The Ceramic Tile Industry Is Expected to Upgrade and Increase Concentration

The ceramic tile is a kind of porcelain decoration material resistant to acid and alkali, which is made of clay, quartz sand and other blanks after compression and high temperature firing. It is resistant to corrosion, easy to clean, and non-flammable. It is a traditional decorative building material that is very popular among consumers, mainly used to decorate floors and walls.

China Is the World's Largest Ceramic Tile Producer and Marketer

Affected by the new crown pneumonia epidemic in 2020, the global economy has been hit hard, and the ceramic industry has also suffered greatly. Statistics show that the global ceramic tile output in 2020 is approximately 11.6 billion square meters, a decrease of 8.5% compared to 2019. Among them, Asia is the world's largest ceramic tile production and sales base, and Asian ceramic tile production and sales account for more than 60% of global ceramic tiles. China has the largest production and sales market in Asia, and it is also the world's largest ceramic tile production and sales base. China's ceramic tile production accounts for more than 45% of the world's total output, and sales volume reaches more than 38%. In the past two years, China's decline in ceramic tile production and consumption is mainly due to the contraction of overseas markets.

Scattered Enterprises in the Ceramic Tile Industry

From the perspective of the upstream and downstream of the industrial chain, the cost of ceramic tile raw materials is relatively high, reaching nearly 30%. The main raw materials are mainly composed of blanks and glazes. The high reserves and low mining technology of the natural resources industry have led to many companies producing blanks and glazes in the industry, but the scale of the enterprises is generally small, the market competition is relatively sufficient, and the market-oriented mechanism for the purchase price of raw materials for enterprises is strong.

From 2010 to 2014, the rapid growth of the real estate industry promoted the development of the ceramic tile industry. After 2015, the effects of supply-side reforms and overcapacity reduction policies have been obvious, and industry growth has been relatively flat. From 2018 to 2019, many external factors have affected the development of the industry, such as the domestic and international economic environment, real estate macro policy adjustments, and demand shifts. The ceramic tile industry has shown obvious changes with fluctuations in real estate. As the pressure of the epidemic eased, the real estate industry gradually recovered, and the growth of the ceramic tile industry was restored. The output in the first 11 months of 2020 reached 9.43 billion square meters, exceeding the total output of 2019.

In 2020, in the ceramic tile industry according to the sales ranking, the top six sales totaled more than 4 billion yuan. For a volume with annual sales of more than 300 billion yuan, the industry presents obvious decentralized characteristics, and brand concentration is expected to further increase.

The Real Estate Boom Has Rebounded, And The Start of Construction and Sales Have Picked Up

The overall prosperity of the real estate industry has rebounded, and the area of construction and sales has increased year-on-year. Public data shows that from January to February this year, the growth rate of the sales area of commercial housing and residential housing rebounded to 104.9%.

Completion Replenishment, Boosting Real Estate Demand

The smog caused by the epidemic will eventually become a thing of the past, and the overall trend of the development of the real estate industry has not changed much. In 2019, the year-on-year growth rate of the completed area changed from negative to positive, reaching 3.02%; the first quarter of 2020 was negatively affected by the new crown pneumonia epidemic, and the year-on-year decline was severe, and there was a significant improvement in the second half of the year. The completed projects delayed by the epidemic last year are expected to be delivered this year, boosting the demand for ceramic tiles.

China's Hardcover Penetration Rate Is Low, And There Is a Lot of Room for Development

From the perspective of the overall development trend of the industry, the penetration rate of domestic hardcover houses has shown a significant increase, but there is still a lot of room. It is expected that the penetration rate of hardcover houses will maintain a steady increase in the next few years. The data shows that from 2016 to 2019, the penetration rate of China's hardcover market has increased from 12% to 32%, a significant increase. However, compared with developed countries such as Japan, the United States and Germany, China's hardcover market is still in the early stages of development. In developed countries such as Europe, America and Japan, the penetration rate of hardcover houses has stabilized at a level above 80%. Ceramic tiles are an indispensable material in fine decoration projects. It is expected that the increase in the proportion of fine decoration rooms will effectively stimulate the demand for ceramic tiles.


Increased Demand for Second-Hand Renovation, Driving Business Growth

Second-hand housing transactions are booming. From January to February this year, the number of urban second-hand housing transactions increased by about 70% compared with the same period in 2019. It is expected that the second-hand housing transaction market will maintain a rapid growth in the medium and long term. The development of the second-hand housing transaction market provides a large amount of second-hand housing renovation demand. Data shows that the growth rate of second-hand housing renovation demand remains above 13%.Industry Transformation and Upgrading, Concentration Is Expected to Increase

The ceramic construction industry is a high pollution, high energy consumption and resource-dependent industry. While it has brought many economic benefits, it has also caused serious environmental problems. As the issue of environmental protection has become the most important development, environmental protection policies have become more and more stringent, and the emission standards of air pollutants in the ceramic industry have become stricter. The government has issued relevant policies to encourage ceramic companies to innovate processes to provide more functional, more beautiful, and more environmentally friendly products.

Product structure upgrades, industry profit margins are expected to increase. The rise in related production costs will increase the average unit price of the industry to ensure the profit margin of the company. In addition, the change in the market demand structure promotes the upgrading of the industry structure, and urges enterprises to continuously improve the product structure and quality.

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