The market predicts that China's cement production capacity will experience negative growth, but industry insiders believe that the next decade will still be the golden period of the cement industry.
In the past two years, the Chinese government has stifled new cement production capacity by eliminating obsolete production capacity, improving the cement industry access threshold, and suspending the approval of new cement production lines. The market predicts that there will be negative growth in the production capacity of the Chinese cement industry next year, but the cement production industry has different views on this.
Conspicuous demand in the market Anhui Conch Cement is the largest cement producer in China. Chairman Guo Wenkai said in an exclusive interview with Reuters UK: “The cement industry has entered a virtuous circle in terms of energy saving and emission reduction, elimination of outdated production capacity and market consolidation, and the future cement industry Will enter a very precious 'golden harvest'." He predicted that by 2020 will be China's cement industry's "golden harvest" until 2020, China's basic construction of airports, railways, water conservancy, affordable housing, etc. Upon completion, cement supply and demand will reach equilibrium.
Industry insiders estimate that China plans to build 10 million sets of affordable housing this year. Calculating the average area of ​​60 square meters, the cement volume needed will reach 150 million tons. Last year, the national cement production was 1.87 billion tons.
Conch Cement Chairman pointed out that in addition to demand-driven, the cost of the cement industry, such as wages, transportation, coal and other cost prices are rising. Coupled with the government's increasingly stringent environmental protection and other factors, cement prices will continue to be pushed up. He said: "China's demand for cement in the next 5-10 years is still growing. Low-grade cement has been eliminated. Although there is not much new capacity, there is a strong market demand."
The first quarter is generally the off-season of the cement industry, but a number of Hong Kong-listed cement makers have said that this year, there has been a "not off-season" situation. The data of Chinese building materials, the largest cement producer in China, shows that in the first quarter of this year, its cement business has risen sharply from the same period of last year, both in terms of price and sales volume, and has also increased steadily from the fourth quarter.
In the report, JP Morgan stated that it is believed that the China Cement segment will enter a value revaluation cycle that will continue for many years. This is mainly due to a more orderly supply of cement and a record profitability of the company. In particular, the gross profit per ton of cement for the three figures has been rare in the past. In addition, the continuation of industry mergers and consolidation will also further drive cement prices.
Large-scale enterprises have a beachhead layout Currently, there are two modes of production and operation in China's cement industry. One is to buy and merge and expand, and the other is to increase production capacity by self-built production lines. Both models have advantages and disadvantages: acquisitions and mergers can acquire new capacity in a short period of time, but require a longer integration process; self-built capacity takes a long time, but it has a greater grasp of the project's control and efficiency.
Conch Cement chairman said that the company will still have approved project construction before 2013, and will also study acquisition projects, but the premise is that the company must have a greater grasp of the target market and profitability of the target to be acquired. Will not drag the company's performance.
Due to the limited transportation costs, the cement market is very regional. The listed cement companies in Hong Kong have different locations in different regions of the Mainland. For example, the company's core business is in the Eastern and Central markets. CR Cement focuses on South China, and China National Building Materials Group has three cement branches: China Cement, South Cement and Northern Cement. Target area layout.
In the past few years, the cement price in the eastern region once slumped due to overcapacity. However, with the Chinese government suspending the approval of new cement production lines, improving access barriers and increasing the elimination of outdated production capacity, the market has improved significantly.
In contrast, in the southwestern region, cement prices in Sichuan and Chongqing between 2007 and 2008 were already high, and the reconstruction project after the Wenchuan earthquake in 2008 also attracted a large amount of new investment in cement. These new production capacities were gradually put into operation, which caused the problem of overcapacity in the southwest region to become apparent last year, which led to a drop in cement prices.
In the past two years, the Chinese government has stifled new cement production capacity by eliminating obsolete production capacity, improving the cement industry access threshold, and suspending the approval of new cement production lines. The market predicts that there will be negative growth in the production capacity of the Chinese cement industry next year, but the cement production industry has different views on this.
Conspicuous demand in the market Anhui Conch Cement is the largest cement producer in China. Chairman Guo Wenkai said in an exclusive interview with Reuters UK: “The cement industry has entered a virtuous circle in terms of energy saving and emission reduction, elimination of outdated production capacity and market consolidation, and the future cement industry Will enter a very precious 'golden harvest'." He predicted that by 2020 will be China's cement industry's "golden harvest" until 2020, China's basic construction of airports, railways, water conservancy, affordable housing, etc. Upon completion, cement supply and demand will reach equilibrium.
Industry insiders estimate that China plans to build 10 million sets of affordable housing this year. Calculating the average area of ​​60 square meters, the cement volume needed will reach 150 million tons. Last year, the national cement production was 1.87 billion tons.
Conch Cement Chairman pointed out that in addition to demand-driven, the cost of the cement industry, such as wages, transportation, coal and other cost prices are rising. Coupled with the government's increasingly stringent environmental protection and other factors, cement prices will continue to be pushed up. He said: "China's demand for cement in the next 5-10 years is still growing. Low-grade cement has been eliminated. Although there is not much new capacity, there is a strong market demand."
The first quarter is generally the off-season of the cement industry, but a number of Hong Kong-listed cement makers have said that this year, there has been a "not off-season" situation. The data of Chinese building materials, the largest cement producer in China, shows that in the first quarter of this year, its cement business has risen sharply from the same period of last year, both in terms of price and sales volume, and has also increased steadily from the fourth quarter.
In the report, JP Morgan stated that it is believed that the China Cement segment will enter a value revaluation cycle that will continue for many years. This is mainly due to a more orderly supply of cement and a record profitability of the company. In particular, the gross profit per ton of cement for the three figures has been rare in the past. In addition, the continuation of industry mergers and consolidation will also further drive cement prices.
Large-scale enterprises have a beachhead layout Currently, there are two modes of production and operation in China's cement industry. One is to buy and merge and expand, and the other is to increase production capacity by self-built production lines. Both models have advantages and disadvantages: acquisitions and mergers can acquire new capacity in a short period of time, but require a longer integration process; self-built capacity takes a long time, but it has a greater grasp of the project's control and efficiency.
Conch Cement chairman said that the company will still have approved project construction before 2013, and will also study acquisition projects, but the premise is that the company must have a greater grasp of the target market and profitability of the target to be acquired. Will not drag the company's performance.
Due to the limited transportation costs, the cement market is very regional. The listed cement companies in Hong Kong have different locations in different regions of the Mainland. For example, the company's core business is in the Eastern and Central markets. CR Cement focuses on South China, and China National Building Materials Group has three cement branches: China Cement, South Cement and Northern Cement. Target area layout.
In the past few years, the cement price in the eastern region once slumped due to overcapacity. However, with the Chinese government suspending the approval of new cement production lines, improving access barriers and increasing the elimination of outdated production capacity, the market has improved significantly.
In contrast, in the southwestern region, cement prices in Sichuan and Chongqing between 2007 and 2008 were already high, and the reconstruction project after the Wenchuan earthquake in 2008 also attracted a large amount of new investment in cement. These new production capacities were gradually put into operation, which caused the problem of overcapacity in the southwest region to become apparent last year, which led to a drop in cement prices.
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