Displaying items by tag: Anhui Conch

China: Anhui Conch and China Resources Cement have entered into a strategic co-operation agreement. According to the agreement Anhui Conch shall assist the China Resources Cement in the construction and the upgrade of its cement plants. Both parties intend to build a knowledge transfer system to allow their experience in production, technology and business management to be shared. They also have agreed to jointly promote the sustainable and healthy development of the cement industry in China and explore the possibilities of co-operation in China and overseas.

Indonesia: A joint venture between the State Development and Investment Corp (SDIC) and Anhui Conch Cement Company will start production at its 1.5Mt/yr plant in Manokwari, West Papua in July 2016. Hu Xiaohong, PT Conch-SDIC Papua Cement Indonesia’s head of general affairs, said that the first phase of the US$400m plant was nearly complete, in comments reported upon by the Jakarta Post.

China: Anhui Conch Cement’s net profit has dropped by 45% year-on-year to US$123m in the first quarter of 2016 from US$233m in the same period in 2015. Its revenue fell by 5.5% to US$1.63bn from US$1.73bn. It attributed the decreases in profit and sales revenue to falling prices.

China: Anhui Conch Cement has reported that its net profit fell by 30% year-on-year to US$1.16bn in 2015. Its revenue fell by 16% to US$7.63bn. It blamed the poor financial results on slower fixed-asset investment and a slowing housing market limiting the demand of cement and pushing prices down.

The producer's cement output grew by 2% to 224Mt in 2015. Its cement production capacity reached 290Mt/yr by the end of 2015.

China: Anhui Conch Cement has confirmed that its subsidiary in Shaanxi province, Liquan Conch Cement, has suspended its production. The decision follows Shaanxi Provincial Government legislation requiring all cement and clinker producers to adopt off-peak production. Most producers are required to stop production from 15 December 2015 until 15 March 2016 with a few exceptions. 25 cement companies, with a total of 37 clinker production lines, are based in the province.

Liquan Conch has a cement production capacity of 4.4Mt/yr, contributing 1.5% to the total production capacity of Anhui Conch. It held audited net assets worth US$96.3m at the end of 2014, representing 0.9% of Anhui Conch’s total. Anhui Conch do not expect the temporary suspension of production at Liquan Conch to adversely affect its operating results. Liquan Conch was built in 2009.

China: Anhui Conch has agreed to more than double its stake in smaller rival West China Cement for US$592m amid consolidation in an industry suffering from overcapacity.

Conch International Holdings (HK) Ltd, a wholly owned unit of Anhui Conch, plans to increase its holding in Shaanxi-based West China to 51.57% from the current 21.17%. If the transaction goes through, Anhui Conch will make a mandatory cash offer for all of the shares of West China that it doesn't already own.

West China agreed to buy four units of Anhui Conch and will issue shares in itself to pay for the purchase. West China will issue 3.403 billion shares at US$0.17 each for a total of US$592m. The issuance will raise Anhui Conch's stake in West China. Should Anhui Conch be required to make an offer for the rest of West China, it will pay US$0.22 in cash for each share.

China: Anhui Conch Cement's operating profit fell by 31% year-on-year to US$1.1bn in the first nine months of 2015 as weak demand and price competition took a toll. Its revenue dropped by 13% to US$5.96bn.

Chinese demand for cement has languished following a rush of infrastructure building. Domestic cement production shrank by about 5% year-on-year to roughly 1.7Bnt during the first nine months of 2015, according to the National Bureau of Statistics.

The Chinese stock market volatility this week has not been a surprise for the cement industry. The question for both the local cement industry and the wider economy is how the current economic jitters are being managed. Are we witnessing the long expected hard landing of the Chinese economy or will the state planners been able to dodge it?

Growth in the housing market and infrastructure spending has been falling. The country's cement producers have reduced their production growth as the industry consolidates. First half profits in 2015 have fallen for many Chinese cement producers including China Resources Cement and Asia Cement. Anhui Conch, one of the top three cement producers in the world, reported that its first quarter profits in 2015 fell by 31%.

Chinese cement production figures have always seemed incompatible with other data suggesting incomplete information. For example, the Global Cement Directory 2015 reported China's cement production capacity at 1.48Bnt/yr. At full capacity utilisation this would suggest a national cement consumption of 1057kg/capita, a figure that bears no resemblance to any other country on earth with the exception of petrochemical giants like Saudi Arabia and Qatar. Although, to be fair to China, it's recent economic growth has been unprecedented. Poor reporting, the country's unique state regulated capitalism, language difficulties and other factors may all have contributed to confusion among western analysts.

In mid-August 2015 China devalued the Yuan in its biggest drop in 20 years. It is likely it was a strategy to boost exports to rally markets against a sliding stock market since mid June. At the time of writing the Chinese authorities have now tried cutting interest rates with a similar aim and the markets have rallied.

The effect of a devalued Yuan is relevant due to China's overcapacity in several heavy industries such as a steel and cement. Already European and North American steel bodies have cried out against the threat of fresh Chinese exports undercutting their business. Clinker exports are likely to pose less of a risk given its relative low value and high transport costs. Even so, China exported less than 15Mt in 2013, a tiny portion of its production capacity. Altering the exchange rate might well help that export figure creep up. This would be bad news for local cement producers in coastal areas of East Africa for example. Here, Chinese imports might be harder to resist than, say, southern Asian ones, due to Chinese investment in the region. Recent spats over Chinese cement imports in Kenya and Zimbabwe underline this issue.

More worrying for the wider cement industry will be the risk of Chinese cement plant manufacturers and suppliers further undercutting western firms. Eurocement signed a deal with Sinoma in November 2014 for the Chinese equipment producer to supply three 3Mt/yr production lines for US$93.3m each or just over US$30m per 1Mt of production capacity. Compare this to FLSmidth's charge to a Qatari firm of US$190m in October 2014 to build a 2.24Mt/yr production line or just over US$80m per 1Mt of production capacity. This is not a completely fair comparison due to the plants being in completely different regions, but it gives some idea of the price pressures non-Chinese equipment manufacturers face. In their defence the usual argument is that their equipment is better made. However, cement producers being able to buy even cheaper Chinese kit will not help their plight. Today we report on Dangote Cement signing yet more contracts with Sinoma to build new cement plants in Africa.

The actions of the Chinese financial authorities show that they are trying careful tweaks one-by-one to fix the situation. The real problem though is that, as China transitions from a developing nation into a developed one, broader structural changes to the general economy may be required instead of tweaks. A massively over-producing cement industry is a symptom of this and how the country copes with it is instructive to how it will succeed overall. Bold attempts to consolidate the industry have shown willingness in recent years. Unfortunately the current crisis may artificially prop up an industry that should be reducing in size.

Russia/China: Anhui Conch Cement plans to build a 2Mt/yr capacity cement plant in Ulyanovsk, Volga for Euro274m.

China: According to Reuters, Anhui Conch Cement sold its shares in Xinjiang Qingsong Building Materials and Chemicals Group and Tangshan Jidong Cement Company in the April – June 2015 period for a net profit of US$217m.