In the first half of 2021, Siwa encountered the "darkest" moment in the past ten years: product sales fell off a cliff, ceramic manufacturers had inventory backlogs, and raw material and energy costs continued to skyrocket, making manufacturers overwhelmed. (Note: To facilitate readers’ reading and understanding, the tiles in this article generally refer to Western-style ceramic tiles, mainly European-style interlocking tiles)
Some ceramic companies told "Ceramic Information" that Siwa products have always been in a low-profit state, and the profit of each piece is even calculated in cents. However, this year, the production cost of Siwa has increased sharply, and the unit price of the products has been due to "homogeneity". Not only is it difficult to increase due to fierce competition and sales are stagnant, but manufacturers are also cutting prices, causing many companies to "produce everything but lose money."
"In the first half of this year, more than 90% of ceramic companies that produce Siwa said that life was difficult." A ceramic company said so. According to reports, since March this year, before the first half of the year has passed, the Xiwa production line has been shut down on a large scale, and some Xiwa factories have even stopped production. What is even more rare is that many professional tile manufacturers in Jiangxi, Hunan and other places have made technical transformation and switched production for the first time, entering new categories such as antique tiles, floor paving stones, and medium boards.
“The Siwa market is too sluggish this year”
In May, a manufacturer stopped production across the board
According to the memories of ceramic enterprises in Hubei, Hunan, Jiangxi, Sichuan, Anhui and other places, the two to three months after the beginning of each year have always been the traditional peak sales season for Siwa. However, after the Spring Festival this year, the hot sales situation of Siwa only remained After just one or twenty days, the stamina was insufficient and faded quickly. During this short period of time, manufacturers only raised prices once.
After March 15, the market situation took a sharp turn for the worse, and products were unsalable. Some manufacturers even stopped production and kilns in March due to poor sales. In order to reduce inventory pressure, some manufacturers conducted price reduction promotions in April and May.
“This year’s Siwa market is in a mess, it’s so sluggish.” Said the person in charge of a Siwa manufacturer in Anhui who did not want to be named. Overall, the Siwa market this year has not been booming. So far, it is not uncommon for Siwa manufacturers in Anhui production areas to open one production line, stop one, or even stop production entirely.
According to reports, in order to reduce inventory pressure, many manufacturers in Anhui suspended all or part of their production lines as early as May. &ld"Moreover, now is not the most difficult time. If the current market continues, many tile factories in Anhui will be liquidated in less than 20 days." "Analysis from a ceramic industry person in Anhui.
In the Jiangxi production area, as of now, more than one ceramic company has stopped all its production lines, and many West Wa companies have stopped some of their production lines. According to incomplete statistics, there are more than a dozen Siwa production lines currently suspended in Gao'an and surrounding production areas alone, with a shutdown rate of nearly 40%.
In the Sichuan production area, some ceramic companies told "Ceramic Information" that the demand for chain tiles (300×400mm) was strong last year, and the company increased prices many times but still exceeded supply, with the highest price rising to 1.4 to 1.5 yuan/piece. However, this year Due to the poor market conditions, the price rose to 1.2 yuan/piece and then stopped rising.
The cost of coal, raw materials, etc. has soared
The manufacturer said "it has already had zero profit or loss"
To make matters worse, in the first half of this year, in addition to the abnormally cold sales market, Siwa also suffered from skyrocketing production costs. Under the influence of dual factors, Siwa manufacturers are under heavy pressure.
“At the beginning of this year, the prices of all kinds of raw materials are rising, and the production costs in some production areas have increased by more than 30%.” According to the tile enterprises, the price of coal this year has doubled compared with the low period last year. At the same time, , the costs of soil materials, chemical materials, color materials, labor and other materials have increased sharply, and the prices of Siwa products of various ceramic companies have already approached the cost price.
However, due to sluggish sales and high corporate inventory pressure, Siwa manufacturers have not dared to take the lead in raising prices. Instead, some manufacturers have lowered product prices in order to clear inventory.
Judging from the current production costs and sales prices in Siwa, most manufacturers are basically in a "zero profit" state, and some products have even been "sold below cost price". Of course, there are a few Siwa manufacturers that sell relatively well, but such companies are relatively rare.
According to industry insiders, tiles, especially European-style chain tiles, have always been low-profit, low-added value and highly homogeneous products. Production costs have already reached their limits, resulting in enterprises’ ability to withstand the risk of skyrocketing costs. weak.
Take a piece of 300×400mm interlocking tiles as an example. According to the current ex-factory price, the unit price is only equivalent to 7-8 yuan/square meter (Note: 300×400mm interlocking tiles are arched, the actual area after unfolding is greater than 0.12㎡, here one square meter is calculated as 7 pieces). In the production process, the production process of Siwa and ceramic tiles is similar - there is no need for polished tiles and printing, and the chemical materials used for full glazing are no less than ceramic tiles. However, the cheapest ceramic tiles on the market have an ex-factory price of more than 14 yuan/square meter. .
In other words, the factory price of chain tiles is much lower than that of mid- to low-end ceramic tiles. "Ceramic products only cost more than 7 yuan per square meter. Such a low price is unimaginable. It is cheaper than cabbage prices." A ceramic enterprise said: "In comparison, no matter how cheap antique bricks and polished bricks are sold, the profit is higher than Sivago."
However, in the second half of 2020, the prices of many types of chemical materials have increased by 30% to 40%, or even doubled, and coal prices and labor costs have also soared. "How many ceramic companies mainly engaged in Siwa can withstand such a cost increase compared to the meager profit margin?"
"Ceramic Information" learned from Jiangxi, Anhui, Hubei and other production areas that many Siwa manufacturers are already on the verge of suspending production, but no one wants to be the first to stop production. As inventory pressure continues to rise, it will become the first force to stop production. The last "straw".
"Actually, everyone is holding on. Now many manufacturers have no place to store their products, and they will have no choice but to stop production." A person in charge of an Anhui manufacturer who did not want to be named said frankly.
In addition, for manufacturers with financing or contracts, they face huge financial pressure even if they stop production. "Whether it stops or not, these manufacturers will be very uncomfortable." An industry insider said.
Hubei, Hunan, Anhui, and Jiangxi provinces
In the past three years, Siwa’s total production capacity has surged by 53.3%
As a building ceramics product, why is the sales situation of Siwa in 2021 so different from that of ceramic tiles?
The person in charge of a ceramics company in Guangdong, which is mainly engaged in Siwa, pointed out that one of the reasons is the surge in production capacity. In the past few years, the production lines and production capacity of tiles across the country have increased dramatically. Especially around 2016 and 2017, a large number of antique brick and exterior wall tile production lines across the country were converted to tiles, further exacerbating the overcapacity in this category.
According to "Ceramic Information" "Ceramic Industry Long March" survey data, there were 279 Siwa production lines nationwide in 2017, with a daily production capacity of 31.1056 million pieces. By 2020, the number of Siwa production lines nationwide will increase to 300 lines, and the daily production capacity will increase to 4059.560,000 pieces (equivalent to an annual production capacity of approximately 1.3 billion square meters), with production line and production capacity growth reaching 7.53% and 30.53% respectively.
In terms of regions, the top five producing areas of tiles in the country are: Jiangxi, Sichuan, Anhui, Hubei, and Hunan. The central region accounts for 4. With limited and highly overlapping market space, the central region has become the national Siwa is the place with the most concentrated production capacity and the fiercest homogeneous competition.
Data show that in the past three years, the production capacity of Xiwa in Jiangxi Province has increased by 17.7%, Anhui Province has increased by 174%, Hubei Province has increased by 40.8%, and Hunan Province has increased by 74.5%. In 2020, the total daily production capacity of Siwa in the above four adjacent provinces reached 23.5456 million pieces, accounting for 58% of the country's total, a sharp increase of 53.3% year-on-year in 2017, resulting in a serious "oversupply" of production capacity in Siwa in the central region.
While production capacity has surged, market demand has continued to shrink. Siwa relies on national policies to "eat". On the one hand, the national real estate development speed is slowing down from 2019 to 2020; on the other hand, various localities have successively introduced policies to restrict or prohibit self-built houses in rural areas, which has had a negative impact on the sales of Siwa, which relies heavily on the rural market. significant impact.
Secondly, the hot sales situation in Siwa in the first half of 2020 has "overdrawn" and consumed this year's market demand in advance. In the first half of 2020, affected by the outbreak of the "epidemic", although the ceramic industry chain was severely impacted, at the same time, it also promoted rural housing construction and stimulated the prosperity of the Siwa market. At that time, Siwa's products were loaded onto trucks as soon as they came off the production line. Prices rose "four times in a row" within a month. Sales were so booming that it could be called "a rare good year in the past 10 years."
However, this "abnormal" popularity has "overdrawn" the consumer market in advance, causing market demand to drop off a cliff in the first half of 2021.
A number of industry analysts believe that in the future, the market demand for Siwa will not only not increase, but will only shrink. "Overall, as the policy 'dividends' disappear, new housing in rural areas is shrinking, so market demand will continue to shrink."
According to the observation of "Ceramic Information", with the changes in market demand and supply and demand relationship, some powerful tile factories have begun to transform and enter new categories such as ceramic tiles and floor paving stones. There are also companies planning to expand into high-end tiles and special-shaped tiles. tiles changed and stated that "it will no longer produce chain tiles in the short term."
At the same time, "Ceramic Letter""News" noted that as production costs continue to rise, more than a dozen ceramic factories in Jiangxi, Hunan, Hubei and other places have recently issued price increase letters, planning to collectively increase the prices of chain tiles and other tile types starting from June 20. They are all 5 cents each.
Judging from the price increase time and price increase range, major ceramic companies have maintained a high degree of consistency and unity, more like an industry agreement - no one dares to increase early or increase too much, but they have to increase. . Among them, some ceramic companies clearly stated in the "Price Increase Notice" that the reason for the price increase is "the sharp increase in raw materials, especially the sharp increase in coal prices, which has led to an increase in the company's costs and has been in a state of loss."
(This article is reproduced from Ceramic Information)
