Text/Zhuifeng
As we all know, the COVID-19 outbreak in 2020 has had an indelible impact on all walks of life, including building ceramics, although it may only delay but not really cancel the demand for ceramic tiles.
There are also many knowledgeable people who understand that even if the epidemic does not occur, the building and ceramics industry will continue to taste the bitter fruits caused by the increasingly serious overcapacity in recent years, not to mention the unstoppable channel fission and consumption upgrade. .
But what is puzzling is why the production capacity of the construction and ceramics industry increased instead of falling in such a sluggish environment?
For example, Guangxi Tengxian production area. From January to May 2020, the production and sales of enterprises in Zhonghe Ceramics Industrial Park in Tengxian County, Guangxi were booming, with a total industrial output value of 1.972 billion yuan, a year-on-year increase of 105%; fixed asset investment of 387 million yuan, a year-on-year increase of 84%; tax revenue achieved 91.299 million yuan, a year-on-year increase of 59.6%. Among them, Diou Home Furnishing decided to increase its capital in Guangxi Oceano by 200 million yuan, and the registered capital of Guangxi Oceano increased from 400 million yuan to 600 million yuan.
From the second half of 2020 to 2021, 7 ceramic production companies within the jurisdiction of Teng County, including Mona Lisa, Oceano, and Jianyi, plan to expand and build 11 new production lines, adding more than 70 million square meters of new production capacity/ Year. At present, all 11 production lines have submitted construction applications or reports to the Teng County Government. Relevant companies will also pay close attention to market trends to determine the specific start time. With the proposal and implementation of a new round of 11 production line expansion plans, the number of ceramics and supporting production lines in the entire Teng County production area will reach 68 in the future. The daily ceramic production capacity will increase by 214,500 square meters, and the annual production capacity will increase by more than 70 million square meters (based on 330 days), reaching 370 million square meters.
Another example is the Jiangxi Pan-Gaoan production area. Since various parts of the country pressed the "start button" to resume work in February, Jiangxi's pan-high-security production area has taken the lead in resuming work. Among them, the Gao'an production area has achieved 100% resumption of work in mid-March, with nearly 130 production lines fully ignited and resumed production. Sales of some ceramic companies were extremely hot, and "products were loaded onto trucks as soon as they came off the assembly line"; in April , the entire productThe average production and sales rate in the district has reached about 130%, and some ceramic companies have even reached 140%. After entering May, despite the impact due to the resumption of toll collection on expressways, most ceramic companies still maintained a good sales momentum, and many ceramic companies still maintained a good sales momentum. The production and sales rate reached a new high compared with the same period in previous years.
Under the good situation of Jiangxi Pan-Gao'an Production Area's booming production and sales, 38 production lines will be completed and put into operation in the Pan-Gao'an Production Area in 2020, of which 20 production lines are newly expanded (or demolished and built new) production lines of ceramic enterprises. The main production lines are completed and put into operation. Intelligent large slabs, medium slabs, full-body marble tiles and other series of products; another 18 production lines were previously discontinued or closed ceramic enterprises, and were renovated by new leasing investors and put into production again.
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According to the speech delivered by Gong Wei, secretary-general of the China Building and Sanitary Ceramics Association, at the "Ceramic Industry Summit Forum under the Epidemic" in Jiajiang, the western porcelain capital, the national ceramic tile output from January to April 2020 was 2.607 billion square meters, year-on-year. down 6.64%. In terms of cumulative year-on-year growth rate, except for Guangxi, which bucked the trend and increased by 27.72%, and Shandong production area, which increased by 8.5%, other production areas all declined to varying degrees: Hebei -26.44%, Guangdong -21.99%, Shaanxi -13.7%, and Henan -13.43 %, Jiangxi -9.95%, Sichuan -5.11%, Fujian -1.45%, Liaoning -0.7%.
Gong Wei also said in his speech that the national ceramic output will decline by 15%-20% in 2020, to approximately 7 billion square meters. He believes that after the industry structure adjustment in 2018 and 2019, the elimination of backward production capacity has achieved remarkable results. 2.5 billion square meters of backward production capacity has been eliminated, and one-third of the companies have been withdrawn from the stage of history.
While the production capacity of some production areas is expanding, the national ceramic tile production is declining in 2020. What does this mean?
It shows that production capacity does not match output, let alone sales. The expansion of production capacity in some production areas will further intensify competition in the ceramic tile market, and may even lead to a new round of ceramic tile market that is already mired in low prices. Vicious price wars. Because, when the production line is at full capacity, the national ceramic tile production capacity is about 14 billion square meters. If the national ceramic tile production drops to 7 billion square meters in 2020, it means that half of the production capacity will be idle or there will be an unpredictable batch. The yield is difficult to digest.
This is consistent with what Gong Wei saidIs it contradictory to say “2.5 billion square meters of backward production capacity has been eliminated”? We don't know.
Of course, we must look at the production capacity expansion of ceramic enterprises in two parts.
One is that high-quality ceramic enterprises are following the trend to expand production. For example, Mona Lisa and Oceano, relying on the capital advantages of listed companies, brand strength, capital injection and centralized purchasing support from leading real estate companies, these two leading ceramic companies have maintained rapid and stable performance in recent years. growth, even after the outbreak. They are vigorously expanding in Teng County, Guangxi, and building green and intelligent production lines. This is not only a pragmatic measure to meet the current needs of performance growth, but also a long-term move to take advantage of the opportunity of intensified reshuffle in the construction and ceramics industry.
Another kind of backward ceramic enterprise’s production expansion of “reviving the dead”. For example, in Jiangxi's pan-high security production area, taking advantage of the booming market after the epidemic, some ceramic companies that have been closed down or suspended for many years have come back to life and restarted relatively backward old production lines. In such "production expansion" behavior, "opportunistic" investors account for a large proportion.
Another option is to expand production following the development trend of rock slabs. Since May 2020, the development of rock slabs in China has been advancing rapidly. According to incomplete statistics, the number of slate production lines has surged from 21 in 2019 to 33 currently, and 42+ are under construction or under planning.
After clarifying the types of production capacity expansion of ceramic enterprises, we can speculate on the possible results.
The expansion of production by high-quality ceramic enterprises will promote product optimization and innovation, technological progress, environmentally friendly production upgrades and brand value enhancement, and will react on channel fission (finished house channel and fully decorated channel) and consumption upgrading, thus intensifying the ceramic tile market. Enterprises are reshuffled to increase industry concentration.
The production expansion of backward ceramic enterprises will end with the end of the epidemic, making the already fierce price war in the industry worse, and also making low-end production lines once again face the fate of suspending production for rectification or simply shutting down.
The future of production expansion following the development trend of rock slabs is uncertain. We cannot be blindly optimistic and believe that the trend of rock slabs will definitely bring about trillions of new markets, and we should not deal with the cross-border robbery that may come at any time; We should not belittle ourselves and not actively explore cross-border development and deepen old channels.
In short, it is the same expansion of production, but different ceramic companies have different fates. The main reason is to see what the purpose is.
Author: Zhuifeng
