Operation "Self-help"! Cement industry in Shanxi, Hebei, Shandong and Henan provinces shuts down kilns

2024-04-15 16:17:43

According to the feedback from the market, since the end of the off-peak production in the heating season, the overall demand for cement in the northern region has been low, and the clinker inventory has continued to rise. In this regard, the four provinces of Shanxi, Hebei, Shandong and Henan began to promote the cement industry to stop kilns in April this year.

According to the feedback from the market, since the end of the off-peak production in the heating season, the overall demand for cement in the northern region has been low, and the clinker inventory has continued to rise. In this regard, from April to May this year, cement enterprises in Shanxi, Hebei, Shandong and Henan provinces stopped kilns one after another. This has hardly happened in the past. According to the cement big data forecast of

China Cement Net, the cement output of Hebei in the first quarter of this year was 14.212 million tons, down 25.47% year-on-year; the cement output of Shanxi was 4.1215 million tons, down 30.43% year-on-year; The cement output of Henan was 15.9976 million tons, representing a year-on-year decrease of 30.98%; the cement output of Shandong was 19.76 million tons, representing a year-on-year decrease of 15.88%.

Why did the demand for cement decline seriously in the first quarter of this year? The author learned from the survey that the main reason is the slow start of the market this year, the shortage of government funds and the reduction of the number of projects.

According to a large cement group in the north, by the end of March this year, the demand for cement in the north (mainly referring to Beijing, Hebei, Shandong and Henan) was only about 6-8% of the same period last year. On the one hand, the government is short of funds, the number of new projects is relatively small, on the other hand, there were many projects last year, such as Baojiaolou and so on, which have basically ended this year.

Jidong Cement, as the leading cement enterprise in the northern region, also said recently that the total sales volume of cement and clinker in the first quarter of 2024 is expected to be about 12 million tons, but it is incomparable with the same period last year, because the Spring Festival in 2023 is earlier, which compresses the construction cycle. Another cement company

in Hebei said that many construction units were not in a hurry to start construction in March, because the price of concrete per square meter of the construction company was at least 15 to 20 yuan more expensive before March 15, which increased their own costs. Therefore, the market demand in the first quarter is also general.

According to the financial data released by Shanshui Cement for the three months ending March 31, 2024, the net profit loss of Shanshui Cement was about 808 million yuan, an increase of 43.73% over the same period last year. As to why the loss expanded in the first quarter of this year, the relevant person in charge of the cement enterprise said in an exchange with China Cement Network that the market started slowly in the first quarter of this year, the market price declined last year, and there was a big gap between the first quarter and the same period last year.

"In addition, the shutdown of kilns in the northern region is very good this year, and the loss of shutdown is higher." The above-mentioned people said that in the four provinces of Shanxi, Hebei, Shandong and Henan, except for the production lines to protect people's livelihood and individual non-self-discipline, the rest have stopped, which is the best one in recent years. This is also forced to have no way, we all know that only stop to have a good possibility.

It is worth noting that China Cement Network has learned from its exchanges with the industry that due to the slow progress of the project and insufficient downstream demand, some cement enterprises are facing the problem of full storage and kiln shutdown as soon as they start construction. Even some enterprises in Hebei, Shandong and other places did not open kilns at all in the first quarter.

According to China Cement Network, Shanxi, Hebei, Shandong and Henan are all provinces with large cement clinker production capacity, and the situation of overcapacity is grim. According to the data, by the end of 2023, the annual clinker production capacity of Henan reached 95.2348 million tons; the annual clinker production capacity of Shanxi reached 58.0506 million tons; the annual clinker production capacity of Shandong reached 100 million tons; and the annual clinker production capacity of Hebei reached 89.652 million tons. The four provinces together have an annual clinker production capacity of 343 million tons.

In the current severe industry situation, the four provinces consciously increase the shutdown time according to the actual decline in market demand, or it is also a "self-help" way for cement enterprises to explore the initiative to reduce production in order to seek a balance between production and marketing.

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Correlation

On November 21, the Western Construction (002302) issued a prospectus for issuing stocks to specific targets in 2021. The company plans to introduce Conch Cement as a strategic investor through this issue, and Conch Cement will subscribe for 183 million shares, accounting for 12.48% of the total equity after the issue, becoming the second largest shareholder. The purpose of this issue is to optimize the capital structure, supplement liquidity and repay bank loans, which is expected to bring the company an annual increase of 8.85 billion yuan in operating income and a total profit of 708 million yuan, up 38.71% and 78.23% respectively from 2023.