NEWS CENTER

The elimination of backward cement production capacity is in line with expectations.


Release time:

Aug 05,2013

Cement industry dynamics: last week, the national average price of cement was the same as last week, of which, the rising area is mainly Zhejiang and parts of Guangxi, the price increase of 10-20 yuan/ton. The price of clinker in the Yangtze River Delta and eastern Hubei was raised twice by 10-20 yuan/ton, and the price of clinker in some areas of Guangxi was increased by 10-20 yuan/ton. Cement industry judgment: last week's important events in the industry include the Ministry of Industry and Information Technology to eliminate backward production capacity list announced, and railway fixed asset investment plan increase: 1) the Ministry of Industry and Information Technology announced the cement to eliminate backward production capacity.

Cement industry dynamics: last week, the national average price of cement was the same as last week, of which, the rising area is mainly Zhejiang and parts of Guangxi, the price increase of 10-20 yuan/ton. The price of clinker in the Yangtze River Delta and eastern Hubei was raised twice by 10-20 yuan/ton, and the price of clinker in some areas of Guangxi was increased by 10-20 yuan/ton.

Cement industry judgment: Last week's important events in the industry included the announcement of the Ministry of Industry and Information Technology's list of obsolete production capacity, and the increase in the railway fixed asset investment plan: 1) The Ministry of Industry and Information Technology announced the cement elimination of backward production capacity totaling about 92 million tons. Excluding the grinding station, the eliminated machine kiln and other clinker production capacity of about 73 million tons, compared with our estimate of 83 million tons eliminated last year, down 12%, the elimination of strength is basically in line with expectations. We expect the effective capacity of cement to increase by about 5% this year, and the marginal supply and demand of cement will improve compared with last year;

2) The planned amount of railway fixed asset investment in 2013 was increased from 650 billion yuan at the beginning of the year to 690 billion yuan at present. Assuming that all the increase is used for infrastructure investment, the amount of infrastructure investment in the year will rise to 560 billion yuan from the previous 520 billion yuan (up 8% from 518.5 billion yuan last year). Among them, 187 billion yuan has been completed in the first half of the year, an increase of 25.7 over the same period last year; the infrastructure investment target for the second half of the year is 373 billion yuan, which is basically the same as the investment of 370 billion yuan in the second half of last year. At the current point in time, weak industrial activity and small growth in new real estate starts have strengthened the market's expectation of "not breaking the lower limit of 7% growth. For the cement industry, although the amount of railway investment increased in the second half of the year, there was no obvious incremental change; last year, the new production capacity was basically more in the first half of the year and less in the second half of the year, but the pace of this year's investment may be opposite. Therefore, we believe that the sharp rise in cement prices from September to November last year is difficult to see this year, and the fluctuation of cement prices in the second half of last year will be significantly smaller than last year.

We maintain last week's view that at the time of the interim results, there is a possibility of a rebound in the share prices of cement stocks with low valuations and stable growth, and we recommend focusing on Conch Cement (600585)(600585, buy).

Glass industry dynamics: the domestic float glass market showed a warming trend, the wind vane Shahe area by good shipments, low inventory favorable support, most of the production enterprises quoted up 0.1-0.3 yuan/square meter.

PCCP management industry judgment: 7 city water plant above the water transmission project, Shijiazhuang, Handan two cities a small part of the project has started bidding, we estimate the total amount of PCCP bidding about 0.14 billion yuan. We expect that in the second half of the year, water transmission projects above the water plant in 7 cities in Hebei will be tendered for pipelines. It's just that the plate lacks a catalyst in the short term.

Glass fiber industry judgment: Taishan glass fiber 80000 tons of alkali-free roving will be put into production at the end of August, equivalent to 2.8 of last year's output (last year's overall output increased by 3%), the current enterprise inventory is still high, Taishan glass fiber new production capacity will increase the downward pressure on roving prices.

Individual stock recommendation: maintain a bullish outlook is expected to benefit from the structural changes in the industry and its own profit model transformation to bring high performance of the waterproof materials industry leader Oriental Yuhong (002271)(002271, buy). Maintain a bullish bottom reversal, water treatment and natural gas cylinder business open incremental growth space of Sinoma Technology (002080)(002080, buy).

Risk Warning: Follow-up policy is lower than expected, coal prices rebounded sharply.