Brief Analysis of the Economic Operation of Superhard Materials Industry in 2015

The national macro economy has entered a new normal. According to the statistics in Table 1, the growth rate continued to slow down in 2015, with GDP growth rate of 6.9% and a year-on-year decrease of 0.5%; especially for industrial enterprises above designated size (down 2.3%) and import and export ( The decline of 7%) from the rapid decline to a substantial decline, the central government has continuously introduced new policies to regulate the market, promote the development of the financial and service industries, promote supply-side reforms, and demand "three to one, one to one supplement" - to capacity, go Inventories, de-leveraging, short-boarding, manufacturing transformation and upgrading pressures continue to increase, and the pain continues to increase. Development has been greatly affected.

Under the influence of the big situation, the super-hard materials industry continued to ferment, the pressure continued to increase, the operation became increasingly difficult, and the nominal growth rate of major economic indicators continued to be lower than GDP. The output of major products fell across the board, the total profit was deep, and the production and production stoppage of SMEs continued to expand. Even some large enterprises were struggling. It was really cold and cold, and the situation was very worrying! Most companies had to shrink and wait for the spring. . However, some enterprises have not simply contracted to wait for the new spring, but have the courage to explore and innovate, take the initiative to attack, and simultaneously develop technology and market development, and still maintain rapid growth, and the situation is gratifying.

From the comparative data of Tables 1 and 2, it can be seen that the industrial output value of the industry decreased by 7.6% year-on-year, which is 13.9 percentage points lower than the nominal GDP growth rate of 6.3%. The industrial added value fell by 10.7%, 11.1 percentage points lower than the nominal increase of 0.4% in the country's total industrial added value. Total profit fell by 7.8%, which was 6 percentage points lower than the nominal decline in the total profit of enterprises above designated size. After a strong rebound in exports in 2014, the export was reduced in depth. The total export value was US$1.02 billion, down 6.6%, 4.8 percentage points lower than the 1.8% decline in total national exports. The domestic and foreign trade of industrial products were inferior to the overall situation of the country. However, from Table 3 to Table 5, it can be seen that the unit price of domestic and foreign trade products has mostly increased, indicating that the high-end product market is firm during the economic downturn, mainly due to the low-end products. From the statistics, how important is the transformation and upgrading.

1. Major economic indicators and development of major products in the industry

From Table 3, the output of the two major materials has declined, indicating that the market demand is insufficient and the production capacity is excessive. In fact, the output of China's two major materials is close to the world's output. China's diamond production accounts for more than 90% of the world's total. Cubic boron nitride accounts for more than 60% of the world's total. Therefore, overcapacity is a surplus for both domestic and foreign markets. Reduce production capacity by adjusting product structure. The unit price of diamond is the same as that of the same period of last year. Actually, the structure of diamond products has changed a lot. The price of jewellery with white and yellow single crystals of 30-50 US dollars/carat has increased the average price. This typical transformation and upgrade product makes graphite consumption. Reduced by more than 90%, the average price of a single carat increased by about 600 times. The price of industrial diamond single crystals with a large volume has been greatly reduced. The unit price of cubic boron nitride decreased by 3% year-on-year. The quality level of the two types of industrial single crystals has reached the international advanced level, and has begun to march toward the single crystal tool and jewelry industry.

The output of all kinds of super-hard material products in Table 4 decreased and the unit price increased. On the one hand, it shows that the user industry lacks demand, on the other hand, it indicates that the market is forced to reduce the number of low-end products, the demand structure is developing to high-end products, and the adjustment of industry product structure has already begun to take shape.

2. Import and export market
The industry goods classified by the customs are divided into four categories: diamond, diamond grinding wheel, diamond circular saw blade, and super-hard material cutting tool. The total export value is 1.02 billion US dollars, down 6.6% year-on-year, 4.8 percentage points lower than the national export total of 1.8%. It shows that the industry's exports are inferior to the state's exports, and the international industry market is sluggish. Due to the wide variety of super-hard materials tools, the trade and import and export companies of all walks of life are operating the export business of products in this industry. The same product number contains different materials (the super-hard materials include non-bank products). The grinding wheel products are particularly confusing. The goods of the same material are exported under different commodity numbers (the super-hard materials are included under other commodity numbers), and the special number of super-hard materials is too small. clear. Therefore, the statistical data contains non-Bank products, and other industry statistics contain the Bank's products. The total export value of the industry products is much larger than US$1 billion.
Among the four types of commodities, diamond saw blades accounted for half of the total (55%), which was the largest export commodity, 547 million US dollars, down 11.6%; the grinding wheel was the second largest, 167 million US dollars, accounting for 16.7%, up 25.7%; Third, 145 million US dollars, accounting for 14.5%, down 15.9%; diamonds 143 million, accounting for 14.3%, down 4.0%.
In terms of export volume, except for the large increase of 21.4% of the grinding wheel, the others have declined to varying degrees, and the diamond and tool products have fallen the most, both above 10%. From the unit price of export products, except for diamond circular saw blades, others have increased in varying degrees. The decline in exports indicates that the international economic growth is weak; the rise in unit prices indicates that the mid- to high-end products are less affected when the economic environment is not good. India has become the first destination country in China's top three categories of goods, the first super-US network, showing that the Indian market is developing rapidly and has great potential.
From the perspective of the unit price of import and export, the unit price difference between the grinding wheel and the tool is more than 10 times, and the import and export products are not comparable at all. The international market that we have occupied for many years is not low-end for the counterparts in developed countries? The diamonds and saw blades with relatively small gaps are about 3 times, and the import value of these two types of products is only more than 30 million US dollars. The market share is small. For a large market, large enterprises do not need to pay too much attention, and professional SMEs can specialize. In fact, China's diamond, diamond saw blades, thin-walled drill products, in addition to the traditional advantages of DIY products, high-end products have reached the world's advanced level, has been competing with the developed countries in the same platform, the brand has been initially formed, in the chart The reflected import and export price difference is mainly due to China's occupation of almost all international DIY markets, and such markets cannot be lost. The reduction in the import and export price of diamonds, grinding wheels, boring reamers and milling cutters indicates the structural changes in the export of such products in China; the increase in the price of saw blades and turning tools indicates that the structure needs to be changed. Of course, the top diamonds, diamond saw blades, and thin-walled drills with little market demand are still inferior in China. This may be because our products are not used or the company has no specialization. In addition to the quality of the grinding wheel and tool products, there are also many low-end products, brands are not hard, and services are not in place. In this type of products, developed countries basically sell products in the form of grinding cutting solutions. In China, they mainly sell products. This can also reflect the urgent need for transformation and upgrading, innovation and development tasks. The difficulty and distance of climbing the road.

3. Summary of the annual report of the listed company

Table 20 gives a summary of the 2015 annual report data of 10 listed companies in the superhard materials industry. The enterprises are ranked by the operating income of super-hard materials. According to the table, the annual report data of listed companies on the main board is relatively complete. The annual report data of small and medium-sized board, GEM and NEEQ listed companies is simple. The first-ranked Jiangnan Red Arrow is the world's largest diamond manufacturer. In 2015, revenue dropped by nearly 24%. The impact of macroeconomics and insufficient demand, sales of 5 billion carats, inventory reached 6 billion carats, destocking pressure; Henan diamond operating income growth was the highest, 45.31%, super-hard materials products operating income increased by 19.18%, mainly due to Its transformation and rapid expansion, mass production and sales of jewelry-grade single crystal in 2015; the new three-board listed Fu Nike company operating income increased by 21.89%, thanks to its development and production of high-precision cubic boron nitride tools; the same is the new three board listed Although Zhili Technology has the smallest total revenue, its growth rate is as high as 15.39%, and its net profit has increased by more than 13 times. Wanbang Tools, which is listed on the New Third Board, has lost more than 10% of its operating income and increased its net profit by 228%. Both companies are The product structure has undergone major adjustments, and the transformation and upgrading is fast and good, and its development direction is worth emulating.

4 Conclusion
The industry has entered an unprecedented severe winter. The growth rate of major economic indicators is almost completely lower than that of the national macro-economy. Most enterprises suffer from unprecedented suffering and have to shrink and gain momentum. However, some enterprises have already taken the lead, relying on pioneering and innovative, fighting high spirits, developing against the trend, developing world-class products, and even achieving outstanding achievements of more than 40% growth, setting an example for us.
We must conscientiously implement the five major tasks of 2016 as determined by the Central Economic Work Conference: “three to one, one drop and one supplement”—to capacity, destocking, deleveraging, cost reduction, and short-boarding. Only by eliminating medium and low-end production capacity and inventory, making up the shortcomings of pioneering and innovative, and not using excessive financial leverage, while vigorously developing automation and intelligent production, the cost will naturally decrease. We are the supply side of all walks of life in the national economy. Our structural reforms are completed, and our enterprises will have strong competitiveness and vitality, which will enable China's superhard materials to establish a more glorious image in the domestic and foreign markets. Will make a greater contribution to the great goal of achieving a superhard material power!
China's super-hard materials have formed a powerful force in the world, and the products are almost all over the world. To see that we are marked by the low unit price of the products, the majority of the occupation is the low-end market, and we must also see that the unit price of most of our products is increasing, indicating that we are hitting the high-end. The overall development of the industry is huge, and the task of structural adjustment is arduous.
Specific to the product category, we must recognize that diamond and diamond saw blades (including thin-walled diamonds) products, in addition to the traditional advantages of DIY products, high-end products have reached the world's advanced level, widely exported to developed economies, The developed countries are competing in the same stage, the brand has been initially formed; the tool products have also been widely exported to the developed economies, but the average unit price is one tenth or even lower in the developed countries, and the structure needs to be greatly improved; the grinding wheel products are also If you have not broken out of Asia, you need to increase your efforts.
Long winters have been abused for a long time, will spring be far behind?! Let's hardships, pick up weapons innovation, and establish the confidence to turn things around, to accelerate the pace of reform of the supply side, the brave advance 'Blue Ocean', with full enthusiasm and high morale to meet the upcoming sunny spring industry it! (This article Excerpts from the "20th China Superhard Materials Technology Development Forum Proceedings", the content has a lot of cuts, please read the original text for more details. Please do not reprint!)

About the Author