Recently, Dongpeng Holdings released a record of investor relations activities, which attracted widespread attention. Dongpeng Holdings revealed that its ceramic tile production capacity this year is approximately 150 million square meters, and it still has plans to expand production capacity in the future. There are four main ways to expand production capacity in the future: (1) Establishing projects to add production lines at existing bases, such as Fengcheng, Jiangxi and Yongchuan, Chongqing; (2) Technical transformation and upgrading of existing production lines to high-capacity or high-value product production lines; (3) Through OEM; (4) Through mergers and acquisitions.
On the one hand, in recent years, the construction and ceramics industry has been plagued by overcapacity. The prices of raw materials and fuel have risen sharply, but the prices of ceramic tile products have not been able to rise significantly. At the same time, some ceramics companies have encountered operating difficulties and can only close down and exit; On the one hand, leading ceramic companies are "racing for land" to expand production capacity, and industry concentration is rapidly increasing.
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Top ceramic companies continue to expand production capacity
In September this year, Dongpeng Chongqing Yongchuan Base Phase III project started construction, and two new high-end ceramic tile intelligent production lines will be built. The project covers an area of 600 acres and is expected to be completed and put into operation in 2024, with an annual output of 29.7 million square meters of ceramic tiles. It is reported that Dongpeng signed a contract and settled in Yongchuan, Chongqing in 2017. In April 2020 and July 2022, it built four ceramic tile production lines with an annual production capacity of 25.8 million square meters.
The relevant person in charge said that Dongpeng also plans to start the construction of the fourth phase of the project in Yongchuan next year, which is expected to be completed and put into production in 2025. The fourth phase of the project includes two tile production lines and three sanitary ware production lines. Among them, the two tile production lines have an annual ceramic tile production capacity of 29.7 million square meters; the three sanitary ware production lines have an annual output of 2.64 million pieces of sanitary ware products, as well as hardware faucets and other ancillary products. After the completion of the fourth phase of the project, the annual ceramic tile production capacity of the Yongchuan production base will exceed 85 million square meters, becoming the largest ceramic tile production base in Dongpeng.
In July this year, Hongyu’s new smart wide-body kiln at its Tengxian production base in Guangxi was put into operation. In 2021, Hongyu signed a contract for a 2,600-acre project investment base in Teng County, Guangxi, and purchased the overall assets of Guangxi Xinzhong Tao for 186 million yuan.Up to now, all three production lines of Hongyu Teng County production base have been stably in production, and the comprehensive advantages have been further enhanced.
In February this year, two production lines at Nobel's Jiangxi Jiujiang production base were put into operation at the same time. So far, Nobel's Jiujiang production base has added 4 new production lines. In addition, it is understood that Nobel's production base in Wuhu, Anhui is under construction. According to the relevant person in charge, the project will be constructed in two phases. The first phase of the project will start construction in August 2021, with a total investment of 1.8 billion yuan, and a planned total construction area of approximately 700,000 square meters, including raw material workshops, flour milling workshops, and manufacturing facilities. Workshops, finished product warehouses, etc. are expected to be completed in March 2023.
In 2021, two production lines at the production base of Xuri Group (White Rabbit Ceramics) in Youxian, Hunan have been put into operation, and plans are currently underway to build another two floor tile production lines. It is understood that in the first half of this year, Hunan Xuri Ceramics has completed an output value of 250 million yuan and a tax revenue of 20 million yuan. It is expected that all four production lines will be put into production next year, with a daily output of nearly 100,000 square meters and an annual tax revenue of more than 60 million yuan.
In addition, in 2022, Marco Polo and New Pearl have successively disclosed their listing prospectuses, both stating that they will raise funds to build or upgrade technologically improved production lines: Marco Polo raised 4.018 billion yuan to invest in the construction of smart ceramic home industries including Jiangxi Jiamei Ceramics Co., Ltd. Park (Phase I) construction project, Guangdong Dongwei New Materials Co., Ltd.’s annual output of 5.4 million square meters of special high-performance ceramic plates project, Jiangxi Weimei Ceramics Co., Ltd.’s ceramic production line green intelligent manufacturing upgrade and renovation project, Guangdong Jiamei Ceramics Co., Ltd.’s green intelligence 7 projects including the manufacturing upgrading and transformation project and the green and intelligent manufacturing upgrading and transformation project of Jiangxi Hemei Ceramics Co., Ltd.'s architectural ceramics production line; New Pearl raised 2.009 billion yuan to invest in the second phase of technical transformation of new energy-saving and environmentally friendly plate projects, Hubei New Pearl 6 projects including technical renovation of green building materials production line #1.
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At the same time, many ceramic companies have introduced capital in recent years. With the support of capital, the integration capabilities of ceramic companies have been greatly improved, accelerating industry mergers and reshuffles. According to statistics from Taocheng Daily, from 2020 to 2022, there will be a total of 55 acquisitions and mergers and acquisitions in the global construction ceramics industry, including 14 in 2022, 27 in 2021, and 14 in 2020. Hongyu, Dongpeng, Mona Lisa, Huida and other ceramic companies have completed the localization of production capacity in the regional market through acquisitions and mergers.
As head ceramic companies invest more to expand production capacity, the gap between them and waist and bottom ceramic companiesThe distance will also become larger and larger, and the concentration of the construction and ceramics industry will accelerate. Statistics from the China Building and Sanitary Ceramics Association show that as of the end of 2021, the market share of the top 10 building ceramics companies by revenue has reached 18%, a year-on-year increase of about 3%. This data will also be refreshed this year.
Industrial overcapacity reduction is accelerating
This year’s building ceramics production capacity will be up to 6 billion square meters
The construction and ceramics industry has already entered the stage of stock competition. On the one hand, leading ceramics companies continue to expand production capacity based on their own capital and scale advantages. On the other hand, more and more small and medium-sized enterprises are forced out. Statistics show that during the "Thirteenth Five-Year Plan" period, the number of construction ceramics companies decreased by 317, with the number of exits being 22.5%; the number of construction ceramics production lines decreased by 861, a decrease of 23.8%, and the output of construction ceramics (bricks) decreased by about 15%.
Although leading ceramic companies continue to expand production capacity, the market size of the building ceramics industry continues to shrink under multiple pressures such as the continued downturn in the real estate industry and the release of dual-carbon and dual-limit policies. Statistics show that in 2018, my country's architectural ceramic output was 9.01 billion square meters, falling 8.8% to 8.22 billion square meters in 2020; rising 4.3% to 8.57 billion square meters in 2020; and falling 4.7% to 8.17 billion square meters in 2021. rice. Some people believe that the maximum production capacity of architectural ceramics in 2022 will be 6 billion square meters.
Gong Wei, Secretary-General of the China Building and Sanitary Ceramics Association, delivered a keynote speech entitled "Development Trends of my country's Building and Sanitary Ceramics Industry" at the 2022 China Ceramic Tile Trend Conference, announcing a series of key industry data: National ceramic tile output in the first six months of this year A year-on-year decrease of 9.04%; the main business income of architectural ceramics enterprises decreased by 4.05% year-on-year, and total profits decreased by 25.25% year-on-year. Throughout the first half of the year, more than 500 production lines had never resumed production.
Judging from this series of data, the overall situation of the construction and ceramics industry in 2022 is quite severe. Some people in the industry pointed out that the next bigger challenge for ceramic companies is to transform energy efficiency levels and reach carbon peak and carbon neutrality. At present, various regions have formulated many energy consumption indicators for the construction and ceramics industry, and these indicators will further restrict the development of the industry. It can be foreseen that it will be common for ceramic enterprises to withdraw and be eliminated in the future.state.
Yao Ruohan, executive director of the Ceramics Branch of the China Building Decoration and Decoration Materials Association, said that in the next few years, half of the ceramic companies may exit. Such exits are also good for the industry: companies that sell at low prices and disrupt the industry with rebates will be eliminated. To achieve a new balance between supply and demand, ceramic companies regain control of pricing power. A more optimistic estimate is that in the next few years, the industry will reduce its production capacity and output by half, but the average price will also double. Then the overall output value of the industry will remain basically unchanged, but the industry will be more standardized and healthy.
