New Materials: The Refractory Industry Is About To Enter A Period Of Consolidation And Acceleration

The refractory industry is entering the historical stage of horizontal annexation and reorganization of the industry
With the refractory industry cycle into maturity, with the downstream industry, especially the changes brought about by the consolidation of the steel industry, the refractory industry is undergoing a transformation. We think that the refractory industry is about to usher in the consolidation period of annexation and reorganization, and the driving force of industry integration mainly comes from the comprehensive upgrading of the industry structure, which is manifested as: 1, the industry development model upgrading: the development model of the industry is from the growth period to the industrial upgrading period, from the past simply the pursuit of extensive growth of output to the promotion of product grade, the pursuit of added value transformation. 2, product function upgrade: refractory products from the past single pursuit of fire resistance to have a variety of functions, more energy saving and environmental protection transition. 3. Corporate profit model upgrade:
Refractory enterprise profit model from the past simple product provider to the role of refractory overall solution provider transition. We believe that in the next 3-5 years, the industry will enter a new development stage of horizontal annexation and reorganization, and the refractory industry has strategic investment opportunities.
Transformation of refractory industry development mode: transition from extensive growth period to industrial upgrading period
We think that the rapid growth period of the domestic refractory industry is leaving us, and the industry life cycle is about to transition from the extensive growth period to the industrial upgrading period. In the past two decades, the refractory industry has shared the rapid growth of downstream industries such as steel, and in 2007 China's refractory production has reached 29.11 million tons, accounting for half of the world's total refractory production, and the compound growth rate of nearly 6 years has reached more than 30%; However, with the total output growth of downstream industries such as the steel industry slowing down, the growth rate of refractory demand began to fall, and the output growth in the past two years has almost stalled.
In the future, the industry will end the model of relying on output growth in the past, and the power of continuous growth comes from industrial upgrading.
Energy saving and consumption reduction promote the structural upgrading of refractory products
Energy saving and consumption reduction affect the structure of refractory products from two aspects. On the one hand, the refractory itself is a high energy consumption industry, with the improvement of technology, the service life of refractory materials continues to increase, the amount of steel made per ton of refractory materials increases, saving the use of refractory materials. On the other hand, energy saving and consumption reduction in iron and steel smelting can not be separated from process innovation and technological innovation, which must require the improvement of the function of refractory materials. We summarize the product structure of the refractory industry as "three replacements", that is, the replacement of high-grade materials for low-grade materials, the replacement of non-shaped products for shaped products, and the replacement of functional products for ordinary products.
The profit model of the industry has changed from selling products to contracting services
The overall contracting service model is bringing a revolution to the industry. In the overall contracting mode, the contractor is not only responsible for the supply, but also responsible for the whole process of packing, use, maintenance and unpacking, and the settlement payment is made according to the amount of steel output and the second furnace. This method promotes refractory manufacturers to continuously develop new materials, improve product function, extend service life, change the simple trading relationship with steel mills, and form a community of interests of both supply and demand. When refractory enterprises provide overall contracting services, the charges to steel mills are higher than the charges for direct products. From the financial data of Pu Nai shares and Beijing Lier, the overall gross profit margin of contracting is 3-5 percentage points higher than that of direct selling products. The shift of steel enterprises from products to services will change the profit model of enterprises, and leading enterprises will win the first place in this transformation.
The refractory industry is about to enter a period of integration and acceleration, recommend Pu Nai shares, Beijing Lier
The progress of the barriers to entry in the refractory industry, the rapid integration of downstream customers, and the increasing technical scale will force refractory manufacturers to improve their own technical scale, and small manufacturers without the upper hand in technology will find that the environment is increasingly unable to survive for them, and the technical upper hand and the capital upper hand will lead enterprises to expand market share opportunities.

JIYGO REFRACTORY & ABRASIVE LIMITED