"For 2024, we believe that the overall market pressure is still high, but the downward trend will be weakened." Looking ahead to the cement industry in 2024, Li Kunming, an analyst at the Cement Big Data Research Institute of China Cement Network, said bluntly.
After decades of high-speed development and high platform period, the cement industry has revealed a clear "chill" in the past few years due to factors such as overcapacity, low demand and cost pressure. The net profit of many leading enterprises has declined to varying degrees, or even lost money. Can the supply and demand of cement industry improve in
2024? Can prices be boosted? How will enterprises break the situation? Li Kunming said: "Next , cement prices will rebound to a certain extent, but due to serious overcapacity constraints, the rising space may be limited. It is expected that the average price of cement in 2024 will continue to move down compared with 2023."
At present, overcapacity has become the consensus of the cement industry. "The root of the current predicament of the cement industry lies in overcapacity, and the industry should take effective ways to resolve the problem of overcapacity." Yang Dan, deputy party secretary and general manager of China Gezhouba Cement Company, said. In the view of Zhang Xiaohua, chairman and general manager of Red Lion Holding Group, the cement industry should shift from "de-production" to "de-production" in the face of the aggravation of overcapacity.
As far as cement production is concerned, the pace of the industry has slowed down. In 2023, 16 new clinker production lines were put into operation in the cement industry, involving a total capacity of 23.16 million tons, accounting for only 43.5% of the planned production capacity. According to the tracking of China Cement Network Cement Big Data Research Institute, in 2024, 27 clinker lines with a capacity of over 40 million tons are planned to be put into operation, plus some that should have been put into operation in 2023, more are actually planned to be put into operation. However, in view of the fact that the industry is still under great pressure in 2024, it is expected that the release progress of new production capacity will be less than expected.
"On the supply side in 2024, production capacity is still less than expected, and supply pressure is controllable as a whole." Li Kunming said. Nevertheless, the contradiction between supply and demand in the downward period of demand is prominent, and the problem of overcapacity is still serious.
Zhang Xiaohua believes that "rational capacity removal" may be an important strategy for the cement industry to get out of the predicament in the future, even if the capacity withdrawers withdraw in return, which can not only improve the concentration but also make the industry achieve good benefits. However, from the current point of view, the possibility of the industry through competition to capacity is far greater than rational capacity. According
to Zou Weibin, senior consultant of China Cement Network, the winter of the cement industry will not last. Next, it is nothing more than eliminating some backward production capacity and enterprises in some ways, and then re-forming a new industry situation, which is also a virtuous circle.
Zou Weibin said that in 2023, the cement industry has issued a number of industry standards. For example, GB 175-2023 "General Portland Cement", "Opinions on Promoting the Implementation of Ultra-low Emission in Cement Industry", "Benchmarking Level and Benchmark Level of Energy Efficiency in Key Industrial Areas (2023 Edition)" and a series of documents to promote "Double Carbon" action. The successive implementation of these policies will eliminate some cement enterprises. "In particular, GB 175-2023 General Portland Cement will be implemented in June 2024, which will certainly enable some enterprises to sell production capacity or withdraw from the industry." He said.
Cement prices may rebound
. "As far as cement prices are concerned, cement prices have reached a relatively low level at present, and many enterprises have a strong willingness to raise prices. Under the background of basically stable demand, it is unlikely that cement prices will weaken substantially." Speaking of cement prices, Li Kunming said that from the quarterly trend, the year-on-year decline in cement prices will gradually narrow, and there is a possibility of turning positive in the second half of the year.
At present, the off-season characteristics of cement market are obvious, and the market is weak. The national cement price index of China Cement Net shows that on January 15, 2024, the national cement price index was 112.08, down 18.45% year-on-year; the national clinker price index was 112.89, down 18.95% year-on-year.
"Near the end of the year, construction projects decreased and demand continued to be weak." According to the weekly monitoring report jointly released by China Cement Network and Tangsong Big Data, the northern market is mostly in the state of off-peak kiln shutdown, and most of the construction sites are shut down; the terminal demand in the southern region is general, the sales volume is low, and some areas are affected by rainy weather, so the start-up is poor. Generally speaking, the off-season characteristics are obvious, and the national cement price is weak.
As far as the demand side of the whole year of 2024 is concerned, it is expected that the drag of real estate will be weakened and the infrastructure will still be pulled. In 2024, the demand for cement will decline slightly and the decline will continue to narrow. The annual cement output will be about 2.01 billion tons, down by about 2% compared with the same period last year. It is worth noting that under the background of steady growth, the growth rate of infrastructure in 2024 is expected to be slightly faster than that in 2023. Some new projects will enter the civil construction period in 2024, boosting the demand for cement, and the pull of infrastructure on the demand for cement is still increasing.
Cement enterprises also showed some confidence in the development of the whole year. For example, the business target of Tapai Group in 2024 is to produce and sell more than 17.5 million tons of cement (including clinker) and strive to achieve a net profit of more than 600 million yuan. "At present, the macroeconomic recovery is good, the national infrastructure investment has maintained a certain growth, and the cement industry will be in a period of adjustment with both opportunities and challenges in the future." Jidong Cement said. "There are difficulties and challenges, but more of them are bright prospects and firm confidence," said Shangfeng Cement .
Tianfeng Securities pointed out in the research report that cement is expected to benefit from the improvement of follow-up infrastructure and real estate demand, and the supply pattern is expected to continue to optimize in the medium and long term.
Actively exploring new growth points
In the face of the challenging industry situation, cement enterprises are also accelerating their transformation, with a view to seeking new growth points by extending the industrial chain and investing in strategic emerging industries on the basis of consolidating the main cement industry. These layouts are steadily landing and gradually showing results.
For example, on January 5, Jinyu Group said that recently, six photovoltaic power generation projects of Jinyu Jidong Cement were successfully connected to the grid, with an estimated annual total power generation of 17 million kilowatt-hours, a total saving of more than 5200 tons of standard coal and a total emission reduction of more than 14000 tons of carbon dioxide. It is reported that in 2023, Jinyu Jidong Cement made an overall plan for the new energy business, and successively started the construction of 12 photovoltaic power generation projects, with a total installed capacity of 46 MW.
Look at the conch cement . At the end of December 2023, the world's first 10 MW/80 MWh carbon dioxide energy storage demonstration system was successfully commissioned and connected to the grid. The system takes Wuhu Conch Cement Plant as the application scenario. Conch Cement said that the company will accelerate the transformation and development of the industry, take effective investment as the guide, strengthen the main cement industry and the upstream and downstream industrial chain, give full play to the advantages of industrial synergy; at the same time, strengthen technological innovation, promote the development of environmental protection, new energy and digital industry, empower the main cement industry and enhance the competitiveness of the industry.
"The company will insist on making its main business better and stronger, and constantly improve its own industrial chain." Jidong Cement said that the company has been strictly controlling capital expenditure in the past two years, and will fully study and judge the industry and market situation in the future, and invest capital expenditure according to its own development plan and financial situation, prudently and reasonably select investment targets with high asset quality, resource advantages and obvious regional synergy effect. It is Shangfeng Cement that frequently "sells"
on the investment side. At the end of December 2023, Shangfeng Cement disclosed again that it planned to invest in Fushi Science and Technology and Hengchuan Science and Technology with a joint venture private equity fund. It is understood that Fushi Science and Technology is committed to the research and development of lidar core chips and a variety of machine vision solutions, while Hengchuan Science and Technology focuses on the research and development and production of high-performance lithium-ion battery diaphragms.
When investors asked Shangfeng Cement "how much economic value has been created by the two-wing investment projects", Shangfeng Cement said that the company's two-wing business reflects excellent performance contribution, and the total operating profit of the company's aggregate and environmental protection business in the first three quarters of 2023 has reached about 40%; The new energy business has also begun to contribute rapidly to the comprehensive income of carbon reduction and cost reduction, and the equity investment has also performed well.
"The rapid rise of the two wings and the strong chain of the main industry complement each other, reflecting the landing of the company's low-carbon and high-quality development strategy, and the promotion of comprehensive competitiveness and the sustained growth of comprehensive value also reflect the return to long-term investors." Shangfeng Cement related personages said so.
