High cost, weak demand and poor transportation caused by superimposed regional epidemic factors have made the cement industry with record high profitability in previous years no longer beautiful.
Under the background of moderately advanced infrastructure layout and frequent signals of real estate rescue in the near future, the cement industry still has confidence in the market in the peak season of the second quarter.
During the interview, a number of cement enterprises and analysts told the reporter of securities times · e company that the demand suppressed by the epidemic and other factors in the first quarter may be released in the second quarter. At the same time, the favorable signals of infrastructure and real estate are expected to drive the market back to temperature throughout the year.
The cement market is not prosperous in the peak season under the epidemic situation
From 2022 to late April, the cement industry has not ushered in the traditional peak season.
Due to the Limited Logistics caused by the epidemic and other factors, the cement price in Henan has been declining frequently since late March. On March 15, the winter peak shifting production has just ended, and a new round of peak shifting has been started again recently.
"Staggering production is the main means of supply side reform, which plays an obvious role in regulating the supply and demand of the market. This staggering kiln shutdown is expected to reduce the cement output by about 5 million tons, which will help to reduce inventory and boost market confidence." Wang Kai (a pseudonym), as the first-line sales person in charge of Henan cement enterprises, told the reporter of securities times · e company that although the profit of the cement industry decreased year-on-year, the horizontal operation of the cement industry is still better than that of the cement industry.
In the northeast region greatly affected by the epidemic, a staff member of a cement company also told the securities times · e company that although some cement enterprises affiliated to the company have resumed work and production, due to the impact of the epidemic, the cement sales have decreased seriously year-on-year. The annual sales volume is not expected to be affected by the price of cement products because of the large sales volume.
According to the data of the National Bureau of statistics, from January to February this year, the national cement output was 199 million tons, a year-on-year decrease of 17.8%. The total output fell back to 12 years ago, which was only higher than that in 2020, which was seriously affected by the epidemic, and was basically the same as that in 2010. According to the latest data, from January to March, China's cumulative cement output was 387 million tons, a year-on-year decrease of 12.1%.
"Excluding the factors affected by the epidemic in 2020, the performance of the cement market in the first quarter of this year was the worst in recent years." Chen Bolin, Deputy Secretary General of China Cement Association and President of digital cement network, said that in the past, the peak season of the cement market came in March, but from mid March to mid April this year, the peak season was not prosperous, and the industry as a whole was very depressed. Although the market shouted more, and the cumulative increase was even as high as 100 yuan per ton, the actual landing range should be discounted.
Although the current price looks high, combined with the current coal cost, it is still far from the level of last year or even the previous year. The current market price in the northern region is below the cost line.
"From April 8 to 10, some major manufacturers in many places in Henan tried to push up the cement price by about 30-50 yuan / ton, but the actual implementation was not ideal. Due to the shutdown of the kiln, Henan pushed up again on April 16, and it remains to be seen whether the follow-up can be implemented." Zhuo Chuang analyst Wang Qi said.
Market downturn and performance is now "Waterloo"
After the rapid growth in 2019 and 2020, the performance of cement enterprises began to show a high decline trend since 2021.
As a leading enterprise in the cement industry, Anhui Conch Cement Company Limited(600585) 3 disclosed its annual report on March 25, which showed that under the cost pressure of rising coal prices, Anhui Conch Cement Company Limited(600585) ended the continuous growth trend of the previous five years, with both revenue and net profit declining.
Gansu Qilianshan Cement Group Co.Ltd(600720) 2021, the operating revenue decreased by 1.78% year on year, and the net profit decreased by 34.07% year on year Ningxia Building Materials Group Co.Ltd(600449) 2021 operating revenue increased by 13.17% year-on-year and net profit decreased by 16.96% year-on-year. It is mentioned in the annual reports of Gansu Qilianshan Cement Group Co.Ltd(600720) and Ningxia Building Materials Group Co.Ltd(600449) that the price of raw and fuel materials has risen sharply, increasing the operating cost of the company.
In the first quarter of 2022, the operating performance of cement listed companies continued to be depressed. April 19 Tangshan Jidong Cement Co.Ltd(000401) disclosed that the first quarterly report showed that during the period, the company realized an operating revenue of 4.968 billion yuan, a year-on-year decrease of 2.51%; The net profit loss was 233 million yuan, with a loss of 514855 million yuan in the same period last year.
In addition, Gansu Qilianshan Cement Group Co.Ltd(600720) expects the net profit in the first quarter to drop by 87% - 99%, and the profit is less than 6 million yuan Guangdong Tapai Group Co.Ltd(002233) it is estimated that the net profit in the first quarter will be 492446 million yuan - 703495 million yuan, a year-on-year decrease of 80% - 86%. The rise of coal purchase price is still an important factor affecting the performance of relevant listed companies in the first quarter.
According to Wang Tao, chief of Tianfeng Securities Co.Ltd(601162) Building Materials Association, the first quarter of this year will probably be the low performance of the cement industry because the demand and gross profit per ton are lower than last year. With the control of the epidemic in China, especially the gradual weakening of the impact of coal prices on the cement industry, and the rise of cement prices, it is expected that the operating performance of the cement industry will improve quarter by quarter, and the fundamentals in the second half of this year will be better than that in the first half of this year.
High cost and low demand lead to the misfire of cement bull market
In 2021, affected by factors such as dual control of energy consumption, shutdown and power rationing, the price of cement in many places once soared, setting an all-time high. However, in the context of the year-on-year growth of 7.3% in the annual operating revenue, the industry profit fell by 10% year-on-year. As a traditional high energy consuming enterprise, the rise of coal price is an important factor affecting the performance of cement listed companies last year.
Wang Qi said that since August last year, coal prices have risen abnormally. Under a series of regulatory policies, coal prices are still at a high level. At present, the arrival price of coal in Hebei, Henan and other places can reach 17001800 yuan / ton. In some areas in Northwest China adjacent to coal producing areas such as Shanxi, the arrival price of 5500 kcal thermal coal is also about 1500 yuan / ton.
"Coal for cement is purchased in the market. The proportion of long-term cooperation is very low and the price is relatively high. At present, in the process of cement production, the cost of coal alone has increased by 80-100 yuan per ton year-on-year." He said.
In the first quarter of this year, many cement enterprises mentioned the rising factors of upstream raw and fuel materials in the price adjustment letters released. On February 9 this year, the national development and Reform Commission and the National Energy Administration jointly held a meeting to arrange and deploy to continuously stabilize the coal market price, and conducted interviews and reminders for some enterprises with falsely high coal prices found in the monitoring, requiring them to speed up the verification and rectification.
Wang Tao said that the poor performance and weak demand of the cement industry last year was mainly due to the regulation of the real estate industry, which led to a sharp decline in demand, especially the continuous decline in new construction and sales in the second half of the year. In addition, coupled with the "dual control of energy consumption" and power shortage, some cement enterprises are forced to reduce customs clearance.
From this year's situation, it is expected that the decline of real estate will still drag down the demand side of the cement industry. However, under the background of steady growth, with the further enhancement of market confidence, the cement industry is expected to benefit.
"It should be pointed out that due to the impact of the epidemic at this stage, the demand recovery of the cement industry is relatively slow, and the specific recovery needs to be further observed.
”Wang Tao said that from a medium and long-term perspective, the concentration of the cement industry is expected to be further improved in the future, and the market share of leading enterprises in the industry will become a strong guarantee to support the growth of enterprise performance.
Expected to improve in the second quarter or meet the inflection point
Although the market was depressed in the first quarter, people in the industry are still optimistic about the performance in the peak season in the second quarter.
"The market demand decreased in the first quarter of this year and will certainly pick up in the second quarter. Driven by high costs such as coal and electricity, the industry generally believes that cement will enter an era of high prices." For the future performance of the cement market in Henan, Wang Kai said that after the "720 flood" in 2021, there are many "leak detection and vacancy filling" and "weakness filling" projects in Henan. It is required to promote the construction of about 8000 major projects, which will greatly boost the demand of the cement market in Henan, and it is a continuous process.
The relevant staff of a listed cement company also said that the market situation in the first quarter of this year was relatively special. The cement industry was affected by the epidemic and the rise of coal prices, which put pressure on the performance of cement enterprises in the first quarter. In view of the current decline in coal prices, it is expected that the business situation in the second quarter will be better than that in the first quarter. More and more cities have liberalized the restrictions on the sale of real estate market, coupled with the increasing investment in infrastructure, which will certainly be good for the cement industry.
Li Kunming, an analyst at China cement.com, told the securities times · e company that the downstream demand of the cement industry is mainly real estate and infrastructure, and the proportion of the two may exceed 80% of the overall demand of the cement industry. From the current situation, the demand for real estate is still declining, and the growth of infrastructure demand can not offset the decline of real estate demand. The overall demand of the cement industry is down this year.
However, cement prices will rise compared with last year. It is expected that coal prices will not rise irrationally again this year, but will enter a relatively rational range. On this basis, the benefit of cement enterprises this year should be the same as last year or increase slightly, and it is still good on the whole.
Wang Qi believes that infrastructure, as a means of counter cyclical regulation, will still be the main economic support this year. However, the infrastructure construction cycle is relatively long. Even if the project is started at the beginning of this year, the final stage of using cement will be in the second half of the year. In addition, even if the new construction data of real estate this year improves, it will take three months to six months to implement the cement demand. Basically, we can see the results, but also until the second half of the year.
"The cement market can really see an improvement, which is estimated to be in the second half of the year. Under the uncertain factors such as the epidemic, the profit level of the cement market this year may be lower than that in 2021." According to Wang Qi's analysis, even if there is an inflection point in the market this year, the industry profit will not return to the level of 2019 and 2020.
Reporter's observation: the layout of the whole industrial chain of cement enterprises should respond to industrial changes
For a long time, the cement industry has been the sub industry with the largest emission in the building materials industry. In the context of double carbon, some cement enterprises are accelerating their layout in the field of new energy.
On March 9 this year, Anhui Conch Cement Company Limited(600585) announced again that the company acquired conch new energy in August 2021. In order to accelerate the development of the company's new energy industry, create a new industrial growth pole, practice the green development strategy, implement the relevant national policies of carbon peak and carbon neutralization, and promote the company to accelerate industrial transformation and upgrading, the company has formulated the following investment plan for the development of new energy business in 2022: in 2022, The company will invest 5 billion yuan to develop new energy businesses such as photovoltaic power stations and energy storage projects to achieve full coverage of photovoltaic power generation in subordinate factories. It is expected that by the end of 2022, the installed capacity of photovoltaic power generation will reach 1GW and the annual power generation capacity will be 1 billion kwh.
Previously, Anhui Conch Cement Company Limited(600585) had announced on August 31 last year that the company would acquire 100% equity of conch new energy company at a total price of 443 million yuan. Conch new energy company is mainly engaged in photovoltaic power generation and other businesses, which can provide power support for cement production.
In addition to Anhui Conch Cement Company Limited(600585) , Guangdong Tapai Group Co.Ltd(002233) announced as early as June 17 last year that in order to optimize the company's energy use structure and reduce power consumption costs, the company plans to invest about 1.339 billion yuan to build distributed photovoltaic power generation and energy storage integration projects in the factory areas and mining areas of the company and its subsidiaries (branches) and grandchildren.
Wei Yu, senior analyst of China cement network, told the reporter of securities times · e company that large cement enterprises enter the field of photovoltaic power generation not simply for profit, but to achieve the goal of carbon peak and carbon neutralization in the future. As the investment scale in this field is generally large, not all cement enterprises can bear the cost pressure. Therefore, relatively speaking, the pressure of small-scale cement enterprises will be relatively large.
Tianfeng Securities Co.Ltd(601162) building materials joint chief Wang Tao said in a previous interview with E company that the market space and growth of the new energy track are good, the energy consumption of building materials enterprises is also high, and there is a great demand for clean energy in the future. In the future, more and more enterprises may enter the field of photovoltaic self use, which is also the general trend of the manufacturing industry, but for the tilt or transformation of the main business to new energy, We need to look at the correlation between traditional business and new energy and our own resource endowment.
\u3000\u3000 "For cement enterprises in the future, the most difficult part to control is the part to eliminate carbon emissions. In China's power structure, more than 70% are thermal power, which should be converted into the carbon emission quota of power enterprises. Although cement enterprises have not yet participated in the process of carbon trading, it is also the necessity of medium and short-term development. In order to offset the amount of carbon emissions in the later stage, cement enterprises need to purchase green power, which is more expensive than ordinary industrial power It must be high. Cement enterprises now directly invest in new energy such as photovoltaic, which can meet their own power needs and reduce carbon emissions in the future. This will be a big trend. " Zhuo Chuang analyst Wang Qi believes that the new energy layout of cement enterprises is still in the early stage, and the construction process will also be a gradual process. At the same time, it is also difficult for the cement industry to reduce carbon emissions. In the process of firing clinker, the carbon dioxide contained in limestone will be released, which is the largest source of carbon emission in the process of cement production. For one ton of cement, the carbon dioxide emission of limestone may be more than 400 kg, while the carbon emission per ton in the process of cement production reaches more than 800 kg, so there is still a long way to eliminate carbon emission in the process of cement production.
In response to industry changes, cement enterprises are actively extending the upstream and downstream of the industrial chain while based on the development of carbon reduction.
The annual reports of Anhui Conch Cement Company Limited(600585) , Xinjiang Tianshan Cement Co.Ltd(000877) and other listed enterprises show that in order to improve the profitability of enterprises and strengthen the extension of upstream and downstream industries, it has become an important means for cement enterprises to meet the challenges.
Anhui Conch Cement Company Limited(600585) in the annual report, he said that relying on the "conch +" strategic cooperation mode, he would give full play to the marketing advantages of the "cement +" whole industry chain, fully promote the expansion of aggregate projects and production capacity, accelerate the layout of commercial concrete industry, vigorously promote the development of new energy industry and create a new industrial growth pole.
"The industry trend determines that the future cement demand will be a gradual downward process. In the downward period, from foreign experience, the industry will realize the layout of the whole industrial chain through gradual integration, so as to control costs and obtain a relatively reasonable profit level. Therefore, in order to survive in the future, water sludge enterprises need to produce and develop more low-carbon products and realize the integration of upstream and downstream of the industrial chain to reduce carbon emissions." Chen Bolin, Deputy Secretary General of China Cement Association and President of digital cement network, said.
Wang Qi, an analyst at Zhuo Chuang, also said that promoting the merger and reorganization of cement enterprises is inevitable for improving the industry concentration, improving the effective utilization of production capacity and promoting energy conservation and emission reduction. After the industry reaches its peak, the number of enterprises must be the largest, and the competitive environment is also the worst at this time. When the market demand begins to appear from prosperity to decline, the industry merger and reorganization will also speed up.
