Ten predictions for the cement industry in 2023: stabilize expectations, stabilize confidence, and stabilize the overall situation!

      2022 is a relatively special year in China's economic development, and it is more difficult to predict the market under the superposition of multiple unexpected factors. Affected by the stalled downturn of the real estate industry and the severe epidemic situation, the development of the cement industry has encountered major difficulties. The demand has been sluggish throughout the year, and the industry's profitability has shrunk sharply. The Cement Big Data Research Institute made a prediction on the development trend of the cement industry, market and enterprises in 2023.

1. The dragging factor of real estate is still there, and the demand for cement will decline

      Under the policy of "housing, housing and no speculation", real estate investment is difficult to return to normal. The real estate's demand for cement is still dragging down. Under the background of steady growth pressure, there is still room for infrastructure construction. The pull of infrastructure construction to cement demand will improve, but the range is limited. We predict that cement production will still decline in 2023, and the rate of decline will be significantly narrower than that in 2022.

2. The production capacity of clinker tends to decline, and some areas are under greater pressure

      In 2022, a total of 13 cement clinker production lines will be ignited across the country, with a total production capacity of 23.5 million tons, and 47 will be withdrawn, involving a production capacity of 29.51 million tons. In 2023, more than 30 new lines (with a production capacity of 44.52 million tons) are planned to be put into operation. However, under the unfavorable market environment, the production progress is expected to be slower than expected. The total clinker production capacity is stable and tends to decline.

3. Staggered peak production is intensified, and cement supply is dynamically shrinking

      In 2020, the Ministry of Industry and Information Technology and the Ministry of Ecology and Environment jointly issued a document requesting to promote the normalization of off-peak production in the cement industry. After two years of practice, this policy will be vigorously promoted and implemented in 2022. Under the pressure of declining market demand in 2023, peak-staggered production, as the core measure of supply-side reform, is expected to be further strengthened.

4. The peak of the industry has passed, and the capacity replacement has decreased

      From 2020 to 2021, the cement industry will be in a bright moment, with capacity replacement in full swing and new production lines coming and going. In 2022, the high level will drop rapidly, especially in the second half and the fourth quarter. No replacement projects or new production lines will be announced in all regions. It is expected that cement clinker replacement projects will further decrease this year under the dual constraints of stricter policies and declining demand.

5. The price center of cement has moved down, and the industry benefits are hard to say optimistic

      Under the influence of weak demand and high base, the center of gravity of the average cement price for the whole year of 2023 will still move down. In terms of benefits, in 2023, the coal supply and demand pattern is slightly wider, and the price is expected to be stable and slightly lower. Coupled with the promotion of alternative fuel technologies, the industry's benefits are expected to remain relatively stable under the relief of production cost pressures of cement enterprises; , the industry benefits are difficult to have an optimistic performance, and it is expected to be stable as a whole.

6. Accelerate the construction of a unified market, and the flow of east, west, north and south is enhanced

      In March 2022, the "Opinions of the Central Committee of the Communist Party of China and the State Council on Accelerating the Construction of a National Unified Market" was released, aiming to break through the key blocking points that restrict the economic cycle, break through local protection and market segmentation, and accelerate the construction of a national unified market. With the continuous improvement of my country's transportation infrastructure, the "short leg" attribute of cement is expected to be further broken, regional mobility will continue to increase, and market competition will become increasingly fierce.

7. Mergers and reorganizations are surging, and the competitive landscape continues to optimize

      Since October 2022, more than 10 cement companies have frequently transferred their cement assets, which rarely happened before. The operating environment in 2022 is similar to that in 2015. Many corporate mergers and acquisitions have occurred after the industry’s profitability has shrunk sharply. From 2015 to 2016, the concentration ratio of the top ten clinker production capacity increased from 52.7% to 55.8%, an increase of 3.1% The concentration rate of the top ten clinker production capacity in 2022 is about 60%. It is expected that the merger and reorganization of the cement industry will speed up in 2023, the ability of large enterprises to control the market will continue to increase, and the market competition pattern is expected to be further optimized.

8. Broaden the industrial chain and actively transform and upgrade

      During the "14th Five-Year Plan" period, the demand for the cement industry will enter a downward channel. At the same time, the era of high costs is coming. How to cultivate new profit growth points and realize transformation and upgrading have become important issues for the cement industry to consider. In 2022, China Conch Cement, a leading enterprise, will expand the cement industry chain and spare no effort to develop the new energy industry. Red Lion Group will establish a "cement + polysilicon" dual-main business development pattern and play a guiding role in the industry transformation. It is expected that the cement industry will be in 2023. Make great efforts in broadening the industrial chain, actively transforming and upgrading, etc., and open a new game.

9. With the release of the carbon peak plan, high-quality development will accelerate

      In 2022, a series of energy-saving and carbon-reducing policies for the cement and building materials industry, such as the Implementation Plan for Carbon Peak in the Industrial Sector and the Implementation Plan for Carbon Peak in the Building Materials Industry, have been issued successively, pointing out the direction for the high-quality development of the cement industry. 2023 is the first and crucial year for implementing the policy of carbon peaking in the cement industry. It is expected that the industry will make new breakthroughs and progress in reducing product energy consumption and replacing raw materials and fuels.

10. Global consumer demand is weak, and overcapacity is becoming increasingly prominent

      In 2023, the world economy and industry development still face many challenges and uncertainties. In October 2022, the International Monetary Fund predicted that the world economy would grow by 3.2%, a decrease of 2.8 percentage points from 2021, and the downward pressure on the global economy will increase. WCA predicts that global cement demand will not increase in 2023, and some countries will have a large excess capacity. 2023 will be a difficult year for the development of the cement industry.

      ZHENJIN REFRACTORIES has been focusing on refractory materials for 38 years. It is a brand leader in cement kiln lining refractory materials, helping the cement industry, creating maximum value for customers, and driving the development of the industry.