The Development of Building Material Industry

1. The General Situation of the Industry Development
This year the building material industry developed in the direction under the state macroeconomic control, and the over investment and over development of production were roughly brought under control; the market sales maintained a steady growth, and the export situation continued to improve. It’s expected that the cement production for the whole year will reach 1.05 billion tons, increasing by about 10%; the production of plate glass was 350 million boxes, up about 11%. Statistics show that the total value of industrial output of the building material industry exceeded 950 billion Yuan (based on current prices), up 21%. The sales in the building material market steadily increased, and the prices remained at a low level and won’t fluctuate too much. The growth of export will maintain a 30% growth or above, earning more than 9 billion US$. Influenced by the great slowdown of the profitability of cement and plate glass industries, the profitability of the whole building material industry inevitably decreased, and the profit may exceed 30 billion Yuan after balancing the accounts, slightly decreasing over the previous year.

In the first half of the year, the production, investment, and the profits with China’s building material industry greatly slowed down. The production of main building material-cement reached 456 million tons, and the output of plate glass reached 173 million boxes, increasing by 8.2% and 14.5 percent respectively, both slowed down by around 10 percentage points. The investment in the building material industry was 52.19 billion Yuan, increasing by 13% over the previous year and with the growth rate slowing down by 40 percentage points. The total profits achieved by the building material industry was 13.96 billion Yuan, down 21.9% over the previous year, while the profits for the first half of the previous year increased by 130% over the previous year. The total loss made by the loss-making enterprises was 6.2 billion Yuan, increasing 61.7% over the same period of the previous year, while for the same period of the previous year the loss was 12.9% down. The profits from high-growth products in the building material industry, such as fiberglass and the related products, fiberglass--strengthened plastic products, sanitary ceramics maintained a fine development momentum because of the dragging effect by exports and demand from lower-stream industries.

(1)The production and investment growth slowed down, although higher than the beginning of the year. For the January-October period, a total of 831.14 million tons of cement was produced, up 10.8% from the same period of the previous year, and the rate of growth decreased by 4.5 percentage points, while accelerating by 6.5 and 2.6 percentage points from the first quarter and the first half of the year respectively. The accumulated production of plate glass was 296.51 million boxes, up 15 percent from the previous period, with the growth rate slowing down by 7 percentage points, and almost at the same level with the year beginning and the first half of the year. According to statistics, above-scale building material enterprises achieved a accumulated gross value of industrial output of 807.7 billion Yuan (at current prices), up 24% from the previous period, and the growth rate slowed down by nearly 8 percentage points from the same period of the previous year, while accelerating by 6.8 percentage points and 1 percentage point from the first quarter and the first half of the year respectively. For the January-October period, the total fixed asset investment was 113.1 billion Yuan, up only 23.9% from the same period of the previous year, and the growth rate slowed down by 23 percentage points from the previous period while accelerating by 25 and 11 percentage points from the first quartet and the first half of the year respectively.

(2)The sales of the products grew steadily, and the situation for export continued to improve. According to statistics, the gross industrial sales by building material enterprises above a certain scale was valued at 784 billion Yuan (at current prices), up 24.3% from the previous year, and accelerating by 5.2 and 0.5 percentage points from the first quarter and the first half of the year respectively. The production and demand were more closely linked, and the average sales-production ratio was 97.1%, up 0.3 percentage point from the previous year, and up 0.93 and 0.58 point from the first quarter and the first half of the year respectively. For the January-October period, a total of 689.1 billion Yuan of sales income was achieved, up 20.3%, and accelerating by 5.6 points and 0.6 point respectively. The sales income from cement was 205.1 billion Yuan, up 13.6% from the previous period, and the sales income from plate glass was 24.4 billion Yuan, up 14.1%; sales from constructional and sanitary ceramics was 74.8 billion Yuan, up 27.6% from the previous period; sales income nonmetal minerals exploration and selection was 58.5 billion Yuan, up 38.6%, and the growth rate increased by 5 percentage points, also accelerating from the year beginning.

(3)The overall profitability of the industry decreased while the range of decrease narrowed month by month. For the January-October period, the nonmetal minerals exploration and selection, constructional stone processing, glass fiber and related products, tiles and building blocks industries realized 4.17 billion , 2.22 billion, 1.5 billion and 1 billion Yuan of profits respectively, up 81.4%, 33.6%, 28.1% and 39.7% respectively. The gross profit for the constructional and sanitary ceramics was 3.6 billion Yuan, up 13.4% over the same period of the previous year. For the January-October period, the cement and plate glass produced by backbone building material enterprises only achieved a sales income of 4.47 billion and 890 million Yuan respectively, down 61% and 58.8% respectively from the same period of the previous year. Affected by the substantial decrease of the profitability of the cement and glass industries, the whole building material industry only achieved a gross profit of 27.8 billion Yuan after deducing losses from profits, down 10.1%. However, from the perspective of the margin of the decrease, the profitability decreased by 43.8% for the first quarter, by 22.1% for the first half of the year, and by 13.4% for the first three quarters. The margin of the decrease narrowed gradually.