New start of 2022, Saudi Building materials prices start to rise, Chinese enterprises to survive difficulties?

2022-06-17 0 By

As one of the basic industries in China, building materials industry has been widely used in all walks of life in China because of its extensive and irreplaceable characteristics.And cement and cement products are widely used in civil construction, water conservancy and other projects, which is the most widely used, the most dosage of construction materials.From the current development of China’s building materials industry, the entire industry after the golden development period into a dilemma.And to the building materials industry this year, it can be said that it is an unfavorable start.Among them, Saudi building materials prices began to soar, the survival of Chinese enterprises can be said to be difficult.So, how is the development of building materials industry in China?According to a local media report in Saudi Arabia, due to the impact of the epidemic economic recovery, local steel prices in the past January, fully increased by 6%.Local steel prices, for example, were 3,558 shatyria a tonne in December.In January, the price had risen to 3,790 shatyria a tonne.In fact, there are many reasons for the rise in local steel prices.For example, high domestic demand, continued steel exports and local loan policy adjustments have led to a rapid increase in housing demand.Obviously, the rapidly rising steel price is very unfavorable for Chinese enterprises investing in Saudi Arabia.The continuous rise in the price of local raw materials, round-trip air tickets and quarantine costs incurred after returning to China, etc., have also greatly increased the cost of Chinese enterprises, making it even more difficult for them to develop.In addition, compared with other national contractors, the price advantage of Chinese contractors is gradually decreasing.Actually, what building materials price rises is not Saudi Arabia area, since last year, the building materials price of our country also lies in rising ceaselessly in.Next, we talk with you about the development of building materials market in China last year.In 2021, the development of China’s building materials market from the overall point of view, last year, China’s building materials market presents the following characteristics: First, the output of main building materials products maintain growth for the most part.According to data released by the China Building Materials Association, from January to November last year, the output of 31 key building materials products was monitored, and the output of 21 of them was rising.And flat glass production rose the highest proportion, reached 8.4%.Second, commodity prices maintain a high increase in building materials production costs.As the building materials industry is a typical commodity dependent industry, affected by the continuous rise of commodity prices, the profits of China’s building materials related enterprises were severely compressed last year.Among them, coal, chemical and other commodity prices continue to rise, resulting in a substantial increase in production costs of building materials enterprises.As the main fuel of building materials industry coal, natural gas, its price is rising rapidly.The price of coal has exceeded 2,000 yuan per ton in some areas, while the price of liquefied natural gas has increased by more than 50 percent.And to cement, cement products, waterproof materials as a representative of the industry profit dropped significantly.Since the third quarter of last year, although commodity prices have declined, the cost of building materials industry is still running at a high level.Third, the growth of macro market demand is slowing down.Fixed-asset investment (excluding rural households) and investment in construction and installation projects rose 5.2% and 3.9% respectively in the january-November period, compared with a two-year average growth of 3.9% and 6.3%, according to the National Bureau of Statistics.This also shows that China’s building materials industry is still facing low investment market demand growth.In the real estate sector, which is closely related to building materials, the area of completed corporate houses increased only 16.2 percent from January to November last year, registering an average growth rate of 3.8 percent over the past two years.The sales volume of building and decoration materials increased by 22.2%, but decreased by 4.5% compared with the same period in 2019, which also shows that the real estate industry in China does not play an obvious role in driving the building materials market.In fact, the building materials industry in Our country after experiencing the golden period of development since the founding of the country into a dilemma.To 2015, the building materials industry, a number of business chaos, imbalance between supply and demand structure, price reduction and other problems, the overall benefit of the industry fell sharply, building materials industry supply side reform is imminent.Since the fifth Plenary Session of the 18th Central Committee of the COMMUNIST Party of China in 2015, the central Government has proposed that “overcapacity reduction, inventory reduction, deleveraging, cost reduction and strengthening of weak links” is an urgent problem to be solved in the supply-side reform.It hopes to meet the practical needs of the people through the supply and effective use of land, labor, technology, capital, management and other factors of production.Since the supply-side reform was proposed in 2015, 2016 has become the year when the supply-side reform of building materials industry began.Cement business as an important part of building materials industry, its profit model transformation under the reform of the supply side is particularly prominent.The following will introduce in detail the promotion effect of supply-side reform on the profit model optimization of the building materials industry and cement business in the building materials industry.Under the requirements of supply-side reform, the building materials industry has carried out a series of effective actions since 2016. First, it promotes the development of the building materials industry to the direction of green environmental protection.Through the development of green and environmentally friendly production capacity, we have eliminated a number of backward production capacity that does not meet the requirements of green and environmental protection, and alleviated the overcapacity situation in the building materials industry, such as steel and cement.The second is to promote the transformation and upgrading of the building materials industry, adjust the industrial structure, while developing cement, steel and other traditional building materials, the development of new building materials, the third is to extend the building materials industry chain, the building materials industry business to the construction service industry to go.Give full play to the main position of building materials industry, enhance the overall value level.Fourth, the development of the “go out” strategy, under the “Belt and Road” to promote the export of China’s building materials products, and construction services and “go out” strategy integration, the building materials industry value chain to extend abroad.Cement business, as a traditional business of building materials industry, has more diverse methods to change its profit model under the reform of supply side.First, we will actively phase out outdated production facilities.The production of PC32.5 grade cement was greatly reduced, and many enterprises eliminated production lines with low productivity and closed small shaft kiln cement.At the same time, through capacity replacement to achieve the purpose of eliminating backward capacity, in capacity replacement each production of a new capacity will be corresponding to the elimination of a backward capacity.This not only promoted the cement industry to the green environmental protection strategy development, but also helped enterprises to eliminate the original backward production capacity.Second, the implementation of staggered peak production can not only improve the relationship between supply and demand of cement industry.This is also of great significance for saving production energy and reducing pollution emissions.Conclusion: From the above analysis, due to the impact of rising raw material prices in Saudi Arabia, the price advantage of Chinese enterprises in Saudi Arabia has gradually decreased, and the development of enterprises has encountered a bottleneck.From the development of building materials industry in China last year, although the output is improved, but the whole industry is still facing greater development pressure.Finally, the author wants to ask below everybody, how does everybody look to the building materials industry of our country this year?