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Building material industry experiencing structural adjustment
Last Updated(Beijing Time):2007-05-22 14:56

By Lv Guixin

In 2006, the overall economic development of the building material industry kept a favorable and efficient state. The increase of production and sales was speeded up obviously, together with the economic development quality was further increases, and the industrial structure was improved further.

Firstly, the production and sales kept increasing rapidly. According to the statistics in 2006, the cement production in China reached 1.24 billion tons, up 15.5 percent year on year. The respective growth margins for deep-manufacturing glass, plasterboard, ceramics for building use, refractory materials, stone material processing, as well as brick and tile production exceeded or approached to 25 percent.

Secondly, the price kept on increasing with stable state. The factory prices of building materials have increased by 1.67 percent year on year, but the prices of selected non-mental products increased by 2.84 percent. At the end of 2006, the price of cement increased by a large margin when compared to that at the beginning of 2006 in certain areas in East China and Middle China; the cement price increased by 2 percent year on year across China. The factory price of flat glass declined by 5.9 percent compared with that of last year due to the impact from over concentrated production of newly accomplished projects.

Thirdly, the overall economic returns increased by a large margin. Incomes from the main businesses increased by 29.3 percent year on year to RMB1.1534 trillion yuan, and the growth margin was 3.1 percentage points higher year on year. With profits and deficits balanced out, the profits realized amounted to RMB60.3 billion yuan with a growth margin of 47.1 percent. The cement industry realized a profit of RMB15 billion yuan with a year-on-year growth margin of 92.6 percent.

Fourthly, the export of building materials continued to increase rapidly. The delivery value of exports reached RMB121.6 billion yuan with a year-on-year growth rate of 30.6 percent. The respective growth margins for marble brick and tile, plaster products, other granite products, as well as sealed insulating glass approached to or exceeded 100 percent. The exports of cement and wrought materials amounted to 36.13 million tons with a year-on-year growth margin of 63.2 percent.

Fifthly, the investment structure was further improved. The investment on fixed capital in the whole industry continued to increase rapidly, but the investment on industries with surplus production capability began to decrease. The investments in fixed assets completed in building material industry amounted to RMB154.7 billion yuan in whole year with a year-on-year growth margin of 35.2 percent. The investments in fixed assets accumulatively completed in the cement industry decreased by 2.4 percent year on year to RMB40.3 billion yuan, but investments were mainly made in the large-sized new dry process cement technology.

Sixthly, the product storage kept at a normal level. The total storage of finished products of above-scale building material manufacturers maintained at RMB69.9 billion yuan with a year-on-year growth margin of 15.7 percent. According to the data from National Building Material Information Center, the storage of cement in 140 major cement manufacturers increased by 24.51 percent year on year to 7.69 million tons by the end of December, 2006. The growth margin of the cement storage was less than that of the cement output.

New effects of structure regulation.

Firstly, the product structure was further improved. The proportion of new dry-process cement in the cement industry was improved up to 50 percent, up 10 percentage points than that of last year. The lagging cement producibility as vertical kiln was eliminated continuously, therefore the output proportion further decreased. The glass deep processing business developed rapidly and exceeded its upstream flat glass products for the first time in terms of the production value and main business income.

Secondly, the elimination of backward productivity was accelerated. Some local governments used multiple means in a comprehensive way to accelerate the elimination of the backwards. The proportion of dry-process cement in Zhejiang province reached more than 90 percent through eliminating backward cement producibility last year.

Thirdly, energy saving and consumption reduction made new progress. The comprehensive energy consumption per ten thousand yuan GDP was reduced by over 7.5 percent year on year. With the development of new dry process technology of cement, the comprehensive energy consumption per unit cement production further decreased.

Fourthly, the process of enterprise merger and restructuring was accelerated. Large scale enterprise groups developed rapidly, the industrial concentration further improved. The private enterprises developed rapidly in 2006, the involvement of international financial and industrial capitals objectively stimulated the merger and reorganization and market integration in China's building material industry.

Fifthly, the export structure was further optimized. The exports of high-energy-consuming products, represented by cement, dropped down obviously, while the exports of further processed products with high added value, represented by auto glass and glass fiber products, continued to increase by a large margin. The exports of technique, equipment and labor, driven by the overseas contracted cement construction projects, increased significantly. The trade surplus of building materials was further enlarged.

The building material industry will continue to increase rapidly this year.

The foreign and domestic environment is beneficial to the development of building material industry in 2007.

Firstly, the international environment benefits the development of Chinese building material industry. At present, the foreign investors generally think highly of China's building material industry, transnational funds had expedited their steps to merger, restructure and integrate resources in China's building material market. Although trade protectionism pricked up in European countries and the USA, the market is still promising especially in Middle East and Africa as the international trades of building materials developed continuously. Secondly, the internal momentum for economic growth is still strong. Especially, such factors including the upgrading of housing and traveling consumption structure that is closely related to the development of building material industry, the increased investments in infrastructure, as well as the accelerated construction of a new Socialist countryside and urbanization will continue to drive the building material industry to realize a relatively rapid growth.

Simultaneously, some potential risks along with the operation of building material industry should be emphasized:


Firstly, with large amounts of new building material production lines being established and put into production, the increased producibility will uplift the pressure from market competition. Secondly, the momentum of investment on building material industry is still strong. Although the investments on cement and flat glass slightly reduced in 2006 year on year, the growth margin of total investment on building material and nonmetal industry remained higher than that of last year. Thirdly, the energy saving and discharge reduction are still big challenges. In order to promote the change of increase pattern, it is a must to focus on energy saving, consumption reducing and discharge reducing continuously.


It is estimated that the demands in the building material market will continue to increase, but the growth margin may decline; the industrial production will keep its stable and speedy increase, with the growth margin of cement and glass production volume above 10 percent, the total profits realized by the industry will have an increase than that of last year. 
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