“It’s not the off-season that forces companies to shut down their kilns, but the rise in production costs.” The marketing manager of a ceramics company in Gao’an said frankly.
A few days ago, a business owner in the Gao'an production area revealed to "Ceramic Information" that he plans to stop 1-2 existing production lines for about 10-15 days. On the one hand, sales are declining due to the off-season.
What's more important is that the prices of raw materials such as coal have risen sharply, but the prices of ceramic tiles have not been able to follow the price increases. Not only do manufacturers have no profits, they may also lose money.
Gaoan expanded more than 20 lines in the first half of the year
Daily ceramic tile production capacity increased by 900,000 m2 year-on-year
In recent years, Foshan's first-tier brand companies have expanded their presence in mainstream production areas across the country such as Guangxi, Jiangxi and Sichuan, which has affected the expansion and development pace of many local companies in mainstream production areas. Especially in the favorable market environment after the epidemic in 2020, a large number of companies have rerouted and expanded, as well as the "revitalization" of zombie manufacturers, resulting in significant regional growth in ceramic tile production capacity.
According to incomplete statistics from "Ceramic Information", in the first half of this year, the daily production capacity of ceramic tiles in the Jiangxi Pan-Gao'an production area increased by nearly 900,000 square meters compared with the same period last year, with more than 20 newly expanded production lines.
Mainly among them are the production lines of newly-built intelligent bases such as ASUS, Roosevelt, Geshiqi and Greely, as well as the newly expanded intelligent production lines of Sun, Jinliyuan, Jimcare, Jingcheng, Kangerju, etc. At the same time, There are also a considerable number of production lines of "zombie companies" that have ceased production and closed down and have been revitalized.
It is understood that most of the newly expanded production lines in Gaoan last year were put into full production in April and May this year. Faced with the explosive increase in production capacity and the arrival of the market off-season, the off-season in 2021 will put many companies in Gaoan in charge of sales. People said: "In 2020, we enjoyed the best market situation in recent years. In 2021, we will face the weakest market in the past three years."
Siwa’s production and sales have been cut in half
The production suspension rate reaches 40%
The most obvious feeling is Siwa! In 2020, Siwa enjoyed a market dividend that was rare in ten years. After the manufacturer experienced the explosion of "products were taken away as soon as they came off the production line" and "prices increased four times in a row".
In April this year, Xiwa Enterprises in the Gao'an production area faced losses due to liquidation and losses.Large areas of production have been suspended.
It is understood that as of now, many Siwa production lines of many companies in Jiangxi production areas have been suspended, and the production lines of most Siwa companies have been suspended and transformed.
According to incomplete statistics, there are currently more than a dozen Siwa production lines suspended in Gao'an and surrounding production areas, with a shutdown rate of close to 40%.
Due to the cold weather of the Siwa market, Jiayu Ceramics Company, the "King of Siwa", has launched the strategic transformation of the company and entered the field of ceramic tiles. The company has carried out technical transformation on some Siwa production lines, and has moved into antique tiles and glazed tiles. Brick and other floor tile layout.
The production and sales rate in June fell by 10%-20% month-on-month
Manufacturers encounter "double pressure" of off-season and cost
After entering June, most ceramic companies in the pan-Gao'an production area said that "the market has obviously weakened". The production and sales rate in June fell by 10%-20% compared with May. The production and sales rate of some floor tile companies was only about 70%. .
The most important thing is that this year's off-season is different from previous years. The pressure faced by manufacturers is not slow sales in the off-season, but rising costs.
“Many of the production lines that were newly built or renovated last year, a considerable part of them are concentrated in April and May to produce products, especially 750×1500mm large panels. This year, the production capacity has increased by more than 200,000 square meters per day, and more than 10 companies are in Large panels of this specification were launched this year, and the explosive growth in production capacity will inevitably force prices to fall," said a sales manager of a ceramics company in Gao'an who did not want to be named.
In the view of many mainstream companies in Gaoan, the current market pressure is not caused by the off-season, but more by the cost pressure brought by the rising cost of bulk raw materials.
Reducing production in the off-season is a normal market rule, but as costs rise, the cost of ceramic tiles cannot rise accordingly, which puts the greatest pressure on business operations.
The marketing manager of a ceramic company in Gaoan said frankly that May is the best opportunity for price increases. The prices of bulk raw materials such as coal, cartons, and chemical raw materials have risen sharply. The increase in coal prices alone has increased the production cost of a single ceramic tile by more than 1.5 yuan. Most companies have issued price increase notices, and some manufacturers have raised prices for some of their products. However, most companies' price increases ultimately remain as "notices."
“The favorable market situation in 2020 has caused many ‘zombie companies’ or companies with poor operations toIt has been given the opportunity to be resurrected. In particular, some companies that compete with low quality and low prices have had a greater impact on production areas and markets. This phenomenon of 'bad money drives out good money' has further curbed high-security production areas. The reshuffle has lowered the price and brand image of the entire production area. "The boss of a high-tech ceramics company said.
"Coal prices continued to rise in June, and the price of Gao'an natural gas also rose to a high point (due to Gao'an's centralized gas supply maintenance, some new enterprise production lines switched to natural gas). If they make ordinary products, most manufacturers will have no profit at all. , and may even lose money," said the owner of an antique brick company in Gao'an.
“The current market situation puts greater pressure on small-scale companies with high financial costs. Such companies have been competing with low quality and low prices, and have high production and procurement costs. Once they encounter slow sales in the market, they will face capital turnover. pressure." said the business owner.
According to "Ceramic Information", as of press time, no ceramic tile manufacturers in the Pan-Gaoan production area have stopped production due to inventory pressure. However, as the market off-season intensifies, most companies' sales in July will be higher than in June. The decline is bound to cause some ceramic product lines to stop production or reduce production due to large inventories.
At the same time, some companies have said that if the prices of coal and other raw materials remain high, they will consider stopping one or two production lines.
(This article is reproduced from Ceramic Information)
