Recently, the weather in Anhui and the Yangtze River Delta has been fine. With the “from light to warm” demand for cement downstream, the clinker prices in Northern Anhui and along the river have started to rise continuously, with a cumulative increase of 50-60 yuan / ton.
According to the information of Anhui cement network, in 2021, Anhui cement enterprises met the downstream demand. The cement clinker enterprises in the province completed 164.5% of the annual plan, and the output reached a record high. Relevant staff of Anhui Cement Association told the Securities Daily that with the commencement of several major projects in Anhui Province in 2022, it is believed that local cement enterprises can still maintain the current good situation.
Northern Anhui brewing the first round of price increase
enterprises along the river have raised prices for two rounds
“The price has indeed risen, about 30 yuan per ton! Now the listed price of cement is 570 yuan.” An insider of a large cement enterprise located in central Anhui told reporters, “we didn’t rise much, the weather improved, and many projects in the province are about to start. In the first quarter, we still have staggered peak production to implement, and now three of the four kilns have been stopped.”
A cement analyst told reporters that at present Anhui Conch Cement Company Limited(600585) , the clinker price of Zoomlion cement in Anhui is also shouting up. Although the downstream recovery time after the Spring Festival this year is later than that in 2021, the price raising strategy of enterprises has not changed. In his opinion, one of the main reasons for the price rise is the off peak production, which leads to the reduction of cement production, and the other is the off-season maintenance. According to regulations, the peak shifting production time in Anhui in the first quarter of this year was 20 days, and the total peak shifting production time in July and August was 10 days, a total of 30 days. After the Spring Festival, the cement and clinker prices of cement enterprises in Northern Anhui and along the river have been raised. On the whole, the clinker in Northern Anhui is cheaper than that along the river, about 50 yuan a ton.
“Now many parts of the country are shouting for price increases, such as Guangdong, Guangdong, Sichuan, Anhui and so on. Some enterprises clearly raise prices, but in fact, they don’t raise prices after giving rebates to dealers. This is a strategy, which is to create an atmosphere of price increases.” The analyst further said that Anhui is the largest clinker producing area in China and the main cement clinker export place along the Yangtze River. It can enter the markets in the middle reaches of Hubei and other regions up to the Yangtze River Delta. Therefore, the off peak production of Anhui enterprises will inevitably have an important impact on the cement supply and price of the whole East China and even the whole country.
The reporter found that before the current round of cement price increase in Northern Anhui, the clinker price along the river in Anhui has completed two rounds of increase. Due to the shortage of clinker inventory caused by off peak production, and the purchase enthusiasm of enterprises in downstream grinding stations is high. On February 7, some major enterprises along the river in Anhui raised the clinker price by 30 yuan / ton. From February 15, they again notified to raise the clinker price by 30 yuan / ton, with a cumulative increase of 60 yuan / ton. After the adjustment, the FOB price of clinker of large factories along the river (Wuhu) is 450 yuan / ton.
After the Spring Festival, local cement enterprises began to enter the price increase mode one after another. From February 14 to 17, some manufacturers in Chongqing successively notified to increase the cement price by 40 yuan / ton to 50 yuan / ton. Local cement enterprises said that due to the good implementation of off peak production in Chongqing, the inventory of most enterprises is generally between 50% and 60%, the inventory pressure of enterprises is small, and the rising price of raw fuels such as coal leads to the increase of production costs of cement enterprises. In Guangdong, the enterprise’s clinker production line implemented staggered peak shutdown, and the clinker inventory pressure decreased. In addition, the price rise of raw and combustion materials such as coal leads to the rise of clinker production cost. Following the increase of clinker price by 30 yuan / ton in eastern Guangdong on February 11, manufacturers in northern Guangdong and the Pearl River Delta notified the increase of clinker price by about 20 yuan / ton – 30 yuan / ton from February 18. From February 14 to 17, some major manufacturers in Hohhot, Ulanqab and other places in Inner Mongolia began to try to promote the increase of cement price by 20 yuan / ton – 30 yuan / ton. However, since the market in the north will recover at least after March, the implementation of enterprise price increase remains to be seen.
1.7 trillion investment plan into Anhui
the demand of cement enterprises is guaranteed
From the second half of 2021, due to the influence of the real estate industry, the demand of cement market is under great downward pressure. However, the demand for infrastructure construction is still relatively strong, and the general trend of the cement industry has not changed.
According to the calculation of cement big data research institute, the cement consumed by housing construction projects developed by real estate companies accounts for about 28% of all, and less than 30%. Although this proportion is not low, it has not shaken the foundation of cement demand. Under the assumption that the cement demand for real estate development decreases by 10% – 20%, the overall cement demand decreases by about 2.8% – 5.6%. In addition, with the transformation of the real estate industry and real estate companies, the proportion of commercial housing and long-term rental apartments may rise. National policies are also actively supporting the transformation of indemnificatory housing and old residential areas, improving the living quality and reducing the living cost, which can offset the declining demand for some residential real estate development.
“Despite the peak shifting production and decline in demand, the cement output of Anhui Province reached 149.9 million tons in 2021, an increase of 4.01% year-on-year, ranking the fourth in China. The cement clinker was 143 million tons, an increase of 2.9% year-on-year.” The staff of Anhui Cement Association told the reporter of Securities Daily, “This year, there are many concentrated construction projects in various places, and there are also many in Anhui, especially in Northern Anhui, which involves the counterpart assistance policies of brother provinces, and will also increase project investment. The price of cement clinker in Anhui is higher than that in Jiangsu, Zhejiang and the Pearl River Delta. As a major province of clinker production, 45% of clinker will be exported to the Yangtze River Delta in 2021, filling their market demand. Compared with that in 2021 The operation rate of China’s cement production line is more than 70%, and the operation rate of Anhui enterprises is more than 95%, which makes the output of cement and clinker in Anhui Province reach a record high. “
According to the latest news of Anhui Provincial Development and Reform Commission on February 21, the investment plan for key projects in Anhui Province in 2022 was printed and issued in the name of the provincial government. The total number of projects included in the plan is 8897, and the annual planned investment is 1.66 trillion yuan. Among them, there are 5642 continued projects and 3255 planned projects. 1752 projects are planned to be completed throughout the year. Anhui Provincial Development and Reform Commission said that the total number of projects in 2022 exceeded 8800, an increase of more than 1000 compared with the first batch of plans in 2021. The annual planned investment reached 1.66 trillion yuan, a year-on-year increase of 11.8%. The plan highlights the construction of manufacturing projects to expand and strengthen the real economy; Increased the construction of transportation and other projects, and moderately advanced infrastructure investment; We increased investment in ecological and environmental protection and helped promote green development. The annual planned investment in ecological and environmental protection projects was 40.199 billion yuan, a year-on-year increase of 11.2%.
The relevant person in charge of a large state-owned cement enterprise told reporters that from a comprehensive point of view, the pressure of cement enterprises in 2022 is mainly concentrated in the first half of the year. There is the pressure of insufficient demand, rising cost and downward price. Cement enterprises will face the industry form of many complex factors. We must stabilize the main cement industry, accelerate the transformation and development, and keep warm in the weak market.
