1． Marketing Opportunities of worldwide cement industry
As building industry of lots developed countries is not good for a long time, so this forms a comparative market for worldwide cement and its producing equipment in last 20 years. But since the beginning of 21st centuries, America, Indian, Vietnamese cement industries together with Middle East increased very fast leading by Chinese growing on Cement Industry and this formed an rapid development situation. And new dry process Cement which grows from small, large to strong through over 30 years. Worldwide cement consumption increased from 1.64 billion tons in 2001 to 2.3 billion tons in 2005, as a 40% increasing, during this time, the annual cement output has increased from 620 million tons to 1.64 billion tons accordingly, as a 71.6% increasing, until the end of 2006, and the foreign projected that contracted by Sinoma group and CNBM group is over 100, and 32 items of them are whole equipment of 4000-10000t/d production line and large grinding station. According to clinker calculation, this account for 20% of cement equipment market quota (Chinese market is not included). And this attracts special attention to our cement industry from worldwide cement and equipment supplier.
This article emphasized to study the business opportunities during 2006-2010, the risks may happen after 2010, and various possible conditions which could appear in our cement industry from now, we should try to solve this to keep the constant increasing and finish our history mission asap.
1. Worldwide singed and fixed cement project in 2006-2010
In the world, the new cement production line which has been or will be put into operation has 582pieces during 2006-2010, new cement producing capacity is about 890million tons/a, and that of China occupies for 320 million tons/a. Average annual output of these new production line will be over 1.5 million tons/a.
2. Worldwide cement production and consumption during 2003-2010
In the world, cement output is equal to its consumption, as cement couldn’t be stored for a long time. During 2005-2010, the average increasing rate will be 6.5%, while that of China will be 7.9%, and the average numbers of others countries will be 5.2%, the output rate between Chinese cement and whole output of the world increased from 42.5% in 2003 to 48% in 2006, and which is estimated to be 49.2% in 2010. During 2006 to 2010, new cement output which has been fixed in the worldwide will be 568 million tons/a if the new increasing output of worldwide cement industry could be 890 million tons/a, and the estimated rest output of 320 million tons/a could be our business opportunities, so we should try our best to gain these projects. But after reducing the 150 million tons/a of Chinese market, the rest will be 170 million tons/a. This is our real target for Chinese Cement Equipment and Project companies. Total investment is about 17 billion USD; the ones who will win the projects will turn up before the end of 2008.
二． Future and risks for worldwide cement industry
Generally speaking, before 2010, worldwide cement industry will be flourishing. It comes through high developing times for last 20 years. But after deep thinking, the future of worldwide cement industry may have some incertitude elements or some risks.
Firstly, whether the outcome of worldwide political circumstances could create an comparative peaceful and stable economic situation. This is the largest risk, and the solving method is that all the countries should work for this target together.
Secondary, if the cement consumption, cement output and new cement project design could be implemented or whether there is some part area and countries will have various reasons to stop the designing. So we should have a most wore conception that all the 320 million tons/a cement output which haven’t been fixed will be canceled; even like this, the worldwide cement output should be at least 280 million tons/a. This risk also exists in our country – that is to say whether we will have a 1.55 billion tons cement output at the end of 2010. During The 11th Five, our country will not only build 300 million tons/a PC cement kiln, but also build another 200 million -250 million tons/a to replace various out of times equipments, so total is about 500 million -550 million tons/a which is really a hard work, if we could basically gain this target, it is a huge contribution to not only China but also worldwide cement industry. Meanwhile we have confidence and capacity to implement this target, but we also need the good outside environment.
Third, if the oil cost decreases quickly, the economic developing foam of middle east will be crushed, due to this, cement output of this area will be too much, which will affect cement industries in various countries of the world. As these years, cement industry developing of Middle East is too fast, and it is a little abnormal, which is be worried by many inside man. If the situation will be great, and everything will develop in normal order, until 2010, the average cement consumption of Middle East for each people will be 2.3times than that in 2005, which will be 860kg/people. But these years annual utilization rate of cement output has decreased to 65%, so it appears the over capacity. In case other disbennifit situation turns up, the foam crushing risk will be higher. But luckily, now oil cost seems no deep decreasing trend, so economic developing of 9 countries in Middle East which depends on oil industry has great possibility or is ensured to be ok.
Forth, these years America is always the largest cement importing country. In 2006, cement and clink importing volume approached for 30 million tons, and 10 million tons of them are imported from China. But during 2006-2010, America will build new 40 million tons/a production line for cement. Others, in 2007, America will reduce the special customs of cement importing from Mexico, which has been implemented for over 10 years, from USD26/ton to USD 3/ ton. Both of these two reasons will affect the countries including China, who has been exporting Cement to America such as Japan, Greece, Germany and so on, though the exporting cement volume to America is not too much, the percent which cement volume accounting from total cement volume is a bit large. So these countries will be comparatively affected by this. However, luckily America PCA has leaked that, the new building production lines are used to replace the behindhand production lines which were built in 60s to 70s of last century, and not to reduce the cement importing volume. And some of this large cement transportation are under construction, which means the cement importing volume of America should keep in a comparative higher level. But presently the situation that cost of cement is reaching USD80/ton will be over.
Fifth, this is the main worry for European Countries, that is to say they may suffer in this risks. Their worry is that in case the cement output of China is overmuch, will this cause the large quantity cement of China be exported? If yes, it will strongly impact the cement industry of European countries together with Japan. Chinese cement output occupies half of worldwide output, obviously each action of China have the significant effect on worldwide cement industry. Thus their worry is understandable.
In a word, the writers thought the probability of better future is lager than that of risks, so cement industry will keep striving according to constant developing strategy together with the guideline direction of Four Zero and One negative, and it will make the great contribution to social circle economic developing and give benefits to worldwide peoples. Though, there are rough and risks on this road, but we will run true to form and advance bravely.
三．Policies of Chinese Cement Industry
Chinese cement industry are facing to both local and foreign markets. Concerning local market, little key machine or parts should be imported, others designing, construction, installation, debugging and supplies of whole set equipments are in charge of Chinese enterprises. While Chinese cement industry is a new star in the foreign market; and she doesn’t enter into advanced market. At present, the project of whole set cement production line in the foreign market were not always contracted by several first class of worldwide cement companies like 10 years ago, but they are contracted by them together with China National Materials Group Corporation, CNBM together with some new competitors appears in the market these years, such as FCB, PSP, KHI, IHI, Cemag, WalchandNegar/Ono-da, Omag, CepreocimandInekon and so on. The traditional structure of the market is changing, and this is a good chance for Chinese company extending foreign market.
How about the position that Chinese cement industry is located in foreign market? Germany Winston Consulting Company with authorities released a researching report in Dec. of 2006, answering this question, which is good for us to realize reality and understand both of us and competitors. Writers of this article carefully audit the data sheets of this report, and thought the content is real and believable.
Due to participation of Chinese and other factories, FLS accounts for 50% quota in the international markets for years, and now decreased to under 40%, and Polysius couldn’t keep its second position, while KHD has gone out of the shadow for years and has a good development, China and other stars has begun to show talent. But the total demand of the market increased more than 3 times, so all companies have flourish business. Thus if we calculate the quota according to output of cement engineering project, Chinese enterprises account for 20%. But if we calculate the account of contract, Chinese enterprises account for a little more than 10%. Additionally these foreign project need to purchase some expensive European equipments, so the rest benefits for Chinese enterprises is tiny. As the Chinese enterprises which decide to go to the worldwide market and become larger and stronger, should realize clearly that this managing concept and mode couldn’t last for long, so it couldn’t develop the enterprise. The writer proposes following advance according to real condition of Chinese cement equipment and engineering enterprise and foreign market, for reference.
1.Increase developing investment to completely improve the quality and operating reliability of Chinese whole set cement equipment, don’t sink in the misunderstanding area of “ cost reduction”, but intently create Chinese cement equipment brand and increase cognitive aspects of customers, even this adds a little manufacturing cost. Taking a long view, this step should be taken sooner or later in order to improve competition of Chinese Enterprises.
2.As Chinese enterprises has occupied a comparative quota and successful experience on putting the 5000t/d and 10000t/d production lines into operation, The managing concept and policies of Chinese enterprises should be adjust properly from “Large volume, small profit” to “High quality and favorable price”. The writer is very glad that Chinese enterprises have pay special attention to this and have made some improvement. Others, based on completely quality improvement of our whole set equipment, we should increase the localization rate for all the equipments of foreign equipment, gradually break away from importing European equipments to utilizing in foreign engineering.
3. Local competitors shouldn’t have price war in foreign market. This will damage the public face and dignity not only enterprises themselves but also China, so this should be forbidden. Chinese relevant enterprises and groups should have some privities for sharing foreign market, as foreign market is large, so it is unnecessary to hurt each other for a project, and foreign customers will gain more benefits from this, so it is unworthy.
4.Before 2010, the market of North America and Middle East oil countries has been shared by various manufacturers, so the rest part is less. As known, these suspensive projects have had the tendency or repeatability. Thus Chinese enterprises could not extend the market of North America for this moment. Meanwhile we have had a comparative trading base in the market of oil countries of Middle East. At present, mainly we should finish the signed contract in good quality and in time, in the aspect of getting new order, we could wait at ones ease for the exhausted enemy, and there is no need to invest more manpower and material resource.
5.The emphasize on extending foreign market should be “BRI”(Brazil, Russia, India) and African countries. These markets have the largest potential, and our country have some advantages, so we should grip the opportunities. Concerning Brazil, our country could consider merging some local aging factories and improving their technology, and then we could gradually enter into its cement market. As India are deeply affected by the traditional culture and thinking of England and America, so we need more time and patience to extend this market, but once we are in, the marketing potential is huge. For some African countries, our cement enterprises have got various Pos, so we could continue to strengthening and extending African market. Now we have got better achievement in Pakistan and Vietnam, so we should keep and strengthen our influence and competition competitiveness, at the same time we should extend to around countries soon, such as Indonesia, Thailand, etc.
6.The reduction on drawback of Chinese importing cement has told us an information that Chinese government don’t encourage the cement exporting, so relevant countries should set their heart at rest. Writer thought, on the one hand, the rate of cement exporting drawback should have the possibility of continuative decreasing, at the other hand, we should research and set a quota of cement exporting volume. In case the PC kiln cement is overmuch, we could stop the behindhand cement production lines as adjustment as until 2010, China still has more 30% behindhand production lines for cement. From the side of our long-term integrate benefit of politic & economy, quickening the behindhand cement production lines’ exiting is more superior and judicious than enlarging cement exporting volume.
At last, we should say that after 2010, the risk that cement output could be overmuch in the world could more or less exist. If this couldn’t promote a high increasing or decreasing, worldwide output will stay on the level of 3.1billion tons/a for a long time. The high level managing of Chinese cement industry should be vigilant of this future condition.
