The profit of China's cement industry reached 100 billion yuan in 2011

In 2011, China’s cement output was nearly 2.1 billion tons, not only the fastest growth rate, but also a great increase. At present, China's cement production accounts for about 60% of the world's total. From the industrial efficiency point of view, as of the end of the industry profits of 100 billion yuan, tons of cement profit is close to 50 yuan. Overall, in 2011, China's cement market was a good year for both total profits and tons of profits. However, this 100 billion profit has not come easily.

Why is it hard to come by? In recent years, with the rapid development of investment in fixed assets, investment in the cement industry has also reached a peak. The rate of production capacity is much higher than the demand growth rate, causing the problem of overcapacity to become more and more prominent. In particular, in 2011, the new production capacity in the first two years was all released and the overall and national surplus began to appear. At present, there are still gaps in the new dry methods in Guangdong Province and Heilongjiang Province, and there are problems with excess capacity in other regions. The problem caused by excess capacity is disorderly competition in the industry, falling prices, and rapid decline in economic efficiency.

Under such an industry background, in 2011, the cement industry could achieve a profit of 100 billion yuan, mainly due to the industry's strategic restructuring earlier this year while focusing on the adjustment of the company's technology structure. Especially in East China, the start was relatively early. Through several years of efforts, the degree of production concentration has been increased to some extent.

In 2012, in the context of overcapacity, can the cement industry maintain a better level of benefits? Creating a good relationship between supply and demand is the key. Judging from the current situation, if there are no major fluctuations in the economic situation at home and abroad this year, the overall demand for cement will continue to grow, but the growth rate will decline significantly compared with 2011. In terms of sub-regions, there will be great differences between the eastern, central and western regions. The peak of demand in the eastern region will have passed, and there will be moderate growth in the central region. The western region will no longer have high growth, but it will continue to grow.

During the "Twelfth Five-Year Plan" period, if the annual growth rate of GDP reaches 7%, the growth rate of fixed asset investment will be 15%, which will drive the cement demand growth rate to remain at about 3% to 4%, and the peak demand for cement may reach 2.4 billion tons; It is expected that the cement supply capacity in 2012 will reach 2.5 billion tons. From this calculation, China's cement supply and demand are basically balanced. In order to create a good relationship between supply and demand, it is recommended that investors should be cautious about the new cement projects, and the relevant government departments should be strict with them. The situation of excess cement production capacity has been very severe. New projects must be controlled during the “12th Five-Year Plan” period. Otherwise, it is a great waste of resources and energy.

Only by strictly controlling new projects and increasing mergers and reorganizations in the industry can we promote the healthy development of the industry and achieve benefits. Recently, Miao Wei, Minister of Industry and Information Technology, expressed at the National Conference on Industry and Information Technology in 2012 that in 2012, he will vigorously promote the optimization and upgrading of traditional industries. It will promote the introduction of guidance on strengthening industrial technology in the new period at the national level, formulate the "12th Five-Year Plan" technology reform program, and regard mergers and acquisitions as the focus of work that will focus on breakthroughs throughout the year, and will introduce mergers and acquisitions in key industries such as steel, automobiles and cement. The reorganization plan will promote the improvement of the policy system for promoting mergers and acquisitions. Mergers and reorganizations are the trend of the times, but can they not be limited to big gains and losses, can big companies make some restructuring? The proposed mechanism for mergers and reorganizations can be more flexible, such as equity swaps, swaps for operations and management in a region, and so on. In this regard, there are many successful experiences in foreign countries. A similar restructuring is to create a better environment for regional industry self-regulation.

In short, the overall situation of the cement market in 2012 is rather grim. However, as long as we can understand the situation and sum up experience, the profit of 1,000 billion yuan in 2011 is expected to continue this year.