You Live at the Head of the West River, I Live at the End of the West River: a Sigh of Guangdong Cement

In the last article, I talked about the three cards of Guangxi Cement , and understood the "bottom line" of Guangxi (for details, see: everyone looks down on Guangxi Cement? Don't forget that it holds three cards ), in order to truly understand the "helplessness" of Guangdong. The same Xijiang River, the upstream is the natural advantage of Guangxi, but the downstream is the industry fate that Guangdong can not get rid of. The cement price increase initiated by

Guangdong in early July has now been pulled back across the board. In recent years, the familiar script of

price increase, exploration, loosening, collapse and fall has been staged over and over again in Guangdong cement market. Every round of prices full of expectations, most of them ended hastily and returned to weakness, leaving practitioners with endless helplessness and suffocation.

The Xijiang River flows eastward, Guangxi is located in the upper reaches of the Xijiang River, and Guangdong is located in the lower reaches of the Xijiang River, using ancient poems: You live at the head of the Xijiang River, and I live at the end of the Xijiang River. I miss you every day, but I drink from the same river.

The same golden waterway deeply binds the cement industry in Guangdong and Guangxi. The upstream has a huge stock of production capacity, and the local digestion is under pressure; the downstream is the core consumer hinterland of South China, and the market volume is considerable. Only by understanding the industrial game between the two places can we understand the helplessness behind the cement market in Guangdong.

From the point of view of production capacity, the new production capacity of clinker in Guangdong in recent years is limited, mainly relying on capacity replacement to complete technological upgrading, and there is no large-scale disorderly expansion of production. Relying on the huge population base and the construction of Dawan District, Guangdong is the largest cement consumption market in South China.

However, the general trend is irreversible, and the national real estate downturn directly drives the demand for cement in the province to weaken year by year. Even if the impact of external supply is excluded, the existing capacity of Guangdong is in a state of oversupply and overcapacity.

If the market can be closed within a province, the provincial leader will coordinate to control production and stabilize prices, and the market can still hold the basic market.

However, the Xijiang River is surging, and the river water is not divided into provincial boundaries.

Every time Guangdong plans to pull up the market, it will take the initiative to dock with several large factories in Guangxi and invite them to stand up at the same time. However, not only the interests of multiple subjects are complex, but also there are game suspicions among them, which make it difficult to coordinate and achieve a unified implementation effect.

This time, no accident, it's yellow again! A steady stream of cement and clinker flowed down the Xijiang River, easily breaking the hard-won price balance (as I predicted on July 10)

. A large number of goods poured into the Pearl River Delta, directly diluting the results of Guangdong's price increase, making every price action mostly short-lived.

In fact, we should also see that although the rhythm of Guangdong market rise and fall is in the hands of local conch, China Resources and other large factories, the market window period for enterprises to display is very limited. In the

early years, the dry season of the Xijiang River generally lasted from October to April after the next year, which was the golden cycle for Guangdong to repair profits. With the improvement of waterway regulation and lock dispatching capacity, even in the dry season, navigation conditions are much better than in the past. Like last year, it was not until late November that the impact of low water appeared, the goods were blocked, and the effective window to really reduce the impact of external supply was often only two months.

Only in this short period of time can big factories in Guangdong have the conditions to pull up effectively and repair the profits of enterprises.

But for most of the year, the Xijiang waterway is open to navigation smoothly. With the advent of the wet season, large quantities of goods in Guangxi are once again transported downward to compete for market share. In order to defend the local territory, Guangdong's leading price war is also very heavy, taking the initiative to make profits and grab customers, so as to resist the impact of external supply at the expense of profits.

Raising prices and bargaining, two completely different operations, are realistic games made by local leaders under the constraints of objective conditions.