The Henan Building Materials Industry Association held the “Henan Key Cement Enterprises Off-Peak Production Symposium” in Zhengzhou. More than 60 leaders from 22 major cement enterprises in Henan and Shanxi attended the meeting, including Wang Aizhen, President of the Henan Building Materials Industry Association; Liang Zhijun, Director of the Jincheng Building Materials Industry Management Center in Shanxi Province; Sun Jiancheng, General Manager of China United Cement Group Co., Ltd.; Ding Jifeng, General Manager of Tianrui (316.43 yuan/ton, 0%) Group; and Zhang Wei, Chairman of Tongli (350 yuan/ton, 0%) Group. Kong Xiangzhong, Executive Vice President of the China Cement Association, and Dr. Li Chen, Secretary-General of the Carbon Emission Reduction Expert Committee, were invited to attend, and Kong Xiangzhong delivered an important speech at the meeting.

The meeting focused on the theme of “comprehensively consolidating the achievements of off-peak production and advancing supply-side reform to cut overcapacity.” Participants had thorough exchanges and communication on Henan Province's implementation of the spirit of the State Council General Office Document 2016 (34) and the Ministry of Industry and Information Technology Original Joint Document 2016 (351), effectively implementing the resolution of the March 3, 2017 “Hebei-Shandong-Henan Cement Enterprises Off-Peak Production Work Meeting,” coordinating market cooperation with neighboring provinces, consolidating the achievements of off-peak production, opposing malicious competition and low-price dumping, and advancing the supply-side structural reform of the cement industry in Henan Province.

President Wang Aizhen chaired the meeting. She pointed out that as the off-peak production period from last winter to this spring is about to expire and kilns are about to resume production, the purpose of convening this symposium of key enterprise leaders from across the province is to maintain the high-level advantage of Henan's cement prices at the end of last year, oppose low-price dumping in the market after kiln resumption, consolidate the achievements of off-peak production, implement the resolution of the “Hebei-Shandong-Henan Meeting,” give play to the market-leading role of large enterprises, advance supply-side reform of the cement industry, and promote the steady improvement of industry benefits.

Kong Xiangzhong, Executive Vice President of the China Cement Association, fully affirmed the implementation of off-peak production in Henan Province and pointed out that the benefits brought by off-peak production to society and enterprises are significant. He expressed gratitude to the competent government departments of Henan Province for their efforts in implementing the off-peak production policy in the cement industry; to Henan Province for the actions of large cement enterprises taking the lead and all enterprises participating in earnestly implementing the national industrial policy of off-peak production; and to the Henan association for its efforts in strengthening the industry self-discipline convention, giving play to the role of market coordination, and organizing enterprises to carry out off-peak production.

Executive Vice President Kong Xiangzhong put forward requirements for off-peak production work from the following five aspects:

First, we must unswervingly implement the off-peak production policy through the industry self-discipline convention and promote enterprise benefits and industry profit levels to a new level. Off-peak production is “destocking.” Destocking not only effectively resolves the overcapacity of clinker but also allows the resources consumed in clinker production to regain value. Destocking means opposing low-price dumping, and destocking means the recovery of enterprise benefits.

Second, the purpose of this Zhengzhou meeting is to implement the resolution of the March 3, 2017 “Hebei-Shandong-Henan Cement Enterprises Off-Peak Production Work Meeting.” Henan must maintain the high-price advantage at the end of 2016 and contribute to the stability of cement prices across the province in 2017. It must take a clear stand against the low-price dumping behavior of individual enterprises. Any low-price dumping behavior undermines the achievements of off-peak production and disrupts industry self-discipline. The association's market supervision organization should disclose and expose enterprises engaged in low-price dumping.

Third, off-peak production is an innovative measure for supply-side reform in the cement industry. This innovative achievement has been recognized by the government, and in 2017 the middle and lower reaches of the Yangtze River and southern regions will explore the implementation of off-peak production. For the industry, off-peak production is a path of supply-side reform to solve the issues related to maximizing industry profits and the relationship between output supply and social costs; for enterprises, it is a means to achieve the balance between maximizing enterprise profits and capacity utilization and comprehensive enterprise costs; for industry associations, it is necessary to advocate self-discipline behavior based on the principle that “industry interests are higher than enterprise interests, and enterprise interests are nurtured within industry interests,” guide cement enterprises to assume social responsibilities, and establish a market environment of fair competition and win-win development.

Fourth, the key factor in consolidating the achievements of off-peak production lies with the main leaders of enterprises. It is necessary to combine off-peak production with the pursuit of enterprises' own interests and the essence of corporate culture, and the win-win principle of market competition must not be ignored. Off-peak production tests the integrity and responsibility of the main leaders of enterprises.

Fifth, the key to supply-side structural reform in the cement industry lies in “cutting overcapacity.” It is suggested that the Henan association and enterprises actively explore the establishment of a “special fund for industrial structure adjustment,” form a provincial-level cement investment management company, accelerate the exit of excess capacity in Henan, improve regional market concentration, optimize industrial layout, and build a provincial-level cement technology innovation R&D center, so as to blaze an innovative path for the supply-side reform of the cement industry in Henan Province.

Sun Jiancheng, General Manager of China United Cement Group Co., Ltd., introduced the advanced experience of off-peak production in Shandong, Hebei, and neighboring provinces. General Manager Sun Jiancheng thanked the competent government departments of Henan, the association, and Henan cement enterprises for actively implementing the off-peak production policy; last year the Henan market led the upward trend of cement prices across the country. The March 3 “Hebei-Shandong-Henan Cement Enterprises Off-Peak Production Work Meeting” formed a “C8+3” market self-discipline coordination mechanism for the three provinces, which requires consistency in off-peak production time, price stability, and cross-provincial operations between provinces. The state has recognized off-peak production as one of the most effective measures to resolve overcapacity, and implementation will be intensified in 2017. On behalf of China United Cement (310.36 yuan/ton, 0.12%), General Manager Sun Jiancheng stated that it will join with Tianrui Group, Tongli Cement, and other large enterprises to resolutely implement the relevant regulations of Henan Province, vigorously maintain market order, oppose low-price dumping, and share the achievements of off-peak production.

Ding Jifeng, General Manager of Tianrui Cement Group, stated that it is necessary to safeguard industry interests and the overall situation; maintain a high degree of consistency with the association, ensure the implementation of off-peak production, and strengthen communication; jointly lead with large enterprises and deepen understanding and cooperation; take the lead in maintaining market order and never engage in malicious dumping. He stated that if subsidiaries of Tianrui Cement fail to comply with the regulations and cause adverse effects on the market, the company will deal with them seriously.

Liu Zonghu, President of the Henan Operations Management Region of China United Cement Group, stated that the inter-regional communication mechanism is very effective. In 2017, demand in the Henan market will slightly exceed supply, and various costs are increasing day by day. Enterprises should act in unison and jointly maintain the market. President Liu Zonghu called for abandoning the mentality of “being content with small gains” and realizing the return of industry value and jointly maintaining the healthy development of the industry.

Zhang Shanyu, Assistant General Manager of Henan Tongli Cement Co., Ltd., stated that the state is increasingly determined to advance supply-side reform and cut overcapacity, and cement enterprises should act in line with the trend. He hoped everyone would cherish the achievements of off-peak production in 2016, seize opportunities, and welcome a fruitful year in 2017. Tongli Cement will continue to be an advocate of supply-side reform and a practitioner of cement price recovery, cooperate with China United and Tianrui to set an example in off-peak production, jointly build the regional market, and jointly assume social responsibilities. He also called for a reasonable distinction among off-peak production targets and differentiation for enterprises with integrated kiln and grinding operations.

Liu Yuhe, General Manager of Hubo Cement Group, stated that it is necessary to overcome some practical problems brought about during the implementation of off-peak production, such as banks withdrawing loans and brain drain, and unswervingly implement the off-peak production policy. Zhang Caifu, Deputy General Manager of Mengdian Group, stated that the benefits of off-peak production are obvious, and Mengdian will organize and coordinate the seven enterprises in the Xinxiang area to closely follow the pace of off-peak production in Henan Province. Qu Songji, Chairman of Dengfeng Songji Cement Co., Ltd., stated: First, off-peak production is not only coordinated kiln shutdown and output limitation but also the safeguarding of industry interests. Second, enterprise concepts must change; the current task is to improve quality and enhance industry interests and enterprise benefits. Third, oppose low-price dumping; enterprises must ensure conscious integrity and promote the maximization of industry interests.

Liang Zhijun, Director of the Jincheng Building Materials Industry Management Center in Shanxi Province, led cement enterprises in the Jincheng area to state that cement enterprises in Jincheng, Shanxi, will actively cooperate with the self-discipline actions of the Henan market, never engage in low-price dumping into Henan, maintain good communication with the Henan association, and actively coordinate inter-provincial collaborative cooperation in the cement market.

Niu Yushi, General Manager of Henan Songji Power Sales Co., Ltd., proposed that cement enterprises give play to the advantages of industry alliance to negotiate electricity prices with power plants and called on all cement enterprises to actively enter the list of direct electricity trading to enjoy favorable prices.

At the meeting, President Wang Aizhen read out the “Meeting Minutes,” and the representatives of the participating enterprises reached a consensus: First, resolutely implement the national industrial policy of off-peak production for cement enterprises; second, oppose malicious competition and low-price dumping in market operations and maintain healthy market development; third, deepen the province's industry self-discipline coordination and communication mechanism and consolidate the achievements of off-peak production and kiln shutdown and output limitation; fourth, strengthen inter-provincial communication with neighboring regions, implement the Hebei-Shandong-Henan “C8+3” market self-discipline coordination mechanism, and achieve consistent steps; fifth, establish a unified purchase and sales mechanism for clinker; sixth, resolutely eliminate backward production capacity, actively explore the establishment of a “special fund for industrial structure adjustment,” and advance the “cutting overcapacity” work of supply-side structural reform in the cement industry of Henan Province.