Recently, "Ceramic Information" learned from ceramic companies mainly engaged in Xiwa in Sichuan, Jiangxi, Hunan, Anhui, Jiangsu and Zhejiang that in the beginning of 2021, after a short period of hot sales, many ceramic factories have begun to Sales pressure and inventory surged in Siwa, and some manufacturers even had to shut down some production lines to relieve pressure.
On the other hand, the prices of raw materials such as colorants and coal have soared across the board this year. The production costs of ceramic enterprises have increased, but the selling prices are almost all lower than the same period last year, resulting in huge operating pressure. "You lose money by stopping kilns, and you lose money by cutting prices." Some people in the industry said that as the off-season continues, many ceramic companies mainly engaged in Siwa may face two choices: one is to choose a price war, and the other is to choose to stop Kiln production capacity is reduced. When choosing between kiln shutdown and price reduction, one can only look at which method will result in less money loss.
“Lack of sales potential”
If the price is 3 cents higher, customers will run away
“Siwa sales have a characteristic. There are generally 4 to 5 months of peak season every year, followed by 3 months of shoulder season and about 4 months of off-season.” Liu, general manager of Jiajiang Company of Sichuan Milano Group Da Jun said that price increases in peak seasons and price decreases in off-seasons are the general rules of Siwa sales.
After the beginning of this year, Siwa in various places has indeed ushered in a wave of sales climax. In addition, the price of pigments, one of the main raw materials produced in Siwa, has skyrocketed. The price of Siwa has risen more sharply than in previous years, but Lack of stamina.
“Last year the price rose sharply, reaching a maximum of 1.4-1.5 yuan/piece (300×400mm glazed tile). This year it has risen to 1.2 yuan/piece and has stopped rising. The main reason is that demand cannot keep up.” A Sichuan reporter The person in charge of the tile enterprise revealed that in the targeted poverty alleviation in the west, the construction of resettlement housing has a relatively large demand for siwa, accounting for 20% of the total production capacity of Sichuan tile. With the end of poverty alleviation work, this part of the demand has also disappeared. However, output has not decreased, so manufacturers feel that this year's peak season is far calmer than in previous years.
After the Spring Festival this year, affected by the sharp increase in the prices of raw materials such as colorants, coupled with the good market sales situation after the beginning of the new year and insufficient manufacturers' inventory, nearly 90% of the products of Xiwa enterprises in Gao'an, Jiangxi Province, increased their prices by 5 cents to 1 cent/mo. piece. This situation lasted until mid-March, and some manufacturers even launched a second round of price increases. But after entering late March, sales of Siwa in Jiangxi began to continue to decline!
It is understood that the Siwa market has ushered in a good year that is "once in ten years" in 2020, and it has also overdrawn some markets to a certain extent! This year, raw materials such as colorants and coal have increased across the board, but product prices are almost all lower than the same period last year.
&ldquoThis product of Siwa is not polished or printed. It does not have such high quality requirements as ceramic tiles, and the customers are not as fixed as ceramic tiles. As long as you pay 3 cents more, customers will go elsewhere. "The person in charge of a Siwa company in Sichuan introduced that compared with ceramic tiles, most Siwa products are used in self-built houses in rural areas. They are mainly practical and have relatively extensive development. Customers are very price-sensitive.
It is reported that a large Siwa company in Sichuan stopped production for a long time for some reason after the year, and only recently resumed production, but the released market share did not lead to a rush for goods.
"The inventory is not large now, but we dare not increase it any more. If it increases, it will be more difficult to remove the inventory." Industry insiders said.
In contrast, sales of Siwa in eastern Anhui, Jiangsu and Zhejiang are even more deserted. "At the beginning of the new year, our company had a small upsurge, but it ended soon. Around the end of March, production and sales began to become unbalanced, and inventory began to grow." The person in charge of a Siwa company in Anhui told "Ceramics" information".
"Ceramic Information" learned from multiple Siwa production areas that in the past five years, stimulated by the fight against poverty and the demand for new rural construction, the production capacity of Siwa for rural markets has surged. With the advancement of targeted poverty alleviation work, At the end of the year, demand in Siwa has shrunk significantly. Overcapacity and severe oversupply are the main reasons for the current sluggish sales.
Surge in costs and inventory
West tile factories have begun to shut down their kilns
On the one hand, there is a downturn in the sales market, and on the other hand, there is a substantial increase in production costs. This has caused various Siwa manufacturers to be under great pressure. Many manufacturers even said: "This year is very painful."
Affected by the sharp rise in raw material prices this year, the product prices of various ceramic companies have already approached the cost price. "At the beginning of this year, the prices of various raw materials are rising, and some manufacturers' production costs have even increased by more than 30%, which leaves Siwa's room for price reductions very limited." said the person in charge of the above-mentioned Anhui ceramics enterprise.
It is understood that with the recent decline in sales, the inventories of Siwa companies in Jiangsu, Zhejiang, Anhui and other regions are rising. As of now, the average inventory of each Siwa factory has exceeded 70%. In fact, due to the unbalanced production and sales, Siwa manufacturers have begun to stop kilns.
“There are manufacturers around us that have stopped one kiln, and some manufacturers have only opened 1-2 kilns due to poor sales.” The person in charge of Anhui Yixiwa Enterprise told "Ceramic Information".
In the opinion of the person in charge of the above-mentioned Anhui ceramics enterprise, as the off-season continues, Siwa manufacturers may face two choices in the future. One is to choose a price war;The second is to choose to stop the kiln and reduce production capacity. "In the choice between stopping the kiln and reducing the price, most manufacturers will choose to stop the kiln. Stopping the kiln also loses money, and cutting prices also loses money. It depends on which method loses less money. But from the current point of view, no one will It’s easy to lower prices because costs have remained high and there is no room to lower prices now. ”
A person in the tile industry in Jiangsu also believes that "if this continues, manufacturers will be forced to shut down their kilns, and it will only last until June at most. It is expected that there will be a wave of production suspensions in June."
The sales situation of Xiwa in Jiangxi has also taken a turn for the worse. "After the Qingming Festival, the company's production and sales rate in Xiwa is about 60-70%. This year's rainy season came early and lasted for a long time. It basically started from late March and continues until now. Jiangxi, Hunan and other surrounding areas are in rainy weather. and heavy rains, this has seriously affected Siwa products that are mainly used for outdoor construction," said the sales person in charge of a Siwa company in Gao'an, Jiangxi!
In the opinion of the person in charge, in previous years, Siwa’s sales would basically decline after mid-to-late April, but this year it has already appeared in late March.
It is understood that due to cost pressure and the pressure of continued inventory growth, it is not ruled out that Xiwa companies in Jiangxi will stop kilns in the future!
Relatively speaking, the production and sales of Xiwa in Sichuan are relatively balanced for the time being, and only a few companies have large inventories.
“This year’s off-season will definitely come earlier than in previous years. According to the current situation, the peak season may not last until the end of May. Now we must ensure the balance between production and sales and reserve inventory for the off-season. If there is no warehouse storage and production is stopped, the losses will be even greater. "Big." A large-capacity Siwa manufacturer in Sichuan said that at present, the Siwa production capacity of several large enterprises in Sichuan is around 40,000 to 50,000 square meters (about 400,000 pieces), and the products produced every day are equivalent to one special train. According to the off-season, A production and sales rate of 70% to 80% requires dozens of acres of warehouses. Once the balance between production and sales cannot be achieved in the peak season, it will not be able to meet the inventory demand in the off-season.
"Siwa generally has to seize the peak season, make sure not to lose money and make a small profit in the shoulder season, and ensure 80% of production and sales in the off-season, and then guarantee the position."
(The article is reproduced from Ceramic Information)
