Cement Price Rises Steadily After Rainy Season

In the "post epidemic" era, cement prices have gradually stepped out of the stable growth curve.

A few days ago, Shanxi Province issued a notice on staggered peak production in autumn and winter of 2020-2021, pointing out that the peak shifting production industry, including cement clinker and grinding station and other key gas related enterprises, still implemented the shutdown according to the principle of hierarchical management. Among them, enterprises rated as grade D or those that fail to complete the task of governance and transformation on schedule shall stop production; enterprises rated as grade C and non leading shall implement off peak production; enterprises rated as a, B, B-level and leading enterprises and green factories recognized by the Ministry of industry and information technology shall not be included in peak load shifting. The peak shifting production time is from November 1, 2020 to March 31, 2021.

In fact, since entering the third quarter, the pan northeast and Shanxi Hebei Shandong Henan regions have started four months of staggered peak production, and at the same time ensure that the annual shutdown time is not less than 160 days. Recently, all cement clinker enterprises in Hebei Province started to strengthen emission reduction and stagger peak production in autumn from 0:00 on September 26 to 24:00 on October 5 in Hebei Province, and the kiln was shut down for 10 days. In addition, Anyang, Henan province put forward the regulation and control plan of single and even number production in autumn and winter. According to the green management and control implementation plan, Jining of Shandong Province requires B, C and D level enterprises to stop production for no less than 1 month, 2 months and 3 months respectively; Hunan Province has made clear that the base number of peak staggering days of Changsha Zhuzhou Xiangtan and transmission channel provinces and cities is 75 days, and that of other cities and prefectures is 70 days.

"In terms of the overall environment, the country has implemented supply side structural reform for many years, and the policy dividend in the profit growth space has basically ended." Recently, Zheng Jianhui, chief researcher of China cement.com and China Cement Research Institute, said in an interview with the 21st century economic reporter that on the one hand, the peak shifting production was one size fits all, and the expansion was limited. On the other hand, some enterprises have completed the transformation of ultra-low discharge capacity, and may not be subject to the limitation of peak load shifting production in the future.

The price increased steadily

Due to the influence of peak load shifting and the demand of downstream real estate industry, the prices of various building materials industry including cement have increased slightly since October.

But this improvement is still structural. Zheng Jianhui pointed out to the reporter of the 21st century economic report: "the recent rise of cement is relatively slow, and there is a downward trend in Southwest China. The overall growth path is normal and steady."

Sun Mingxin, an analyst with CITIC Securities, pointed out that the weather affected demand in Southwest China led to a slight drop in prices. Prices in North China and Northeast China rose more frequently, mainly in some northern provinces. "The local market demand in the three northeast provinces is still weak. The manufacturers in Liaoning and Jilin have a large volume of shipping sales, and the inventory in central Liaoning is generally low. The manufacturers continue to promote the price rise. In Anhui Province, there was still rainy weather at the end of September, and the local cement sales of all enterprises were slightly lower than the normal level. Among them, under the influence of agricultural busy in Northern Anhui, the cement shipment of some enterprises was only about 60% of the normal level. Some clinker lines along the Yangtze River in Anhui Province have been shut down for maintenance or technical transformation. Although the sales of clinker are controlled, the inventory of clinker is still rapidly reduced to the low level of 30% to 40%

In fact, affected by the epidemic situation in 2020, the cement output in the first quarter of 2020 will be 300 million tons, a year-on-year decrease of 23.9%. With the smooth resumption of production and work, the national cement industry realized 233.2 billion yuan of business revenue from January to April, a year-on-year decrease of 13%, and the total profit of 35.3 billion yuan, with the decline rate narrowed. Throughout the period from January to August, the trend of steady increase is more obvious. From January to August, the total cement output in China was 1.442 billion tons, a year-on-year decrease of 2.1%. In August, the national cement output was 225 million tons, with a year-on-year increase of 6.6%. In September, due to the unexpected rain in Southwest China, the price of cement in the whole country rose and fell. East China, central China, North China and Northeast China continued to rise, while in South China, the price of cement in some areas of southwest and northwest continued to fall, but the overall market continued to improve. In September, the national cement price index of Centennial construction network rose by 22.41.

In October, the traditional winter air pollution prevention and control work led to the issuance of "stop work orders" in some areas of Hebei, Shandong, Shanxi, Henan and other provinces. Prior to the news, leading enterprises in Beijing, Tianjin and Hebei region planned to significantly increase the price of cement of different specifications by 30-60 yuan / ton on October 15, and the high-level notice was mainly increased by 60 yuan / ton, of which the large factories in Shijiazhuang region have announced the increase since the 11th.

"Compared with the traditional" gold 9 silver 10 ", due to the impact of the epidemic, the price fell more than expected in the early stage of this year, and the price increase started in August. In September, due to the increase of rainfall in some areas, the overall growth was stable Zheng Jianhui analysis said that the rainfall is expected to decrease in October, the demand will rise, so the cement price is bullish, especially in East China. North may be due to the cold weather, rising more stable.

Increase of clinker import

The strong rebound of cement price and the continuous downturn of overseas clinker price jointly gave birth to the heat of imported clinker.

According to the data of the Ministry of industry and information technology, the total import of cement clinker from January to July 2020 is 16.44 million tons, with a year-on-year increase of 51%. According to the data of the General Administration of customs, a total of 11.07 million tons of cement and clinker were imported from January to may, with a year-on-year increase of 23.4%, that is, about 5.37 million tons of cement and clinker were imported from June to July. From January to July, the import volume increased by 51% year-on-year, and the average FOB price was 21 US dollars / ton, down 15% year-on-year. According to the exchange rate, 21 US dollars is about 141 yuan RMB, that is, the clinker cost of foreign enterprises is about 130 yuan / ton.

In this case, many enterprises have increased the amount of clinker import. Some people in the industry pointed out that the company under Conch Cement imports about 1.25 million tons of clinker every month, and other traders also import about 500000 tons of clinker every month, with a total import volume of about 1.75 million tons per month. It is also planned that the total annual purchase volume will not be less than 4 million tons, and it is not ruled out that additional procurement will be made according to market demand.

In this regard, Zheng Jianhui analyzed and said: "there are two reasons for domestic enterprises to increase the amount of clinker imports: for conch cement, the transformation of ultra-low emissions will be completed before October 1, and there will be kiln lines to stop. Anhui, as a large clinker base, needs to purchase from abroad; secondly, the overseas epidemic is serious this year, and Asia is a big cement export country, which has an impact on the coastal prices of East China Sound and pressure, conch can balance the pressure to a certain extent

In addition, "gold nine silver ten" is generally a period of strong demand for cement market, and the amount of clinker imported from social grinding stations affected by clinker enterprises' control and sales will also increase. Once the clinker supply is cut off, the social grinding station will also be in danger of stopping production and business.

According to the analysis of insiders, in the past two years, on the one hand, major enterprises have pushed up the prices of cement and clinker by artificially controlling the market supply; on the other hand, they have taken the sea China trade platform in the Yangtze River Delta region of East China as the leading factor, and have taken the Northeast clinker and the imported clinker as the auxiliary to control the market discourse power. At present, the low-cost imported clinker mainly comes from Vietnam, Indonesia, Thailand and other Southeast Asian countries, and the arrival price of clinker is about 320-330 yuan / ton.

Zheng Jianhui believes that the impact of the current epidemic on cement prices is limited, and the profit growth space of enterprises comes more from the internal improvement of enterprises and industry self-discipline, such as high-quality development, upgrading of equipment, and the synergy effect among enterprises. "For example, conch cement and Huaxin Cement have extended their industrial chain this year to enhance their comprehensive competitiveness. Some enterprises are seeking synergy with other enterprises to find new profit growth space under the premise of ensuring supply."

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