The EU recently announced the preliminary ruling on its anti-dumping investigation into Chinese ceramics, imposing a temporary punitive tariff of up to 73% on more than 90% of Chinese ceramic exporting companies. Involving numerous companies and a huge sum of money, this case has been dubbed the EU's "largest ever" anti-dumping investigation against China. In the official EU announcement, I noticed that no Chinese company was granted market economy status. Except for three ceramic companies that received individual treatment, the tariff for cooperating but unselected companies is 32.3%, while the general tariff for other ceramic companies is 73%. The industry describes this anti-dumping investigation's impact on China's ceramics industry as a "magnitude 9 earthquake." If ceramic companies are subject to a 73% tariff, the total amount of tiles exported to the EU is expected to plummet by 70% within six months, directly affecting over 80% of companies, with 15% facing closure.

　　EU documents show that this temporary anti-dumping tariff will be in effect for six months, with a final decision on whether to impose a formal anti-dumping tax for five years to be made on September 17. While nominally leaving Chinese companies six months to appeal, the prospects are actually bleak. It is rumored that the "alternative country" for this EU anti-dumping investigation is the United States. Comparing production costs in the US and China, the final ruling is predictable. "Even if the EU market door isn't completely closed, only a crack remains." Therefore, many ceramic companies have given up hope for the EU market, and those overly reliant on European and American markets face a life-or-death decision.

　　In fact, it's not just Europe and America. From developed countries like the US to developing countries like Brazil and Argentina, from ceramics and shoes to the new energy industry, foreign anti-dumping measures have been repeatedly wielded against Chinese companies in recent years, undoubtedly making the "going global" journey for Chinese manufacturing fraught with thorns. This has also exacerbated the external pressures on the already internally troubled ceramics industry.

　　Unnegotiable power cuts

　　Since last September, as the deadline for energy conservation and emission reduction under the Eleventh Five-Year Plan approached, the "energy conservation exam" was about to be graded. To submit a satisfactory report card, local governments spared no effort, resorting to drastic measures, directly turning energy conservation into "power cuts" under the guise of "energy saving." For a time, power cuts swept through the ceramics industry, plunging ceramic companies, which had just recovered slightly from the financial crisis, the tightening of the real estate market, and labor shortages, and were preparing to make a full effort for the golden September and October, once again into difficulty. Most companies faced the situation of three days of shutdown and four days of operation (i.e., power cuts for 3 days a week), or even four days of shutdown and three days of operation. This is undoubtedly another heavy blow to ceramic companies and the abrasive and grinding tool companies serving them, which are slowly recovering from the 2008 global financial crisis.

　　It is reported that the power supply in various ceramic production areas has decreased by 30-70%. For example, in Enping, electricity is supplied for production based on 75% of the actual load; Sihui only supplies 25% of the total electricity used by enterprises; Gaoyao only retains 22.5% of the power supply. Not only Foshan, but also ceramic industry bases in Jiangxi, Zibo, and other places are facing the same predicament.

　　The severe shortage of power supply has left most ceramic production lines almost paralyzed, with companies complaining bitterly. Ceramic company owners are full of resentment and anxiety, rushing to petition the government for electricity, but in the face of the hard energy conservation and emission reduction targets, the government's attitude is exceptionally firm. It is said that the owner of a large ceramic company in Sanshui, Foshan, personally sat in the government office building to ensure production power, but the factory was still shut down, showing the government's determination in "energy saving." In the past, power cuts had a buffer period of "excessive use warnings." This time, once the limit is exceeded, without notice, immediate action is taken—power cuts have entered a "zero-tolerance" state.

　　Although the Eleventh Five-Year Plan is a thing of the past, the energy conservation and emission reduction policies in the Twelfth Five-Year Plan have not been relaxed in the slightest. Friends in the ceramics industry told me: Due to the characteristics of ceramic equipment, if more than two ball mills are started simultaneously, the instantaneous current will be very large, and it will return to normal after startup. However, the power department ignores your explanation; in short, any overload will immediately cause a factory-wide power cut, which is heartbreaking.

　　The Complex Ceramic Market of 2011

　　"From January to October, the output of daily-use ceramics by nationally-scaled daily-use ceramic enterprises reached 20.398 billion pieces, a year-on-year increase of 35.91%. The output of building ceramic wall and floor tiles was 6.41 billion square meters, and the output of nationally-scaled sanitary ceramic enterprises was 140.08 million pieces, a significant increase compared to last year. From January to October, the output of daily-use ceramics (including art porcelain, etc.) increased by 30.50% year-on-year, with export value reaching US\$236.8 billion. Building ceramics increased by 21.38% year-on-year, with export value reaching US\$3.52 billion, a year-on-year increase of 34.39%. Although the export of sanitary ceramics has been declining for many years, it saw a reversal in 2010, with stable performance throughout the year. China's imports of ceramics are not large, mainly importing high-end products. Imports of daily-use ceramics reached 0.09 million tons, a year-on-year increase of 58.6%, with a cumulative import value of 159 million yuan. Imports of wall and floor tiles reached 3.188 million square meters, a year-on-year increase of 48.66%." Data from the 2010 China Ceramic Industry Economic Situation Report provided by He Tianxiong, chairman of the China Ceramic Industry Association in December 2010, shows that the ceramics industry performed very well last year.

　　However, in 2011, facing new shocks and more severe pressures: national macro-control of energy conservation and emission reduction, further deterioration of the "labor shortage," the introduction of the new National Standard 8, and the negative impact of the EU's anti-dumping case against China, the entire ceramics industry is facing a new turning point. If 2008 was the most difficult year for the ceramics industry, 2011 may be the most complex.

　　Regarding the direction of domestic ceramic companies under high tariffs, many ceramic companies said: The EU's anti-dumping investigation into Chinese ceramic companies will hinder many foreign trade companies in foreign markets, and will inevitably increase efforts to develop the domestic market. Competition in the domestic market may become more intense in the future. Coupled with the regulation of the real estate market, the days of the domestic building ceramic tile industry will be difficult. According to authoritative data in the ceramics industry, there is at least a surplus of 2 billion square meters of building ceramic tiles this year.

　　"Anti-dumping," power cuts, labor cost pressures... mean that the ceramics industry's long-term strategy of low-cost competition expansion is unsustainable. If this is used as a driving mechanism to accelerate the development of low-carbon and high-value-added products and achieve effective transformation of the entire industry as soon as possible, it will also play a certain buffering role in the current oversupply market situation. In the long run, it is not a bad thing for the Chinese ceramics industry, but the key is how to overcome this hurdle. This is also a question that abrasive and grinding tool companies, which are quite similar to the ceramics industry, should consider.

　　Unfavorable Prospects for Abrasives and Grinding Tools in the Ceramics Industry

　　Similarly wearing the hat of "high energy consumption, high emission, and high investment," similarly relying on low cost as the main advantage, similarly requiring a large amount of cheap labor, similarly facing the rising costs of raw materials and labor, environmental protection policies, and other pressures... the abrasive and grinding tool industry and the ceramics industry have too many similarities. Therefore, abrasive and grinding tool companies can also gain insights into their own situation from the ceramics industry situation. Moreover, the difficulties faced by the ceramics industry, as a downstream market for abrasives and grinding tools, directly affect the abrasive companies that rely on this market.

　　Following the anti-dumping measures on ceramics, the ceramic abrasive industry has seen some ceramic factories close down, and the export market will shrink significantly. Of course, some will shift to the domestic market, but the domestic market has oversupply, leading to fiercer competition. A batch of enterprises lacking technological content, low added value, small scale, and poor efficiency will be eliminated by the market, and abrasive enterprises serving the ceramic industry will face unprecedented challenges.

　　It is understood that the amount of abrasives used accounts for about 5%-10% of the total cost of ceramic products (the proportion will increase for low-value-added ceramic products and decrease for high-value-added products). Companies producing products such as rolling cutters, trimming wheels, tangential cutters, metal grinding blocks, and silicon carbide ordinary grinding blocks will all be affected. Many enterprises in Foshan that only produce diamond products for the ceramic industry have already felt the chill of the market, with some stating that the closure of many ceramic companies has directly led to a significant reduction in their market share.

　　Of course, although the ceramic market outlook is not optimistic, we should not be overly pessimistic. These are challenges, but also opportunities. In the face of various crises, upgrading and transformation of China's ceramic abrasive industry is imperative. First, abrasives have wide uses and applications, and products can be diversified and upgraded. We should attach importance to technological innovation and accumulation, master the initiative in product development, and improve our own technical level, R&D capabilities, and brand awareness. Second, more communication and cooperation are needed within the industry and among enterprises to learn from each other's strengths. Establishing effective industry standards and supervisory bodies will allow the industry to have a healthy and benign development space, while also better adapting to the ever-changing market demands and environment.

　　Looking to the future, as the "world factory," China's rapid industrial development is inevitable, and industrial development will inevitably require the abrasive industry, known as the "teeth of industry." Although the road and process to a better future are tortuous, the path lies before us. How we proceed and how far we go depends on ourselves. Survival of the fittest; only those who are good at discovering and seizing opportunities can keep their enterprises undefeated in the industry!