China: The Cement Industry Enters a Crucial Adjustment Period

According to an Economic Daily report, the cement industry in China is experiencing intensified overcapacity and a persistent decline in demand, necessitating a long-term structural adjustment. The national cement clinker production capacity utilization rate was below 60% in 2023, with several regions including Shanxi, Guizhou, Liaoning, Jilin, Heilongjiang, Henan, Xinjiang, and Inner Mongolia having utilization rates below 50%.

The industry faces increased production costs due to energy efficiency and pollution control measures, rising energy and raw material prices, and severe market competition. Despite these challenges, not all cement production companies are operating at a loss. For instance, Tapai Group reported a net profit increase of 150% to 200% in 2023, highlighting the potential for the industry to emerge from its current low.

Experts suggest that resolving the cement industry's overcapacity and market demand downturn is crucial for its long-term healthy development. They recommend enhancing industry concentration through capacity reduction, structural adjustment, and encouraging large enterprises to play a leading role in industry supply-side structural reforms.

Insights and Analysis:

• Overcapacity and Market Demand: How can the cement industry address the challenges of overcapacity and shrinking market demand?
• Cost Pressures: What strategies can cement companies employ to manage rising production costs and maintain profitability?
• Industry Transformation: How can structural adjustments and supply-side reforms contribute to the sustainable development of the cement industry?

Source: WorkerCN