embarrassing problem they face, and capacity reduction is still one of the most important tasks they face. In this regard, steel and coal enterprises must have a sense of urgency. They should not be blindly optimistic because of the rise in prices, or even increase production.

In addition to the coal and steel industries mentioned in the article, it is necessary to pay attention to the impact of market fluctuations on capacity reduction, and the cement industry, which is also a large producer of overcapacity, should also pay attention to that the improvement of market prices must not become a stumbling block to capacity reduction. According to the statistics of the National Bureau of Statistics, in 2016, China's cement production capacity totaled 2.4 billion tons, with a growth rate of 2.5%. The revenue was 876.4 billion yuan, with a year-on-year growth of 1.2%. The profit was 51.8 billion yuan, with a significant year-on-year growth of 55%. The market situation can be changed from the sluggish situation in 2015. However, there is a huge crisis behind the seemingly brilliant data. The reason why the cement industry made such huge profits in 2016 is that, in addition to the increase in national fixed asset investment and the increase in real estate construction investment driving demand, the price rise caused by the change in supply and demand relationship caused by off peak production and off peak production nationwide. In fact, off peak production can only temporarily reduce the output, which is not conducive to solving the current serious overcapacity problem. It is not an accident that China's cement encountered a cold winter in 2015. It reminds us that we must face up to the problem of overcapacity, and overcapacity has become the most urgent task of the industry.

However, in the case of such overcapacity, if it is not to cut production capacity, but to limit production through coordination, once the illusion of improving the market supply and demand relationship appears, the price returns, especially in some regions in the period of infrastructure and real estate development, some manufacturers have stopped production because they could not bear the market pressure, and they will start production again when they see that the market is improving and the price is rising. The overcapacity has not been resolved in the slightest.

As for the trend of the market in 2017, technicians in the industry generally believe that this is closely related to the capacity reduction of the cement industry. If the pace of capacity reduction in the cement industry can be further promoted, the market will maintain an upward or stable trend in 2016. The output reduction brought by the peak shift can only temporarily maintain the market stability, and we need to work hard to reduce the production capacity to maintain the overall healthy and sustainable development of the industry. The Building Materials Industry Development Plan (2016-2020) requires that the cement clinker production capacity should be reduced by 10% during the "13th Five Year Plan" period, which is an arduous task. It is essential to curb new production capacity, promote enterprise merger and reorganization and eliminate "zombie enterprises" in a timely manner. In addition, it is also a practical way to strictly implement relevant laws, regulations and standards on environmental protection, energy consumption, quality, etc. and force backward cement production capacity to exit in a timely manner.

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