Cement: What is the purpose of concentration of operators?

The “12th Five-Year” development plan of the cement industry describes the concentration of “Eleventh Five-Year Plan” operators as “the concentration of production is further improved. In 2010, there were 22 cement enterprises with clinker production exceeding 10 million tons, with a total output of 540 million tons. It accounts for 45.8% of the total output of cement clinker. The cement output of the top 10 enterprises is 470 million tons, accounting for 25.3% of the total cement output, which is 10 percentage points higher than that of 2005.” The goal of the “Twelfth Five-Year Plan” is “end of 2015, strive for The number of cement enterprises has decreased by one-third compared with 2010. The top 10 enterprises have a production concentration of more than 35%."

The concentration of operators is market behavior, and its purpose is to expand the scale of operations and improve market competitiveness. The approach is to achieve fair competition and voluntary union.

The competitiveness of the operators in the market is manifested in many aspects, but the most important factor is the cost. The first element that determines the cost is the rational allocation and utilization of resources. Cement is a resource-dependent industry, and the cement industry is an industry with limited product sales radius. When cement producers and operators occupy high-quality mine resources, are close to the consumer market, have good transportation conditions, adopt advanced and practical technical equipment, and have various supporting conditions, then they have the capital of the market, and add Careful management in production and operation, market competitiveness can also be refined.

If enterprises can maintain continuous technological progress, continuously optimize resource allocation, and strengthen management, they can maintain sustained market competitiveness. This is also the goal that every operator expects and strives for.

The main focus of operators to achieve market competitiveness through fair competition and voluntary integration should be to make resources more rational and more efficient use. After the combination, through integration in research and development, technology, management, culture, manpower, resources, etc., the production and operation costs are reduced, and the scope of services is wider, thereby maximizing benefits.

With the expansion of business scale and strength, it is possible to invest more funds in innovation and to maintain market competitiveness. That is to say, the operators have embarked on a path of sound development.

Another important factor in determining the profitability of an operator is the price at which the product is sold. The price of cement is a market-adjusted price, which is set by the operators themselves and is the price formed through market competition. As long as the operators do not sell cement at a price lower than the cost for the purpose of crowding out the competitors, they should decide the price at their own discretion. If there is an operator's unfair competition behavior, the operator's responsibility should be investigated according to the Anti-Unfair Competition Law.

The root cause of unfair competition in the market should be that supply exceeds demand and is greater than. The pursuit of the end should be the issue of productivity layout, or investment decisions. The first element of the feasibility study placed on investment projects is market forecasting. The market forecast is to analyze and predict the market capacity, price, competitiveness, and market risk of the output of the project and the required inputs. The results of the market forecast provide the basis for determining the project construction scale and product plan. The concentration of investment by operators has led to an imbalance between supply and demand in the market.

In the period of the machine kiln hegemony, a vertical kiln, but the annual 100,000 tons, the market impact is very mild. When the new dry method investment benefit is higher than the machine shaft kiln, and the scale benefit becomes more and more obvious, a new dry process line with a daily output of 5,000 tons of clinker is put into operation, and the impact of the annual 2 million tons of cement on the market is very high. Lethality." When the machine shaft kiln produces cement, the market reaction is still normal due to the substitution effect. When the new dry process production of cement accounted for a large part, the approval of a large number of cement projects would be contrary to the original intention of the investment system reform, that is, under the national macro-control, give full play to the basic role of market allocation resources, and establish enterprises in investment activities. The status of the main body creates a market environment conducive to fair and orderly competition of all types of investment entities, promotes the rational flow and effective allocation of production factors, optimizes the investment structure, improves investment efficiency, and promotes coordinated economic development and overall social progress. The project authorities have a certain degree of work mistakes in the approval of the cement project in the process of deepening the reform of the investment system.

For the existing overcapacity, the “prescription” of its governance is incremental, and it is controlled from the source of the project; the second is the stock, “survival of the fittest”. It is natural for the concentration of operators in the process of “survival of the fittest”. Concentration has enabled the market competitiveness of operators to be improved, and naturally the level of the entire cement industry has been improved.

Therefore, the purpose of concentration of operators is to improve the competitiveness of the operators in the market. If through the concentration of operators, the focus is on improving the operator's right to speak on the price, the direction is obviously biased, which is also unfavorable for the continued healthy development of the cement industry.

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