15, Conch Cement held its 2023 annual performance presentation. When asked, "Where is the company's new profit growth point this year?" On this issue, Li Qunfeng, executive director and general manager of Conch Cement, pointed out that Conch Cement will take the main cement industry as the basis, make every effort to promote the development of aggregate industry and production capacity, promote the layout of commercial mixing industry, and create a new profit growth point.
Aggregate, as an important building material, has become the "life buoy" of many cement enterprises in the downturn of the cement market, and Conch Cement, the "vane of the cement industry", has also achieved a bumper harvest in the aggregate business in 2023.
In the context of the decline in cement profitability, Conch Cement has increased the production capacity of aggregates since 2022. In 2022 and 2023, Conch Cement will increase its aggregate production capacity by 44.8 million tons and 40.7 million tons respectively. By the end of 2023, the production capacity of conch cement aggregate was 149 million tons. The 2023 annual report disclosed
by Conch Cement shows that the aggregate business is the highlight of the annual report. From the perspective of revenue growth, Conch Cement Aggregate and Machine-made Sand achieved revenue of 3.864 billion yuan in 2023, a substantial increase of 73.32% over the same period last year. From the perspective of gross profit rate, aggregate and machine-made sand still maintain a gross profit rate of 48.32%, which is the highest among all products.
For some enterprises, the "life buoy" effect of aggregate business is more obvious.
Taking a large cement enterprise as an example, the company sold about 60 million tons of aggregate last year, with a gross profit of about 35 yuan per ton of aggregate, and a comprehensive gross profit of about 2.1 billion yuan last year. In 2023, the company's overall performance suffered a slight loss, so you can imagine how much the aggregate business has played a role in reducing losses.
However, with the downturn of the real estate industry and the slowdown of infrastructure construction, the problem of oversupply in the saturated aggregate market is becoming more and more serious. Data show that in 2023, 14.973 billion tons of sand and gravel aggregates were used in concrete, cement products and similar products nationwide, down 2.29% from the same period last year. On
the supply side, in 2022, there were 748 transactions of sand and gravel mining rights in China, with a total resource reserve of 23.713 billion tons. In 2023, there were 939 transactions of sand and gravel mining rights in China, with a total resource reserve of 25.476 billion tons. Affected
by the decline in demand and the increase in supply, the overall downward trend of aggregate prices in recent years is obvious. Since
2021, the demand for sand and gravel in China has been weak, but the production capacity of sand and gravel has been continuously released, resulting in a continuous decline in the price of sand and gravel. As of April 11, 2024, the National Gravel Price Index (CSPI) closed at 83.58 points, down 0.02% annually and 4.04% year-on-year. The National Machine-made Sand Price Index (MSPI) closed at 87.08 points, down 0.05% from the previous month and 7.43% from the previous year.
Guangdong sand and gravel industry insiders told China Cement Network that demand is down, cement and gravel are the same, the only slightly better place may be that sand and gravel will not fall to the cost line.
Aggregate business is a temporary "life-saving straw" for the cement industry, not a long-term solution. In order to really get out of the predicament, cement enterprises need to maintain the steady development of the main cement industry, at the same time, based on the long-term, to seek a diversified sustainable development model.
