NEWS CENTER

Building Materials Industry Facing Economic Downward Pressure


Release time:

Jun 25,2014

From January to April this year, the building materials industry above designated size completed its main business income of 1.3 trillion billion yuan, a year-on-year increase of 14.35 percent, and achieved a total profit of 82.9 billion billion yuan, a year-on-year increase of 29.9 percent. The growth rate of the two economic indicators was higher than that of industrial enterprises above designated size in the same period, and the industry achieved steady and rapid growth. It is expected that the building materials industry will continue to maintain a steady growth in the first five months of this year and even the first half of this year. However, some emerging problems in the operation of the industry also reveal that the downward pressure on the building materials industry is magnifying. The number of enterprises on the regulations has been significantly reduced to release the market environment difficult letter.

From January to April this year, the building materials industry above designated size completed its main business income of 1.3 trillion billion yuan, a year-on-year increase of 14.35 percent, and achieved a total profit of 82.9 billion billion yuan, a year-on-year increase of 29.9 percent. The growth rate of the two economic indicators was higher than that of industrial enterprises above designated size in the same period, and the industry achieved steady and rapid growth. It is expected that the building materials industry will continue to maintain a steady growth in the first five months of this year and even the first half of this year. However, some emerging problems in the operation of the industry also reveal that the downward pressure on the building materials industry is magnifying.

The number of companies on the regulations has been significantly reduced to release a difficult signal of the market environment. According to data from the National Bureau of Statistics, from January to April, there were 28000 enterprises above designated size in the building materials industry across the country, an increase of more than 2100 year-on-year, but a decrease of nearly 1,000 from January to March. This is the first time since 2011 that the number of enterprises above designated size has decreased significantly. From the perspective of industry, cement, brick and tile, building blocks, cement products and other industries have changed greatly, with the number of enterprises on the scale accounting for about 17%, 14% and 20% of the total respectively. From a regional perspective, the number of enterprises on the scale in the eastern region accounted for about 54% of the total, more than half of the country's total. Shandong Province has reduced more than 180 enterprises on the scale, ranking the highest among all provinces in the country. The decrease in the number of enterprises on the building materials regulations indicates that the market environment of the industry has deteriorated, and some enterprises are facing greater market and competitive pressure, which also reflects the transformation, upgrading and industrialization process of some building materials industry to a certain extent.

Weak market demand has led to a decline in the prices of major products. Affected by climatic factors such as the decrease in the area of new real estate construction, the gradual completion of key projects, and rainfall, especially the accelerated release of some new production capacity, the demand for building materials market has weakened since the beginning of this year, and the imbalance between supply and demand in markets such as cement and flat glass has appeared. Product prices continue to fluctuate and decline.

In April and May this year, cement prices changed from the same period in previous years. Except for some areas in the southwest and northwest, cement prices in North, South and East China all dropped significantly. Since February this year, the national average ex-factory price of general-purpose cement has dropped for 4 consecutive months, with a cumulative drop of 14 yuan. At the end of May, it has dropped to 308 yuan/ton. Although it is higher than the same period last year, the downward pressure has become increasingly apparent; flat glass prices have continued to decline. From January to May, the national average ex-factory price of general-purpose flat glass has continued to drop by nearly 3 yuan, and in May to 68 yuan/weight box, it has reached the lowest point since September 2012, and the ex-factory price of ordinary float glass in some enterprises has been as low as 46 yuan/weight box, which is below the profit and loss point.

According to the current trend, there is no obvious sign that the continuous fluctuation of cement prices will be improved, and according to the analysis of the industrial operation cycle of the flat glass industry over the years, it is difficult to get out of the low fluctuation range in a short period of time. The continued decline in cement and flat glass prices also indicates that the downward pressure on the industry has been amplified.

The growth rate of building materials industry benefits gradually narrowed warning industry downward pressure increased. In February, March, and April this year, the cumulative year-on-year growth rate of profits of building materials industrial enterprises above designated size was 46.2, 32.5, and 29.9, respectively, which were higher than the growth rate of national industrial enterprises. This is due to the cement and flat glass manufacturing industry in the same period last year. The low profit base has enabled a large increase in profits in the same period this year, so that the overall profit growth rate of the building materials industry has maintained a relatively fast. On the other hand, it benefits from the basic guarantee that the building materials industry continues to maintain stable and rapid growth. However, with the gradual recovery of the profit level of the cement and flat glass manufacturing industry after May last year, the profit growth rate will gradually decline, and the overall impact on the building materials industry will also be weakened. At the same time, after several years of rapid development of the product industry, the profit growth rate is also difficult to maintain. Large space, so it is difficult for the profit growth rate of the entire building materials industry to continue to maintain a high level, and the growth rate will gradually narrow.

The financing difficulties of enterprises, high accounts receivable, the problem of financial constraints is becoming increasingly prominent. As the country's attention to overcapacity industries continues to increase, the financial system will become more and more strict with the cement and flat glass industries. The phenomenon of difficulty and reluctance to lend frequently appears, and some companies even have bank loans. Since March this year, the proportion of domestic loans in the fixed asset investment sources of the building materials industry has shown a downward trend, and the decline has gradually increased. In the first five months of this year, domestic loans accounted for 7.6 percent of the funding sources, down 1.4 percentage points from a year earlier and 1.2 percentage points more than in January-April. Financing difficulties and high financing costs have become common problems faced by cement and flat glass enterprises. In addition, with the overall increase in labor costs and the price of raw fuel materials, especially with the increasingly stringent standards for energy conservation and emission reduction, the operating costs and corresponding investment of enterprises are rising rigidly. Building materials enterprises, especially those in industries with relatively high asset-liability ratio and overcapacity, are stretched in terms of capital flow.