NEWS CENTER

At the end of August 2013, China's cement industry will meet the traditional peak season


Release time:

Aug 27,2013

At the end of August, the cement industry will usher in the traditional peak season. Due to the decline in inventory, cement prices have shown a steady rise in the near future, and the performance of cement companies is expected to improve. But overall, the serious problem of overcapacity will still restrict the future development of the industry. Inventory decline prices stabilized Cement prices in some areas recently rose in the off-season, exceeding market expectations. The decline in inventory caused by power rationing and the rebound in downstream demand have become direct factors in the cement price increase. Data show that in mid-August, the national cement P.O42.5 price rose to 343 yuan/ton. Among them, Jiangxi and northern Jiangsu and other parts of

At the end of August, the cement industry will usher in the traditional peak season. Due to the decline in inventory, cement prices have shown a steady rise in the near future, and the performance of cement companies is expected to improve. But overall, the serious problem of overcapacity will still restrict the future development of the industry.

Stocks fall, prices stabilize

Cement prices in some areas have recently risen in the off-season, exceeding market expectations. The decline in inventory caused by power rationing and the rebound in downstream demand have become direct factors in the cement price increase.

Data show that in mid-August, the national cement P.O42.5 price rose to 343 yuan/ton. Among them, prices in some regions such as Jiangxi and northern Jiangsu increased by 10-30 yuan/ton, while prices in Beijing, Liaoning and Guizhou fell by 10-20 yuan/ton, and prices in other regions were generally stable.

On the whole, the national average cement price in the first half of this year was at the lowest level since the financial crisis. At the end of June, the national price of P.O42.5 bulk cement was about 294 yuan/ton, compared with 317 yuan/ton at the end of June last year. Cement prices have since begun to pick up significantly. Since August, the price of cement in Nanchang market in Jiangxi Province has increased by 50 yuan/ton to 380 yuan/ton, about 110 yuan/ton higher than that of the same period last year.

The price increase is mainly due to the improvement of downstream market demand and the low inventory of enterprises. Affected by the power rationing factors in some areas, some cement production lines have been shut down for maintenance before, resulting in a decline in market supply. It is understood that since mid-August, the cement clinker production line has resumed production. With the basic lifting of the quota on electricity consumption, the impact on the supply side has been gradually digested by the market. Therefore, whether cement prices can continue to rise in the future will depend on the degree of demand release.

At present, real estate and infrastructure investment is still in good shape, which means that the growth rate of cement demand is still rising slightly. Data show that in July, highway fixed asset investment increased by 12% year-on-year. Although the growth rate dropped by 5 percentage points from June, it still maintained a rapid growth trend. At the same time, real estate investment in July increased by 21% year-on-year, up 2 percentage points from June, and also maintained a rapid growth trend. Affected by this, from January to July this year, the cumulative output of cement nationwide was 1.306 billion tons, an increase of 9.6 percent over the same period last year, of which cement production in July was 0.212 billion tons, an increase of 9.1 percent over the same period last year, and the growth rate was 0.3 percentage points higher than that in June.

De-capacity is imminent

In addition to positive factors, environmental protection and other industrial policies have also become the key to the development of the industry. Although cement prices have improved recently, due to serious overcapacity and pollution problems, the cement industry is still in a relatively depressed period, and the problem of excess capacity still needs to be resolved.

Relevant data show that in 2012, the production capacity of China's new dry process cement clinker was about 1.588 billion tons, and the actual overcapacity ratio of the industry was about 16%. From a sub-regional point of view, the degree of overcapacity in Northeast, Central South and East China is within 10%, while the problem of overcapacity in North China, Southwest and Northwest China is relatively serious, with the proportion of overcapacity exceeding 30%.

It can be seen that the current overcapacity of my country's cement industry not only reduces the economic benefits of the industry, but also intensifies vicious market competition, but also hinders the adjustment of industry structure and the transformation and upgrading of enterprises.

Only from the performance of listed cement companies, subject to the low cement prices in the first half of the year, the performance of related companies is not optimistic. At present, 10 listed cement companies have disclosed interim reports, with an overall operating income of 56.274 billion billion yuan, an increase of 20.82 percent over the same period last year, and a net profit of 4.776 billion billion yuan, an increase of 0.12 percent over the same period last year. Of the 10 companies, 7 had a year-on-year decline in performance in the first half of the year. Of the remaining nine companies that have not disclosed their interim reports, three are expected to decline or lose money. Among the companies with performance growth, Qilian Mountain's net profit increased by 314.46 percent year-on-year, Ningxia's building materials performance increased by 441.75 percent, and Conch Cement's net profit increased by 4.89 percent year-on-year.

As a traditional manufacturing industry, the total demand of the cement industry is approaching the saturation point step by step, which means that the competition of enterprises in the industry will intensify, and it is difficult to release the benefits of enterprises. Therefore, curbing redundant construction, suppressing overcapacity, accelerating enterprise restructuring, and strengthening energy conservation and emission reduction have become the key to maintaining sustainable development of the cement industry.

Since the beginning of this year, the China Cement Association has made continuous efforts to resolve the problem of overcapacity, and put forward the "Implementation Plan for Accelerating the Merger and Reorganization of Cement Industry Enterprises" (draft). At the same time, it also put forward the "Recommendations on Adjusting the Tax Policy for the Comprehensive Utilization of Cement Resources" and "Policy Recommendations for Resolving Cement Overcapacity by Carbon Trading Methods", etc., various measures are "multi-pronged", intended to accelerate the adjustment, resolve the pressure of overcapacity.

Judging from the development in the third and fourth quarters, the cement industry will also face the pressure of infrastructure real estate demand release in the future, and the risk of raw material cost will also affect the profitability of cement enterprises. In particular, the implementation of environmental protection policies will increase the cost burden of cement enterprises in the short term. Overall, the cement industry has not yet fully out of the recession.