In 2022, the cement industry encountered unprecedented difficulties. In the first quarter, the downstream construction was slow, and the demand recovered less than same period. After entering the second quarter, the epidemic rebounded strongly, and the demand stagnated. In the third quarter, the downstream construction was weak due to extreme weather interference, and in the fourth quarter, the peak season failed, and the demand continued to weaken.
In 2022, the overall trend of the national cement price index continued to decline, and the price focus gradually moved down. As of late December, the average price of P.O42.5 bulk cement was 445.99 yuan/ton, down 23% from the same period in 2021; Cement prices continued to fall, with the exception of Xizang in 31 provinces, cement prices in other provinces declined year-on-year. Cement Prices and Year-on-year Growth Rate
of Each Province in December
2022 Source: Cement Big Data (https://data.ccement.com/)
In general, the price of cement will fluctuate and go down in 2022, and the output of cement will hit a new low in recent years. At the same time, as the average price of coal reached a historical high, the profits of the cement industry shrank sharply.
On January 30, Conch Cement issued a performance forecast for 2022, predicting a net profit of 13.973 billion yuan to 16.633 billion yuan, a decrease of 50% to 58% compared with the same period last year. Conch Cement said that in 2022, due to the downturn of the real estate market, repeated epidemics and other factors, the demand for cement market declined, and the sales price and sales volume of the company's cement products declined year-on-year; at the same time, due to the impact of coal prices and electricity price increases, the company's product costs increased year-on-year.
Coincidentally, the performance forecast disclosed by Huaxin Cement on the same day shows that it is expected to achieve net profit of 2.521 billion yuan to 2.843 billion yuan in 2022, a decrease of 47% to 53% compared with the same period last year. The company also mentioned the impact of factors such as the repeated COVID-19 epidemic and the downturn of the real estate industry.
China Cement Network has learned that most of the cement companies that have disclosed their performance forecasts have seen their net profits "cut in half".
Jianfeng Group estimates that the net profit in 2022 will be 280 million yuan to 355 million yuan, with a year-on-year decrease of 61.58% to 69.70%; the net profit deducted from non-profits will be 110 million yuan to 155 million yuan, with a year-on-year decrease of 75.58% to 82.67%.
In addition, the performance forecast recently disclosed by Shangfeng Cement shows that it is expected to make a profit of 920 million yuan to 1.03 billion yuan in 2022, down 52.67% to 57.72% from the same period last year; Tianshan shares are expected to make a profit of 4 billion to 5.2 billion yuan in 2022, 58.50% to 68.08% lower than same period last year. Since the resumption of work in the Spring Festival of
2023, there has been a wave of intensive construction of major projects in many parts of the country, including many infrastructure projects. Can demand for cement recover? Li Kunming, a cement industry analyst at
China Cement Network Cement Big Data Research Institute, believes that the strength of infrastructure support for cement demand is still insufficient. The
more important reason is that the direction of investment in infrastructure has changed greatly. "5G", "Industrial Internet" and other new infrastructure continue to increase, and the "20th National Congress" has put national security infrastructure on the important agenda, which is the future direction, while the traditional infrastructure representing cement demand is declining, and the differentiation of new and old infrastructure will continue to exist. Therefore, it is difficult for infrastructure construction to have a significant pulling effect on cement demand in 2023. The era of
low cost has passed, and the profit margin of the cement industry will remain at a relatively reasonable level. If the decline in demand is small, the tacit understanding of the industry is further improved, the cement price remains relatively stable, the coal cost does not fluctuate significantly, and the industry benefits are expected to remain stable; if the decline in demand is still deep, and the enterprise falls into the state of disorderly price competition in some areas in the summer of 2022 under the huge pressure of survival, then the industry benefits will have the risk of further decline. On the whole, the decline in demand and the high cost make it difficult to say that the benefits of the industry are optimistic.
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