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China's refractories industry yesterday, today and tomorrow
China is the world’s largest producer, consumer, and exporter of refractory materials. China's refractories industry supports the rapid development of steel and other high-temperature industries. However, in recent years, due to the shrinking market demand and the substantial increase in costs, the benefit of refractory enterprises has declined, and the outlook is not optimistic. The reporter conducted an exclusive interview with Vice President Xu Dianli in order to allow readers to more fully understand the refractories industry in China.
Reporter: The refractory industry plays an irreplaceable role in the development of high-temperature industries such as steel, nonferrous metals, cement, and glass (862, -5.00, -0.58%). What kind of development process has China's refractory industry experienced?
Xu Dianli: Refractory materials are mainly used in steel, cement, ceramics, glass, non-ferrous metal smelting, electricity and other fields, of which the steel industry is the largest user of refractories, the consumption of which accounts for 60% -65% of the total consumption of refractories.
Since the reform and opening up, China's refractory industry has gone through the following three stages of development. The first stage was the 1990s. In the early period of reform and opening up, a large number of privately-owned refractories were built due to the low investment in refractories and relatively low technological content. At that time, it was the competition between state-owned enterprises and private enterprises. The second stage was after 2000. Due to the rapid development of the downstream industry, the demand for refractories was rapidly expanded, which promoted the rapid development of the refractory industry led by private enterprises. This stage is the competition between the traditional private enterprises and the new generation of private enterprises. In recent years, with the downstream industry companies standardizing the procurement order, the refractory market has shifted to dominant companies and is currently a game between large-scale refractory companies.
At present, private enterprises occupy an absolute dominant position in the refractory industry, and the proportion of refractory materials produced by state-owned enterprises accounts for less than 5% of the total output.
Reporter: What is the status of China's refractories industry in the international refractories market?
Xu Dianli: China's refractory production accounts for about 65% of the world's total production. In fact, the domestic demand for refractories also accounts for more than 60% of the world's total demand. Annual imports of refractory materials account for less than 0.5% of domestic demand, and exports account for less than 10% of total production. However, in the past decade, China has been the world's largest exporter of refractory materials.
Domestic refractories, regardless of quantity, quality or variety, can meet the demand of refractories for production and operation and technological development in China's high-temperature industries.
Reporter: In 2014, how was the overall performance of the refractory industry in China?
Xu Dianli: In 2014, affected by the downturn in the domestic steel and other downstream industries, especially the decline in the demand for refractory materials for infrastructure construction, the output of refractory materials in China was 27,997,500 tons, a decrease of 4.48% year-on-year.
In 2014, the export volume of refractory raw materials in China exceeded US$3 billion once again, reaching US$3.33 billion. Among them, the export volume of refractory products was 1,862,300 tons, an increase of 5.27% year-on-year; the export trade volume was 1.534 billion US dollars, an increase of 9.73% over the same period of last year, and the comprehensive average price increased by 4.24%. In 2014, the import volume of refractory products in China was 25,100 tons, a year-on-year decrease of 26.45%.
Reporter: What are the major problems currently existing in the refractory industry in China?
Xu Dianli: The first problem is that the oversupply of excess capacity led to oversupply and disorderly competition in the market, making it difficult for some refractories to operate. According to research conducted by relevant local associations, in the third quarter of 2014, nearly 60% of medium and small refractory enterprises in some major refractory production areas were in the state of production suspension and semi-discontinuation.
The second is that the receivables are high, and the pressure on corporate funds is further increased. A survey of the operating conditions of 58 key enterprises with refractory materials found that the total amount of receivables from key enterprises at the end of 2014 was 12.856 billion yuan, an increase of 937 million yuan or 7.86% year-on-year.
Third, although China's refractory mineral resources are relatively abundant, the phenomenon of indiscriminate mining, destruction and waste is serious, and resource protection is imminent.
In addition, after the implementation of the new environmental protection law and the “Guidelines for the Refractory Industry” were issued, the threshold was high and the management was more standardized. The pressure on survival and development of refractory materials was also greater.
Reporter: How is the process of joint reorganization of refractory enterprises?
Xu Dianli: The refractories industry has a large number of joint reorganizations. In particular, several listed refractories companies have made rapid progress in joint reorganization. Many companies have rapidly expanded their production scale through joint reorganization, and they have formed several strong ones. Competitive large-scale refractory enterprises. Before 2010, there were only 1-2 refractory companies with sales revenues exceeding one billion yuan, and now there are more than ten.
Reporter: What kind of development trend will China's refractory industry present in the future?
Xu Dianli: The major downstream industries are affected by excess production capacity. The market has a conflict between supply and demand. The situation of low prices and low efficiency is difficult to change in the short term, and the market demand for its products has reached the top of the arc.
With the advancement of refractory technology and improved performance, the consumption of refractory materials per unit product will gradually decrease. The research results of the Refractory Association show that the consumption of ton steel refractories under the overall contract procurement method of the steel industry in China has dropped to 15 kg, but there is still a big gap between the consumption of refractories of domestic steel and the international advanced level.
Therefore, under the multiple effects of domestic overcapacity in the downstream industries and technological advances that reduce unit refractory consumption, the domestic demand for refractories will show an overall fluctuating trend.
Under this premise, China's refractories industry must first achieve transformation and upgrading, adjustment of industrial structure, expand the achievements of joint restructuring, increase industrial concentration, and adapt to the new normal. Second, we must pay attention to technological innovation, work hard on production, education, research, and independent innovation to improve the competitiveness of the entire industry. Finally, under the management of the new environmental protection law and the “Guidelines for the Refractory Industry Industry”, we must focus on energy conservation and environmental protection to create a comprehensive green refractories.
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