Price Adjustment Window Opened Half A Month Ahead Of Schedule: How To Go In The Second Half Of The Year?

From May this year, the cement price, which entered the continuous decline channel, finally entered the rebound cycle. At the end of July, cement prices stabilized and continued to rise. On August 16, the national cement price index (cempi) closed at 145.33, up nearly 4% from the end of July.

Along with it, cement enterprises in many regions of the country have issued announcements to increase the ex factory price of cement. According to the 21st century economic report reporters, East China and southwest China have the highest increase rate. Since the end of July, Guangxi Nanning, Yulin and other regions have raised the cement price twice, with a cumulative increase of 100 yuan / ton. The price of some cement brands in Nanchong of Sichuan and Dali of Yunnan increased by 50 yuan / ton.

Hou Linlin, a cement analyst with Zhuo Chuang information, told reporters in the 21st century economic report that August is a transitional month for the transition of traditional weak and peak seasons in the cement industry, and cement enterprises usually enter the price adjustment window. However, this year, driven by peak load shifting, power rationing, rising prices of raw materials and fuel, and better demand, the window period for price adjustment has been advanced to the beginning of August, that is, cement prices began to rise half a month ahead of schedule.

Many analysts predict that cement prices will gradually rebound after stabilizing in August, and the market will rise in October and November after entering the peak demand season. Hou Linlin said, "in the first half of this year, the fast rising coal cost and low cement price have eaten up part of the profit space of some enterprises, leading to a decline in the profitability of the industry. With the cement price entering the rising channel, the profit space of cement industry is expected to improve in the second half of the year.

The highest increase was 100 yuan per ton

With the intensive commencement of a series of major projects in many places, as well as the supply side constraints such as peak load shifting and partial power rationing, since August, the areas where the early cement price has fallen significantly have begun to rebound and started the rising rhythm.

On July 31, 227 major projects were started in Anhui Province, with a total investment of 106.4 billion yuan. The performance transmitted to the upstream market is that the cement price in Anhui, Jiangsu and other places was the first to adjust, with the increase range of 20-30 yuan / ton.

In contrast, the increase in East China and southwest China is more obvious. On August 15, Guizhou Cement Industry Association issued an announcement requiring 30 days of peak shifting production in the third quarter. Superimposed on the impact of power rationing in Guizhou, in order to improve profits, major manufacturers in most areas of Guizhou province raised the cement price in advance, ranging from 30 to 60 yuan per ton.

The same scene appears in Shandong. Earlier, on July 30, Shandong Cement Industry Association issued an announcement, requiring that from August 11 to August 30, the clinker production line of Shandong cement clinker enterprises will implement staggered peak production for 20 days in succession. At the same time, 720 major projects were started in Shandong Province, with a total investment of 432.8 billion yuan, with an average investment of more than 600 million yuan. Starting from August 11, some cement manufacturers in Shandong Province informed the price of various types of cement to increase by 30 yuan / ton.

In Nanning, Chongzuo, Yulin, Guigang, Beihai and other regions of Guangxi, after increasing the cement price by 50 yuan / ton from the end of July to the beginning of August, some major manufacturers continued to notice a substantial increase of 50 yuan / ton of cement price since August 11, and the cumulative increase has reached 100 yuan / ton after two increases.

Another factor affecting cement prices has also changed. In the past years, the relatively low price of imported cement clinker will inhibit the price rise of coastal market, but the rising shipping price this year makes the growth rate of cement clinker import slow down, and it is difficult to form an impact on the market price.

According to sun Mingxin, chief building materials analyst of CITIC Securities, 80% of China's cement clinker imports come from Vietnam. Affected by the epidemic situation, international shipping prices have risen rapidly this year. The sea freight from Vietnam to the eastern coast of China has risen from 2.2 US dollars per ton to the highest of 5.4 US dollars per ton, a new high in 10 years. Affected by this, the CIF price of imported cement clinker increased by 22% in the first half of this year, and the import volume increased by 11% year-on-year. Compared with the growth rate of 150% and 22% in the first half of the previous two years, the growth rate was significantly slower.

In May this year, the Ministry of industry and information technology, the national development and Reform Commission and other seven departments jointly issued the "opinions on improving the quality of cement products and standardizing the order of cement market", which also increased the international trade risks and costs of overseas enterprises exporting cement clinker to China. Sun Mingxin believes that in the short and medium term, it will strengthen the wait-and-see mood of exporters and restrict the further expansion of China's cement import scale. It is expected that imported cement will not constitute a resistance factor for the price rise of coastal cement market after the demand is warmer.

Industry profitability under pressure

However, in the first half of the year, high operating coal costs and low operating cement prices have made many cement listed companies feel pressure. According to the data of cement big data research institute, in the first half of 2021, the average price of cement is 461.3 yuan / ton, which is basically the same as that of the same period last year, but the average price of steam coal is 816.5 yuan / ton, which is 50.4% higher than 542.8 yuan / ton in the same period of last year. Affected by this, in the first half of this year, the national cement industry achieved sales revenue of 483.6 billion yuan, a year-on-year increase of 13.2%, and a profit of 73 billion yuan, a year-on-year decrease of 7.2%.

This effect is also obvious in the cement listed companies which have published their mid-term report cards. According to the semi annual report just released by China Resources Cement, in the first half of this year, the turnover of China Resources cement was 16.78 billion yuan, with a year-on-year increase of 19.5%, and a profit of 3.02 billion yuan in the same period, a decrease of 13.3% year-on-year.

As for the reasons for the profit decline, China Resources Cement said in its semi annual report that since this year, the cement price in the eastern Guangdong regional market has continued to operate at a low level. Due to the continuous rise of bulk commodity prices, the construction of some started projects slowed down, and the continuous regulation and control of real estate superimposed, the cement demand fell ahead of time, leading to the peak decline of cement price since the middle and late May.

During the reporting period, the average selling price of cement decreased by 12.13% compared with the same period of last year. Affected by the rise of coal price, the average cost of cement sales of the company increased by 3.06% compared with the same period of last year. Under the superimposed influence, the company's comprehensive gross profit rate decreased and the profit level of cement products declined.

Another cement enterprise, tapai group, also encountered the same problem. According to the semi annual report, the company achieved 3.634 billion yuan of operating revenue, with a year-on-year growth of 29.80%; Net profit attributable to shareholders of listed companies was 915 million yuan, down 0.46% year on year. The average cement sales price of the company decreased by 12.13% year-on-year. However, due to the full release of the second phase capacity of Wenfu wanton line project and the impact of lower base in the same period of last year, the cement production and sales volume increased by 49.39%, offsetting the impact of the sharp drop in cement price.

However, a number of analysts interviewed by the 21st century economic report believe that stable demand supports the rebound in cement prices in the second half of this year. It is expected that in late August or at the end of the month, the market will gradually go out of the off-season, the downstream demand will be significantly improved, and the cement price will continue to rise in the later stage. It is expected that the cement price will rebound and rise after entering the peak demand season in October and November, and relieve the profit pressure of cement enterprises.

Guoxin Securities analyst Huang Daoli believes that as a cement leader in eastern Guangdong, tapai group is expected to benefit from the accelerated construction of Dawan district. According to the data, in the first half of this year, Guangdong's cement output increased by 23% year on year. This year, the province launched major projects, with an annual planned completion amount of 800 billion yuan, and the planned investment growth rate was 14.3%, which was the highest level in recent years.

However, Li Kunming of cement big data Research Institute believes that in general, infrastructure investment has been accelerated and cement output has maintained growth; The cement price is expected to surpass the same period last year. However, the cost continues to rise, profit will still decline.

Relevant data show that, since the beginning of August, except for a few long-term agreement coal prices, most coal enterprises' mine mouth coal prices have risen to the historical high range of 800-900 yuan per ton, while port coal prices have increased even more due to factors such as superimposed freight charges.

?