Many factors have caused cement prices to stop falling and rebound. The peak season of the industry is coming earlier?
Our reporter Liu Huan
Since the end of May, cement prices in most areas of the country have started a continuous downward trend. Cement prices in many areas have fallen by more than 100 yuan/ton, and in some areas it has been close to 200 yuan/ton.
At the end of July, domestic cement prices finally swept away, ushering in a wave of price increases. Industry analysts generally believe that under the background of tight supply, demand recovery and increased costs, this year’s cement peak season may have arrived ahead of schedule.
Regarding the trend of cement prices in the second half of the year, Chen Bolin, deputy secretary-general of China Cement Association and president of Digital Cement Network, believes: “As the unfavorable factors fade, downstream market demand will continue to recover, and cement prices are expected to return to or exceed the same period last year.”
Cement prices rose after two consecutive months of decline
For the cement industry, April to June are peak seasons each year, but this year is different. In the first four months of this year, the cement industry continued its good momentum in the fourth quarter of last year, with many positive factors superimposed. The cement market demand was strong, and the price continued to rise at a high level. The market price reached a recent high.
After entering late May, the peak season ended ahead of schedule, and the national cement market prices continued to decline for 9 consecutive weeks. The decline in many places exceeded 100 yuan/ton, and the price reduction areas were all core profit areas of the industry.
Speaking of the main reasons for cement prices “falling down endlessly”, Chen Bolin said: “It is mainly due to the influence of rainy weather, skyrocketing steel prices, and safety inspections, which have slowed down the construction progress and contracted cement demand in stages. Most of the upper-southern region has not carried out staggered production, the supply and demand situation is gradually deteriorating, cement stocks continue to rise, and the markets in various regions are fiercely competitive.”
July and August are the traditional off-season for the cement industry. The continuously falling cement market showed an upward trend at the end of July, and prices began to rise. This signal is also believed by many analysts that the cement peak season may have come earlier.
Data from the Digital Cement Network shows that from August 2 to August 8, the price of cement increased by 1.28% month-on-month, and the storage-capacity ratio decreased by 1.5 percentage points. 1.28%, an increase of 0.60% year-on-year.
According to data from Guosen Securities, starting from August 9, the national cement market price continued to rise, with a month-on-month increase of 1.3%. The price increases are mainly in Shanghai, Jiangsu, Zhejiang, Anhui, Jiangxi, Hunan, Guangxi and Yunnan, ranging from 20 yuan/ton to 40 yuan/ton.
There are also some areas where cement prices have begun a second round of upward adjustments. From August 10, some major manufacturers in Suqian, Xuzhou, Lianyungang and other places in Jiangsu notified again to increase cement prices by 20 yuan/ton to 30 yuan/ton.
Demand recovery and cost increase are the main reasons
Recently, the weather has improved. With the gradual arrival of the golden period of construction, many major projects have started intensively.
On July 31, Wuhan started construction of 161 major projects of more than 100 million yuan, with a total investment of 215.8 billion yuan; Anhui started 227 major projects with a total investment of 106.4 billion yuan, involving 10 strategic emerging industries, upgrading and transformation of traditional industries, etc. field. At the same time, Shandong Province also recently announced that 720 major projects have been started in a concentrated manner, with a total investment of 432.8 billion yuan, and an average monomer investment of over 600 million yuan.
In the first five months of this year, the growth rate of my country’s infrastructure investment was also lower than market expectations. According to the National Bureau of Statistics, infrastructure investment in the first five months of this year increased by 11.8% year-on-year, and the two-year average growth rate was 2.6%, which was lower than the growth rate of fixed asset investment in the same period.
In addition to the recovery of cement demand, the increase in cement costs is also the main reason for the rebound in cement prices.
The main reason for the increase in cost is the sharp increase in the price of raw materials, and coal is the most important fuel for cement production, and the increase in its price has a greater impact on the cement industry. Since the beginning of this year, coal prices have continued to rise. Since August, coal prices have exceeded 1,000 yuan, a year-on-year increase of 73.4%. Compared with the same period last year, the price difference between water and coal has fallen by more than 20%.
Chen Wenming, founder and director of Zhejiang Xiaode Law Firm, told the reporter of Securities Daily: “In addition to rising demand and rising costs, tight supply also affects cement prices.”
In addition to peak production and production suspension caused by power curtailment, kiln shutdown plans in some areas have also further tightened cement supply.
According to statistics from the National Bureau of Statistics, in the first half of 2021, the national cement industry achieved sales revenue of 483.6 billion yuan, a year-on-year increase of 13.2%, and realized profits of 73 billion yuan, a year-on-year decrease of 7.2%.
Asia Cement (China) interim results show that in the first half of this year, the company achieved operating income of 5.301 billion yuan, an increase of 22.88% year-on-year; gross profit was 1.873 billion yuan, an increase of 4.87% year-on-year; profit attributable to owners was 1.073 billion yuan, A year-on-year increase of 22.20%. The semi-annual performance report of Western Construction showed that the company achieved total operating income of 12.374 billion yuan in the first half of the year, a year-on-year increase of 28.86%; net profit attributable to shareholders of listed companies was 363 million yuan, a year-on-year increase of 22.82%. According to the announcement of Tianshan’s 2021 semi-annual performance increase, the company expects to achieve a net profit of approximately 700 million to 780 million yuan attributable to shareholders of listed companies in the first half of this year, an increase of 3.47% to 15.30% over the same period of the previous year. (Securities Daily)Return to Sohu to see more
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