According to the report "Operation Analysis and Future Outlook of the Sand and Gravel Industry in 2022" issued by the Cement Big Data Research Institute, at least 70 aggregate production lines will be put into operation nationwide in 2022. The new annual production capacity is nearly 430 million tons , and at least 293 projects are proposed, with a total capacity of more than 1.1 billion tons.
Figure: Proposed Aggregate Projects
in Each Province in 2022 Data Source: Cement Big Data (https://data.ccement.com/)
The aggregate production capacity put into operation in 2022 is mainly located in Hubei, Chongqing and Zhejiang provinces, including Hubei and Chongqing, have added at least 110 million tons and 40 million tons of aggregate production capacity respectively.
Overall, the new production capacity in Central South, East China and Southwest China will be the largest in 2022, accounting for more than 90% of the new production capacity in China. In addition, a total of 14 large-scale production lines with an annual production capacity of 10 million tons or more will be put into operation in 2022, of which the largest Huaxin (Yangxin) 100 million tons machine-made sand and gravel project phase I and Ruichang sand and gravel aggregate line of China Building Materials will have an annual production capacity of 50 million tons and 30 million tons respectively.
Figure: Production capacity of the project put into operation in 2022 (10,000 tons/year) Capacity of planned projects in 2022 (10,000 tons/year)
Source: Cement Big Data (https://data.ccement.com/)
The planned new projects in 2022 are mainly distributed in the central and southern regions and East China, of which the central and southern regions have nearly 50% of the capacity.
According to the transfer of sand and gravel mining rights in 2022, the transfer of resource reserves in the central and southern regions will be the most active area for the proposed sand and gravel aggregate projects in 2023 , and the production capacity to be released in Hubei, Guangdong and other places will continue to accelerate growth.
When it comes to sand and gravel aggregates, we have to mention the cement industry.
As far as the domestic market is concerned, the expansion of leading cement enterprises in the main industry has almost come to an end. In the future, in addition to regional mergers and acquisitions, the self-built production lines of cement enterprises will continue to decrease.
This year and in the future, there are only a few projects for capacity replacement. In order to ensure the stability of the main industry, enterprises must extend the industrial chain appropriately in order to expand their scale, and the most prominent one in the past two years is the aggregate industry.
According to the data of Cement Big Data Research Institute, as of June 2022, the annual production capacity of building materials aggregates in China exceeded 200 million tons, ranking first in the country; The annual production capacity of Huaxin Cement reached 168 million tons. However, some leading cement enterprises, such as Huarun Cement, Queshi Cement and Evergreen Aggregate, have an annual production capacity of only 10 million tons.
Table: 2022H1 Aggregate Production Capacity of Cement Enterprises TOP10 (10,000 tons/year)
Data Source: Cement Big Data (https://data.ccement.com/)
In addition to being conducive to its own smooth operation, The high profit of aggregate is an important reason for cement enterprises. Compared with cement projects, sand and gravel aggregate projects have shorter investment cycle, smaller investment in project construction and faster results. In recent years, the proportion of aggregate business revenue of major cement enterprises has been increasing.
Figure: The proportion
of aggregate business revenue of major cement enterprises in 2017-2022H1 Data source: Cement Big Data (https://data.ccement.com/)
Cement Big Data Research Institute. According to the annual report data published by nine listed companies such as Tianshan Stock and Conch Cement in 2021, the comprehensive gross profit rate of aggregate business reached 56%.
In addition, the aggregate business capacity utilization rate of five cement enterprises , Tianshan Stock, Qilian Mountain, Ningxia Building Materials, Jidong Cement and Wannianqing, reached 64.56% , and aggregate became the fastest growing high-margin business area of cement enterprises.
Figure: Gross profit margin
of aggregate business of cement enterprises in 2021 Data source: cement big data (https://data.ccement.com/)
Overcapacity, high cost and cooling of real estate. All kinds of pressures force cement enterprises to seek transformation and upgrading. In the "cement plus" business, the aggregate business has become the best choice for enterprises to expand the industrial chain with its broad market and considerable profits.
At present, China's aggregate industry is developing in the direction of large-scale, green and high-quality development, and the problems of low threshold and non-environmental protection in the past will be improved under the guidance of policies. Referring to the development path of foreign cement enterprises, the layout of aggregate in China's cement enterprises is not only a wise move, but also a general trend.
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