Guangxi, and the market has fallen into vicious competition. Being in the industry, I believe many people have a deep understanding. Prices continue to fall, profits continue to shrink, and competition among peers is becoming more and more intense. There is a strong pessimism in the circle, and many practitioners are tired. It is generally believed that the cement industry in Guangxi has gone and it is difficult to get out of the current predicament.
Admittedly, the pressure of production exceeding sales is visible to the naked eye, but through the fierce market competition, we can still see some dawn and opportunities. The current industry downturn is not only a period of suffering, but also a window period for reshaping the pattern. Many people ignore that Guangxi Cement holds three cards in its hands.
The first card is the top resource endowment of the grandfather's reward.
Guangxi is richly endowed by nature, especially in Chongzuo, Yulin and other core production areas. The limestone ore body in the whole area is of high quality and very low impurities. It is one of the few gold ore belts in China that are naturally suitable for firing high-grade clinker . It is truly gifted.
I have been deeply engaged in the clinker trade between Guangdong and Guangxi for many years, and the market comparison experience is very intuitive: under the same process and working conditions, the compactness, later strength and stability of Guangxi clinker are generally superior to those of Guangdong local clinker.
It is precisely because the raw material base is hard enough, even if the market is depressed and the volume is serious, Guangxi material still has stronger resilience and quality premium ability. Others fight for price, we fight for quality; this innate advantage engraved in the land is the core competitiveness that many provinces can not catch up with even if they spend money.
The second card, the leading layout is early, the concentration of production capacity is high, and it has the basis of market synergy and industry integration. There are about 60 effective clinker production lines
in the whole region (the number of registered production capacity is more, but some production lines exist in name only, for example, the production lines of Huazhong, Yizhou Guangchi and other enterprises are difficult to put into stable production for a long time), 17 for China Resources, 11 for Conch and 7 for Red Lion. The three companies totaled 35, and the capacity concentration of the top three enterprises was close to 60%. The advantages and disadvantages of
high concentration coexist. The good news is that as long as the major leaders reach a consensus and take the initiative to control production, the difficulty of curbing price war is far lower than that of the scattered areas of small and medium-sized enterprises. From a
deeper point of view, the downward stage of the cycle is often the key stage of survival of the fittest. Under the continuous low-price competition, the living space of small and medium-sized manufacturers with weak capital and no cost advantage is constantly compressed. If the leader seizes this round of trough to promote mergers, integrate inefficient production capacity, and further increase regional concentration, the competition order of Guangxi market will continue to optimize in the future, and there is great potential in the long run.
The third card is the advantage of location channel and the new opportunity of Pinglu Canal. The west and southwest of
Guangxi are adjacent to Yunnan and Guizhou, with numerous mountain roads and high land transportation costs. It is difficult for cement from other provinces to pour in in large quantities, and the local market is relatively closed. There is a natural barrier to protect
the market internally, and there is a mature export channel externally: relying on the Xijiang waterway, a large amount of cement is sent to Guangdong all the year round; Yulin is close to the west of Guangdong, and the land shipment is smooth, so the production capacity that can not be digested locally can be continuously diverted to the outside.
With the opening of the Pinglu Canal, it has opened up a new track for going to sea. In the past, Sinotrans basically relied on the Xijiang River to supply Guangdong eastward. After the canal is connected by river and sea, ships can go directly to the Beibu Gulf, which can not only supply Hainan, but also have the opportunity to open up the Southeast Asian market in the long run, so that the surplus production capacity can have a new export.
Holding these three cards represents that Guangxi Cement has the basic conditions to get out of the predicament, but whether the potential can be realized, the core is in the hands of Conch and China Resources.
High concentration market has a distinct feature: the leading production strategy directly determines the industry.
If the leading enterprises choose to control production in an orderly manner and jointly maintain market balance, the whole industry environment will be improved, and enterprises in the circle will be able to obtain reasonable profits. If the leader chooses to release production capacity with all his strength and accelerate industry shuffling with low-price competition, the market pain will last for a long time.
We ordinary people judge the market, there is also an intuitive observation indicator: the rate of opening kilns of leading enterprises.
Take Conch's 11 clinker production lines in Guangxi as an example. Maintaining the operation of 5 ~ 6 kilns for a long time means actively controlling production and guaranteeing prices, and it is difficult for the industry to fall into deep losses; once 10 ~ 11 kilns are in full production throughout the year and the production capacity is fully released, it is difficult for the market price to stabilize, and most of the practitioners except the leading ones will continue to bear pressure. Overcapacity is an unavoidable reality at present, and short-term pain is inevitable. The essence of this downward cycle is industry shuffling and pattern remodeling.
But the leader is also weighing the pros and cons: too early to control production and price, the market will pick up too fast, but it will give the weak small factory life, delay the merger and reorganization of the industry; continue to grind the bottom at a low level, in order to speed up the elimination of backward production capacity and purify the market.
Therefore, the current low-price involution is not simply a vicious competition, but more a process of shuffling intentionally by the leader.
Guangxi holds the three innate cards of resources, concentration and location, and will never lack a market in the future, but only a clean market structure. When the industry is cleared and the pattern is thoroughly optimized, the core advantages of Guangxi cement will naturally be re-realized.
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