2021 is the first year of the “14th Five-Year Plan” and a turbulent year for the construction and ceramics industry. Since the beginning of this year, various explosive news such as "a certain production area has stopped production again", "the craziest price increase in history is coming", "the inventory of such and such a company has exploded", "who and so has acquired someone again", etc. Filling our eyes and ears.
If the world today is undergoing major changes unseen in a century, then the same is true for the construction and ceramics industry.
Power Limitation
After entering July, power rationing orders issued one after another across the country directly affected many ceramic production areas. In early August, the news that ceramic companies in Guangxi's production areas were "pushed out" and that multiple production lines of two major listed ceramic companies were forced to suspend production caused a sensation in the industry, and a tense atmosphere began to permeate the industry.
Some people believe that this is due to the high coal prices leading to weak operation of thermal power plants; others believe that this is a "make-up" behavior adopted by various localities in order to achieve the "dual control" goals of energy consumption in the stage; others speculate that , this is a financial war to regain international bargaining power. It was not until the daily electricity consumption of residents in Northeast China and other places was also affected that various conspiracy theories, including that the power cuts were initiated to win the financial war, were put to rest.
Up to now, more than 20 provinces including Jiangsu, Guangdong, Yunnan, Zhejiang, Shandong, Hunan, Liaoning, Jilin, and Heilongjiang have started orderly power consumption and peak-shifting power consumption, and industrial production enterprises have been required to "open three times and stop power consumption." Four”, “Open two and stop five” or even “Open one and stop six”. On September 27, more than 30 ceramic companies suspended production due to regional power cuts in the Faku ceramics production area in Liaoning.
As an important means to achieve carbon peak before 2030 and achieve carbon neutrality before 2060, "dual control" of energy consumption is closely related to the regional industrial structure, technical capabilities and development stage. Now it has become a measure of the high quality of an industry. important yardstick for development. Although the central government has repeatedly emphasized the need to avoid "one-size-fits-all shutdowns" and correct "sports-based carbon reduction," judging from the impact of this trend on ceramic enterprises, it is probably just a difference between long-term pain and short-term pain.
The reporter learned from the relevant person in charge of a ceramics company in Guangdong that in the face of the current dilemma of power and production restrictions, the company’s productionThe production line will prioritize the production of high-quality products, so partners who take the high-end route basically don’t have to worry about supply issues. On the contrary, the production of affordable products will be affected to some extent.
To sum up, on the one hand, "power rationing" forces enterprises to save energy and reduce emissions and follow a low-carbon and environmentally friendly development path; on the other hand, it also catalyzes the elimination of backward production capacity. If an enterprise wants to use limited resources to produce the most valuable products, it must continue to transform and optimize, including optimizing production systems, product lines and even partners. This is also a foreseeable positive effect of the current so-called "dual control" of energy consumption.
Price increase
In fact, as early as the resumption of work and production at the beginning of the year, the rising raw material prices and natural gas prices have already caused troubles to the production of ceramic companies. This power rationing has undoubtedly made things worse. This has resulted in ceramic enterprises that should have been happily engaged in sales during the "Golden Nine and Silver Ten" periods facing a dilemma.
“With this year’s market situation, the pressure on the boss is also great. Either increase the price or stop the kiln. These are the only two options.” An employee of a ceramics factory revealed to reporters that the price increase is really a helpless move. Not only small and medium-sized enterprises, but also powerful large companies such as Dongpeng and Wrigley have successively issued price increase announcements. Among them, Dongpeng has increased the prices of multiple series of products by 5% since October 1.
At the end of September, there was a wave of price increases for ceramic tiles across the country. On the same day, dozens of ceramic companies in nearly ten building ceramic production areas including Guangdong, Guangxi, Yunnan, Sichuan, Jiangxi, Anhui, Zhejiang, and Shandong issued price increase notices. The price increase products involved large slabs, polished glazes, and medium-sized ceramics. boards, antique tiles, small floor tiles, tiles, etc.
It is worth noting that this situation has occurred more than once this year. As early as early May, the industry had set off a wave of fierce price increases. According to incomplete statistics from the media, hundreds of ceramic companies across the country issued price increase letters within half a month, of which only one day was May 13. Dozens of ceramic companies have announced price increases.
There is no doubt that this "dual control" of energy consumption and power restriction policy will reduce the production capacity of ceramic tile products to a certain extent and have a certain impact on the supply and demand relationship in the local market. It is understood that many dealers have already approached manufacturers to pay for shipments as soon as they received the news.I am afraid that "out of stock" and "price increases" will become more severe in the future.
Inventory
As mentioned above, dealers everywhere are worried about the impact of power cuts and price increases on the ceramic tile end market. But in fact, factories are never out of stock. What is really scarce are those that are easy to sell and can Goods that make money. Why do you say that? Here I have to mention a common phenomenon in the entire industry - stocking up.
Since ceramic tile kilns cannot easily stop or change production once they are fired, ceramic companies generally maintain a certain scale of inventory products to ensure adequate supply. In recent years, with the diversification of ceramic tile colors, textures, specifications, and categories, the product lines of ceramic companies have become longer and longer, forming a large backlog of inventory over time. Therefore, the situation of running out of goods will not occur in a short period of time.
The reporter found through visits that the bustling scene of large container trucks and heavy-duty trucks in the past is no longer found in the Nanzhuang Avenue area. Some people in the industry broke the news through short video platforms that the warehouse inventory of Foshan ceramic companies is getting fatter. Even the slate category, which has been booming in the past two years, also experienced liquidation in June and July.
Relevant data shows that as of the end of 2020, the ceramic tile inventory of three listed companies in the building ceramics industry has reached nearly 100 million square meters. Judging from the production and sales data released by several major listed ceramic companies, their production growth rate is much higher than the sales growth rate, and the inventory growth remains at 14.49%-49.01%.
As my country's economic development has already entered a new normal, the upstream real estate industry continues to cool down. The downturn in the real estate market has directly affected the building materials market, putting most ceramic tile manufacturers under great pressure. Coupled with rising costs, declining profits and other challenges, how to digest tens of millions or hundreds of millions of inventory directly affects the company's capital turnover, and some Only with the guarantee of funds can enterprises maintain a place in the new round of competition.
Expansion
The battle between the strong is nothing more than a competition of strength. Since 2020, leading ceramic companies have made frequent big moves such as investment, production expansion, and acquisitions. In 2020 alone, the new investment amount in the entire industry exceeded 43.5 billion yuan. Although faced with difficulties such as rising raw material prices, power and production restrictions, and inventory backlogs since the beginning of the year, leading ceramic companies are still making big moves.
On January 2, Hunan Xuri Green Building Materials Project signed a contract and held a groundbreaking ceremony. Xuri Group announced an additional investment of 1 billion yuan in the production base;
On January 6, Dongpeng Holdings signed an "Investment Agreement" with the People's Government of Fengcheng City, Jiangxi Province. The total investment in the project is approximately 5.08 billion yuan;
On January 9, Jiangxi Huasuo Holding Group wholly acquired Pingxiang Zhengda Ceramics, which has been closed for nearly two years, and plans to invest 500 million yuan to upgrade five production lines;
On February 3, Hongyu Group officially signed a contract for the ceramic production project in Tengxian County, Guangxi, with a total investment of no less than 2 billion yuan and the construction of 12 production lines;
On February 24, Jiangxi Fengcheng announced that Weimei Group decided to invest 6.18 billion yuan to increase capital and expand production to build the third phase of the project;
On March 4, Hongyu Group successfully purchased Guangxi Xinzhong Ceramics for 186 million yuan;
On March 9, Diou Home invested in Shanxi Huizi New Materials and purchased 20% of the equity of Shanxi Huizi New Materials for 50 million yuan;
On May 13, the foundation stone of the Jianyi Marble Ceramics Guangxi Industrial Park was officially laid. The total investment of the project is approximately 2.5 billion yuan, and 9 production lines are planned to be constructed;
On June 10, SMIC Tiles announced the expansion of its production base in Fengcheng, Jiangxi. The total investment in the project is 1.25 billion yuan and 4 new production lines are planned;
On August 30, Huida Sanitary Ware and LA'BOBO formally signed a merger and acquisition agreement to acquire 70.61% of the equity of Guangxi New Goldman Slim Building Ceramics Co., Ltd. for 130 million yuan;
On September 10, New Pearl Group officially signed a contract with Yongchuan District, Chongqing City, and plans to build a "Southwest Green Intelligent Production Base" in Yongchuan District, Chongqing City.
……
Some people believe that at a time when the gross profit margin of ceramic tiles is declining day by day, scale has become an important factor in determining the core competitiveness of an enterprise. Some people also believe that adhering to the concept of "cannot put all eggs in the same basket", it is imperative to spread production capacity across the country. No matter which statement is made, capacity expansion will be the only way for ceramic enterprises to develop.
Take Oceano as an example. Its three major production bases in Foshan, Guangdong, Jingdezhen, Jiangxi, and Tengxian, Guangxi have a total of 15 production lines, with an annual production capacity of 87 million square meters, ranking 13th in the country in ceramic tile production capacity (data source: " Ceramic Industry Long March V·2020 China Ceramic Tile Production Capacity Survey"). The semi-annual report released by Diou Home FurnishingJudging from the above, Oceano’s ceramic tile business achieved revenue of 2.729 billion yuan in the first half of the year, with a growth rate of 11.10%. For a leading company that has already landed in the capital market, whether production capacity can be further released is very critical.
Nowadays, leading ceramic companies such as Mona Lisa, Oceano, and Dongpeng have been riding on the east wind of capital and are advancing rapidly. The two giants, New Pearl and Marco Polo, have also officially launched an attack on IPO. Next, how the top ceramic companies make every move, how the waist ceramic companies strive for the upper reaches, and how the smaller ceramic companies find their own development direction will all have a significant impact on the future competitive landscape of the building ceramics industry.
(Author: Hong Xiaochun)
