L|"China's building waterproofing industry! Impacts and Suggestions â–¡ Miao Yan, Deputy Secretary-General, China Building Waterproof Materials Industry Association Table 1 Comparison of Economic Growth Indicators for Building Waterproofing and Building Materials Industry in 2005 Name Building Waterproof Industry Building Material Industry Evaluation Sales Revenue Growth Rate 27.8% 24.7% + 3.1% Industrial added value growth rate of 24.88% 17.3% +7.5% Total profit growth rate of 10.9%-2.6% +13.5% The Chinese economy experienced strong growth in the first four months of 2006. In the same period, the building materials industry also showed remarkable results. The speed of development, but the construction of the waterproofing industry not only did not appear warming phenomenon, in fact, a substantial decline in growth rates, the continued downward trend, should cause the industry's high attention.
The construction waterproofing industry saw a downturn in the economic warming. In the second half of 2005, the price of raw materials in the construction waterproofing industry, especially the price of oil, the main raw material, has skyrocketed. Most companies adopt internal price-dilution factors and fine-tune the prices of their products. The impact of the price increase caused by raw material prices was basically absorbed by the industry. However, in 2005, the economic performance of the construction waterproofing industry was still basically good, and the economic growth indicators were better than those of the building materials industry (see Table 1). In the first four months of 2006, the domestic economy witnessed world-renowned growth, but the construction waterproofing industry experienced a huge drop in the same period. Table 2 shows that the industry has begun to show signs of economic prosperity.
The soaring price of raw materials, especially the price of Zhejiang, is an important reason for the huge drop in the construction waterproofing industry. The main raw materials for building waterproof materials come from petroleum or petrochemical products such as Zheqing, SBS rubber, EPDM, PVC resin, Polyurethane and acrylic emulsions, etc. Shows the price composition of Zhejiang Green waterproof membrane in 2004, and the profit before tax is calculated based on 15% of the total cost.
As can be seen from the figure, due to the high degree of industrialization of the production of waterproofing membranes, the cost of raw materials accounted for more than 90% of the main operating costs (raw materials, labor, and hydropower) of the material production enterprises, and the sales price remained unchanged. Under the circumstances, the total price of raw materials will rise by 25%, which will fully reflect the economic growth indicators and industry growth indicators in the year of 2006. The overall social macroeconomic indicators GDP of 10.2% The total social fixed assets investment increased by 29.6% year-on-year. Real estate development investment growth 21.3% of industrial enterprises' industrial added value increased by 16.7% year-on-year, and profits increased by 22.1% from the same period of last year. Building materials industry added value increased by 31.9% year-on-year. Total profit increased by 51.1% from the same period last year. Principal business income increased by 31.7% year-on-year. 7.9% increase in profits, -72.8% increase in corporate losses, and year-on-year increase of 153.5%, and the increase in the price of raw materials to the right also swallowed most of the company's operating results.
Shows that the price of Zhejiang's greenery has continued to rise sharply in the past 10 months, directly leading to a 60% increase in the total cost of raw materials in the construction waterproofing industry, while the product ex-factory price index has risen by less than 10%. The difference between the two was in the first few months of 2006. The industry’s profits have shrunk dramatically in the month, and the loss of loss-making companies has become an important reason.
The three major costs of international crude oil prices and the changes in supply and demand in the domestic Zhejiang market are two major factors affecting domestic oil prices.
It is shown that although the price of retransmitted Zhejiang green prices has a certain lag behind international crude oil price changes, there is still a strong positive correlation.
If the increase in the price of crude oil is the internal cause of the increase in the prices of oil and natural rubber, the inconsistency in the prices of imported and domestic oil and natural oil for the price of crude oil is caused by the supply and demand of the domestic oil and tobacco market.
The price of domestic oil prices will keep running at a high level with crude oil prices, and seasonal price fluctuations will gradually slow down.
1. The continuous rise in international crude oil prices that began in 2003 has been proven to have limited impact on world economic growth. Recently, both the price of bituminous waterproofing membranes constituted the full profits of the embezzled production enterprises.
The proportion of waterproofing materials used in the construction waterproofing market is close to 80%. Zhejiang Green is the most important raw material for waterproofing materials (accounting for more than 55% of the composition). Compared with Zhejiang Zhuang production enterprises and construction waterproof materials users, the construction waterproof production enterprises are small in scale, lacking negotiation advantages and protective pricing capabilities in the industry chain. Most enterprises can only adopt cost reduction, margin reduction, and product upgrades. Prices continue to produce and operate.
From Table 3, it can be seen that the construction waterproof material manufacturers have a break-even point under various price increase policies. Table 3 also shows that even if the price of building waterproofing products is increased by 30%, under the same conditions, 70% of left oil and natural oil prices will have a long-term impact on the industry. Raw material price increases 10% price increase of products: Product price increase 2 Product price increase 3 Table 3 Sensitivity analysis of pre-tax profits/costs The International Monetary Fund, OPEC, or the U.S. Energy Information Administration all expect that international oil demand will continue to grow steadily, although the growth rate will slow down, but the international crude oil prices It will continue to remain at a high level of volatility, and cost promotion will keep the price of oil and natural gas high.
2. Zheqing is the main raw material for Zheqing Base waterproofing materials. According to relevant statistics, in 2005, Zhejiang Zheqing used for highways accounted for more than 85% of the total demand for oil and green tea. In recent years, the development of various types of domestic roads, especially highways, has progressed rapidly. In 2004, the mileage of highways in China exceeded 30,000 kilometers, ranking second in the world. The demand generated by the rapid economic growth will stimulate energy and will further increase the contradiction between supply and demand in China's oil market.
3, oil Zhejiang green seasonal fluctuations, long-term seasonal price differences. When the absolute value of the Zhejiang green price rises to a certain height, when the seasonal price difference is greater than the cost of capital and storage cost, there will be a hedging middle Zhejiang trading company. Since the second half of 2005, it has been the large increase of these hedging trading companies, which has further aggravated the contradiction between the supply and demand of the oil and jade market, and has made domestically-reinvested Zhejiang green out of the price trend independent of imported heavy green jade. The participation of hedging companies in the market will further increase the cost of oil and natural gas users. Even the use of low-cost alternatives to buy some of Zhejiang's spare parts to reduce costs has also been greatly reduced. The complexity of the contradiction between supply and demand in the Zhejiang Zhejiang market also determines the long-term nature of the contradiction between supply and demand in the market.
Under the double pressure of rising prices and unregulated competition in the market, building waterproof material manufacturers feel the cruelty of the market and unprecedented crisis of survival. The absolute price and changing trend of oil and natural The impact will persist for a long time.
Countermeasures and Suggestions Faced with the drastic changes in the raw material market, building waterproof material manufacturers must change their business strategies so that they can find a living space in the new market conditions and new competitive balance.
1. Production companies must adjust their inertial thinking and understand that in a competitive market, the state of zero economic profit will exist for some time.
2. Under the same product quality, production companies must adopt all possible means to reduce production costs and expenses, and use the company’s own scarce resources to create excess profits.
3. Sufficient ideological preparation for the long-term, long-lasting, high-level operation of oil and natural rubber prices, increase the reserve capacity of raw materials, pay close attention to the changes and development trends of the international oil market and the domestic market, and increase the number of raw materials such as Zhejiang and Qinghai in the off-season. The amount of reserves to reduce the deadweight loss caused by raw material price fluctuations.
4. It is the only way for waterproof companies to push up the price of waterproof materials to a reasonable price. To increase product prices step by step in a timely and appropriate manner, avoid vicious competition, and enable enterprises and industries to maintain their own competitiveness and healthy development.
5. Intensify product price coordination, formulate reasonable price pricing mechanism, strengthen price self-regulation and supervision, and curb the situation in which the industry’s losses have increased; at the same time, relevant industry organizations collect relevant information and actively report to the relevant government departments, urging the relevant government departments Adjust the relevant construction engineering quota standards.
6. Increase investment in science and technology and innovation, use effective resources, assets, funds, talent, and technology to develop new products, new technologies, and new construction methods, organize multiple operations, and truly increase the company's core competitiveness.
7. Increase efforts to restructure the industry and seek joint ventures in capital markets, cash flow, or complementary channels to increase the company's ability to resist risks and increase industry concentration.
8. Actively develop the international market and increase the proportion of waterproof material exports.
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