For some time now, many industry media outlets have been analyzing and reporting on the numerous difficulties and challenges that the industry is currently facing. From international affairs to domestic consumption, from market conditions to economic cycles, the bad news keeps coming while the good news seems to be elusive. The industry is permeated with a sense of pessimism and negativity. May's data has not yet been released, and there is talk of a looming real estate crisis, causing great concern about the future of the ceramic industry.

In the current market environment, which is extremely bleak and weak, there seems to be no sign of a recovery. But the harder the times, the more we should remain confident. In fact, over the past few decades, the industry has experienced various harsh winters, and only those companies that face challenges head-on and rise to the occasion can develop a strong resilience and usher in a brighter spring.

"Every black night has a bright dawn." Even in difficult times, the ceramic industry still has many favorable factors to take note of:

01 Natural gas price reduction

Over the past year, natural gas prices have been running at a high level due to the impact of the conflict between Russia and Ukraine and international market supply and demand. In the Zhaoqing production area, prices have even approached 8 yuan/cubic meter, causing more production to result in greater losses for ceramic companies. 

The decline in profitability in the industry over the past year is largely due to the increase in natural gas prices. However, this year, gas prices have gradually fallen, with Guangdong production areas recently dropping to just over 3 yuan, the lowest in two years, and some production areas even back to the 2 yuan range. This is undoubtedly great news for ceramic companies that are highly sensitive to gas prices, as it significantly reduces production costs and improves cash flow.

02 Increased kiln opening rate

Despite the ongoing market downturn, the kiln opening rates of ceramic companies have generally increased in May, especially in Guangdong production areas, where kiln opening rates have seen more significant improvement. While the decrease in natural gas prices plays a role, it is more important that ceramic companies and distributors have full confidence in a market recovery. After all, the domestic market is too large, and the basic demand still maintains a certain scale. At the same time, the "new infrastructure" projects have brought substantial orders, allowing ceramic companies to continuously release their production capacity.

03 Production and sales boom in some production areas

Many people complain about the sluggish market and declining demand. However, in some production areas, especially in the central and western regions such as Jiajiang and Gao'an, production and sales have been flourishing this year. Many companies have achieved a production-to-sales ratio of over 100%, with long queues of trucks waiting to load goods at the doors of ceramic factories, and some companies have even expanded their production capacity to meet the growing market demand. Some companies, channels, and production areas still maintain a strong growth momentum.

04 Major exhibitions held as scheduled, unaffected by the pandemic

Over the past three years, numerous exhibitions, forums, and events have had to be repeatedly postponed or even canceled due to the pandemic. Since the beginning of this year, major professional exhibitions have fully resumed and been held as scheduled. Although they have not fully recovered their past glory, they have allowed the industry to resume normal communication, interaction, and visits. In the future, more professional exhibitions will come one after another, and even if the effects are not satisfactory, they are still worth looking forward to.

The 38th China International Ceramic & Bathroom (short for CeramBath) Fair was held on April 18th-21st, 2023 in Foshan, Guangdong. The Fair attracted a total of 824 brands from around the world, including architectural ceramic wall and floor tiles, slabs, stones, mosaic, sanitary ware, hardware and water fittings, leisure sanitary ware, caulking, ceramic accessories and auxiliary materials, green materials, customized products etc. More than 30,000 products made a stunning appearance at the Fair, attracting 59,935 professional buyers from 78 countries and regions around the world to visit and purchase!

05 Major ceramic enterprises establish new green intelligent factories

On May 27th, the Jianyi Intelligent Production Base was put into operation, once again showcasing a green and intelligent production base that leads the industry. In the past few years, leading ceramic enterprises such as Mona Lisa, Marco Polo, Xin Mingzhu, and Dongpeng have all built green and intelligent production bases that represent advanced industry standards, propelling production equipment and process technology to new heights. 

Due to market downturn, investments in green and intelligent production bases by leading enterprises have slowed down in recent years. However, in such adverse circumstances, Jianyi has invested 3 billion yuan to build nine high-level production lines, demonstrating the strong power of the industry's continued upward momentum in difficult times.

06 Real estate bad debt clearing

Ceramic companies shake off burdens and enter the market with a lighter load: The collapse of the real estate market has had a tremendous impact on the ceramic industry, causing many business owners who have worked tirelessly for decades setbacks overnight. Some ceramic companies have even closed down due to the real estate crash. 

Fortunately, after some time of healing, ceramic companies are crawling out of the pit created by the real estate crisis. Although scarred, they remain incredibly resilient. From the annual reports of several listed ceramic companies, it can be seen that the leading enterprises have made large-scale provisions for real estate bad debts, unburdening themselves and entering the market with a lighter load. At the same time, ceramic companies have generally made significant adjustments to their engineering businesses, placing great emphasis on risk control.

07 Hot sales of new products such as velvet, skin glaze, and satin glaze

For a long time, product innovation in the industry has focused on categories, specifications, and patterns. Even innovations in large slabs and rock panels are seen as the embodiment of a company's production capabilities. Since the beginning of this year, such innovations have gradually decreased, giving way to ongoing iteration and evolution of existing products. Velvet, skin glaze, satin glaze, and other products have gained popularity among many companies. 

Many new products are minor innovations based on existing categories, processes, and technologies, with a greater focus on texture, light perception, tactile sensation, and other details. At the same time, functional tiles have received widespread attention in the industry, such as slip resistance, wear resistance, green and healthy properties.

08 Strong momentum in the integrated channel

E-commerce and live streaming sales are booming

Despite the market downturn and negative growth in the performance of most ceramic companies, certain channels have shown strong growth, with integrated channels emerging as the fastest-growing new channel in recent years, especially as the engineering business has greatly contracted. 

Meanwhile, new e-commerce platforms and live streaming sales on platforms like Douyin and Xiaohongshu are also incredibly popular. The performance resulting from a key influencer or a livestream often surpasses the annual performance of a traditional brick-and-mortar store.

All these small pieces of good news may be the path to the industry's future progress.