Displaying items by tag: China Resources Cement
China: China Resources Cement has appointed Tan Ying as its chief financial officer.
Tan, aged 45 years, joined China Resources Group in 2010 and has worked as the Assistant Controller, the Deputy Controller and the Deputy General Manager of the Finance Department. She holds a bachelor’s degree in economics from the China Institute of Finance and Banking and a master’s degree in business from the University of Sydney in Australia. She holds over 20 years of experience in finance, banking and corporate management.
China Resources Cement’s profit drops in 2021
21 March 2022China: China Resources Cement’s profit was US$993m in 2021, down by 13% year-on-year from 2020 levels. Its cost of sales grew by 22% to US$3.81bn from US$3.12bn. The group noted that the average cost of coal increased by 54% in 2021. It also pointed out that infrastructure investment growth slowed down in 2021. The company increased its turnover for the year by 9.7% to US$5.62bn. Sales volumes of cement and clinker fell by 7% to 81.3Mt and 7% to 3.3Mt respectively. Concrete sales volumes grew by 11% to 14.8Mm3.
During 2021 the group started construction of a second clinker production line and two cement grinding lines at its plant in Wuxuan, Guangxi. Once the upgrades are completed the plant will have a total cement and clinker capacities of 2.4Mt/yr and 1.4Mt/yr respectively. The group also acquired a 51% stake in Hunan Liangtian Cement in January 2022 to enter into the market in Chenzhou, Hunan. This company has cement and clinker production capacities of 1.6Mt/yr and 2Mt/yr respectively. An ongoing upgrade will increase the cement production capacity of 2.1Mt/yr. In March 2022 it sold its 72% stake in Shanxi China Resources Fulong Cement to Tangshan Jidong Cement to enable it to leave the northern market.
China Resources Cement has also been growing its co-processing capabilities in 2021. At the end of the year it reported 10 co-processing projects with a total capacity of 1.7Mt/yr. The projects, mostly based in Guangxi and Yunnan provinces, process municipal solid waste, urban sludge and industrial waste.
CO2 emissions by the Chinese cement sector
01 December 2021Holcim has announced today that it has concluded the sale of its 75% stake of its Zambian business to Huaxin Cement. Meanwhile, in Tanzania last week, Huaxin Cement officially commissioned a cement grinding line at its Tanzanian Maweni Limestone plant. China produces about half the world’s cement and some its producers are expanding overseas as domestic growth dwindles. These actions and others place increased scrutiny on sustainability issues for Chinese cement producers. Readers therefore may be interested to note the publication last week of a list of the 100 largest Chinese corporate emitters of CO2 in 2020.
The Chinese Cement Association (CCA) website carries some highlights on the work by from the cement sector’s perspective. China Venture Carbon and Caixin compiled the list of publicly listed companies using a mixture of freely available data such as sustainability reports, by adjusting public data or by making estimates. The companies covered released 4.42Bnt of CO2 in 2020 or 45% of the Chinese total. The 15 cement firms in the top 100 were responsible for 893Mt of CO2 or around 9% of the national total. This ratio is in keeping with the usual 5 – 10% share of global CO2 emissions attributed to cement production.
Graph 1: Global gross CO2 emissions by large cement companies in 2020. Source: China Venture Carbon/ Caixin, corporate sustainability reports. Note: Includes all reported direct and indirect emissions for all company business lines.
Many of the Chinese cement companies already release sustainability data each year so this data isn’t exactly new. Yet seeing it all in one place like this is illuminating. Unsurprisingly, on the cement side the ranking is a list of producers ordered roughly by production capacity. The world’s biggest cement producer CNBM is also the cement company that emits the most CO2. It released 255Mt of CO2 in 2020. If it were a country, for example, it would be around the 20th largest emitter in the world with a similar output to France or Thailand. In China CNBM is then followed by Anhui Conch, BBMG, Tangshan Jidong Cement and China Resources Cement (CRC).
Graph 1 above also includes the total gross CO2 emissions for other large cement producers outside of China in 2020 for comparison. These figures are estimates compiled from company sustainability reports and they attempt to cover all direct and indirect emissions across all business lines not just cement. Similar to the Chinese list, generally, the less CO2 a cement company emits on this graph the less cement it produces. It is also worth noting that 2020 was an unusual year given the outbreak of the coronavirus pandemic. Generally this reduced global manufacturing output but there was wide regional variation.
The other interesting point to note from the China Venture Carbon-Caixin project is that they re-ranked their list by carbon emission intensity, measured as emissions as a proportion of revenue. This totally changes the ordering. Where before the 15 cement companies were fairly evenly spaced out amongst power generators, coal producers and petrochemical companies, now all of them are in the top 50. As the CCA notes in its commentary, “The emission intensity of electricity and cement is much higher than that of other industries. The top 30 companies in terms of carbon emission intensity are almost all power and cement companies.” Whilst most of these companies are probably safe for the time being, given their size, what this might mean for smaller Chinese cement companies with high emission intensity in light of the Chinese government’s energy efficiency drives might be seen as worrying.
Promoting gross CO2 emissions by cement producers is generally avoided by cement producers because it makes them look bad! It prompts an argument with the environmental lobby and doesn’t recognise the essential nature of cementitious building products to society. However, to their credit producers are publishing the data. The preferred metric for the non-Chinese multinationals is specific emissions per tonne of cement as this better shows the hard-work made to reduce emissions. However, this risks a credibility gap from the outside world, if specific emissions go down but total emissions keep rising each year. In the meantime though the more data the better from China and everywhere else.
China Resources Cement to buy new head office in Shenzhen
24 November 2021China: China Resources Cement has agreed to buy new head office, with an area of 26,700m2, in Shenzhen from its real estate subsidiary China Resources Shenzhen for US$126m. It consists of 91 units in the Runqi Technology Mansion in Shenzhen’s Louhu district. The property will be used by another subsidiary, CR Cement Investments, as its new headquarters. The group says that it wants to use the deal as a showcase of a ‘successful’ high profile transaction in the Shenzhen market to boost sales of other projects.
China Resources Cement increases turnover as profit falls in first nine months of 2021
25 October 2021China: China Resources Cement’s consolidated turnover was US$3.96bn in the first nine months of 2021, up by 13% year-on-year. ET Net News has reported that the company saw its net profit fall by 28% to US$683m.
China: China Resources Cement recorded a consolidated turnover of US$2.59bn in the first half of 2021, up by 19% year-on-year from US$2.17bn in the first half of 2020. Cement and clinker sales volumes increased by 16% to 41.6Mt and 30% to 7.04Mm3 respectively. Its profit attributable to owners of the company rose by 13% to US$467m from US$538m. Its capital expenditure (CAPEX) for the half totalled US$159m. It plans to spend US$540m in the full year in 2021.
China: China Resources Cement has appointed Jing Shiqing as its vice president.
Jing joined China Resources Cement in 2003 working in various production technology, human resources management and administration management. He became the Deputy General Manager of the Human Resources Department in 2018 and became a non-executive director of the company in the same year. Jing holds a bachelor's degree in engineering from the Changsha University of Science and Technology and a master's degree of business administration from the Nanjing University.
China: China Resources Cement’s turnover grew by 51% year-on-year to US$1.1bn in the first quarter of 2021 from US$720m in the same period in 2020. Its profit rose by 16% to US$166m from US$143m. Sales volumes of cement increased by 65% to 18.4Mt and concrete by 80% to 2.87Mm3.
Update on China: March 2021
31 March 2021Financial results for 2020 from the major Chinese cement companies are now out, making it time for a recap. Firstly, information from the China Cement Association (CCA) is worth looking at. The country had a cement production capacity of 1.83Bnt/yr in 2020. For an idea of the current pace of industry growth, 26 new integrated production lines were built in 2020 with a clinker production capacity of just under 40Mt/yr.
This is as one might expect from the world’s biggest cement market. However, the CCA also revealed that the country has over 3400 domestic cement companies, of which two thirds are independent cement grinding companies. Most of these were reportedly created during the late 2000s as dry kilns started to predominate. The CCA is concerned with the quality of the cement some of these companies produce and the lack of order in this part of the market such as regional imbalances. This suggests that the government’s attempts to consolidate the cement industry as a whole had led to the independent companies heading down the supply chain. It also raises the possibility that the government-led consolidation drive may move to grinding next. One news story to remember here is that in February 2021 the CCA called for its industry to respect competition laws following a government investigation. Later in the month it emerged that eight cement companies in Shandong Province had been fined US$35m for price fixing in a sophisticated cartel whereby the perpetrators went as far arranging a formal price management committee to regulate the market.
The CCA described 2020 as a year of sudden decline, rapid recovery and stability. Coronavirus hit cement output in the first quarter of 2020 leading to unprecedented monthly year-on-year declines before it bounced right back in a classic ‘V’ shaped recovery pattern. Despite the pandemic and bad weather later in the year, annual output rose by 2% year-on-year to 2.37Bnt in 2020 from 2.32Bnt in 2019. This has carried on into 2021 with a 61% increase in January and February 2021 to 241Mt from 150Mt in the same period in 2020. That’s not surprising given that China was suffering from the pandemic in these months in 2020 but the growth also suggests that the industry may have gone past stability and is growing beyond simply compensating for lost ground.
Graph 1: Year-on-year change in cement output in China, January 2010 - February 2021. Source: National Bureau of Statistics of China. Note that accumulated data is issued for January and February each year so these months show a mean figure.
Chart 2: Annual cement production growth by Province in 2020. Source: China Cement Association.
Chart 2 above shows cement production in 2020 from a provincial perspective. Note the sharp decline, more than 10% year-on-year, in Hubei Province (shown in dark green). Its capital Wuhan is where the first documented outbreak of coronavirus took place followed by a severe lockdown. Zooming further out, China’s clinker imports grew by 47% year-on-year to 33.4Mt in 2020. This is the third consecutive year of import growth, according to the CCA. The leading sources were Vietnam (59%), Indonesia (10%), Thailand (10%) and Japan (8%). China has become the main export destination for South East Asian cement producers and Chinese imports are expected to continue growing in 2021.
Graph 2: Revenue of large Chinese cement producers in 2020 and 2019. Source: Company reports.
Moving to the financial figures from the larger Chinese cement producers, CNBM and Anhui Conch remain the world’s two largest cement producing companies by revenue, beating multinational peers such as CRH, LafargeHolcim and HeidelbergCement. Anhui Conch appeared to be one of the winners in 2020 and Huaxin Cement appeared to be one of the losers. This is misleading from a cement perspective because Anhui Conch’s increased revenue actually arose from its businesses selling materials other than clinker and cement products. Its cement sales and cement trading revenue remained stable. On the other hand, Huaxin Cement was based, as it describes, in the epicentre of the epidemic and it then had to contend with flooding along the Yangtze River later in the year. Under these conditions, it is unsurprising that its revenue fell.
CNBM’s cement sales revenue fell by 3% year-on-year to US$19.5bn in 2020 with sales from its new materials and engineering compensating. Anhui Conch noted falling product prices in 2020 to varying degrees in most of the different regions of China except for the south. CNBM broadly agreed with this assessment in its financial results. Anhui Conch also reported that its export sales volumes and revenue fell by 51% and 45% year-on-year respectively due to the effects of coronavirus in overseas markets. The last point is interesting given that China increasingly appears in lists of major cement and clinker exporters to different countries. This seems to be more through the sheer size of the domestic sector rather than any concerted efforts at targeting exports.
One major story on CNBM over the last 15 months has been its drive to further consolidate its subsidiaries. In early March 2021 it said it was intending to increase its stake in Tianshan Cement to 88% from 46% and other related transactions. This followed the announcement of restructuring plans in mid-2020 whereby subsidiary Tianshan Cement would take control of China United Cement, North Cement, Sinoma Cement, South Cement, Southwest Cement and CNBM Investment. The move was expected to significantly increase operational efficiency of its constituent cement companies as they would be able to start acting in a more coordinated manner and address ‘fundamental’ issues with production overcapacity nationally.
In summary, the Chinese cement market appears to have more than compensated for the shocks it faced in 2020 with growth in January and February 2021 surpassing the depression in early 2020. Market consolidation is continuing, notably with CNBM’s efforts to better control the world’s largest cement producing company. Alongside this the CCA may be starting to suggest that rationalisation efforts previously focused on integrated plants should perhaps be now looking at the more independent grinding sector. The government continues to tighten regulations on new production capacity and is in the process of introducing new rules increasing the ratio of old lines that have to be shut down before new ones can be built. Finally, China introduced its interim national emissions trading scheme in February 2021, which has large implications for the cement sector in the future, even if the current price lags well behind Europe at present.
China: China Resources Cement’s turnover rose by 3% year-on-year to US$5.16bn in 2020 from US$5.02bn in 2019. Its profit attributable to shareholders was US$1.15bn, up by 4% year-on-year. Sales volumes of cement grew by 6% to 87.3Mt from 82.5Mt. Volumes increased in Guangdong, Guangxi, Yunnan and Guizhou but decreased in Fujian, Hainan and Shanxi.
In February 2020 the cement producer completed the construction of one 1.4Mt/yr clinker production line and two cement grinding lines with a combined cement production capacity of 2Mt/yr in Anshun City, Guizhou. Also in 2020 the group commissioned one new concrete batching plant and shut down two others.
During the reporting year the Group co-processed 183,100t of municipal solid waste, 52,800t of urban sludge with an 80% moisture content and 6100t of hazardous industrial waste. It operates seven co-processing projects with four more either under trial operation or under construction. It also said that it had been following policies for carbon emissions with trial activities conducted in preparation for a future unification of national carbon market. Eight company plants in Guangdong and five in Fujian were reported as having settled their carbon credit quota for 2019.
Other operations of note include the start of Phase 1 of the group’s intelligent manufacturing pilot project at a unit in Tianyang in conjunction with Siemens. The group has also commenced trial operation of its in-house developed intelligent manufacturing system at a cement plant in Pingnan, Guangxi. The project interacts with system quality management systems and advanced kiln controls. The next step will be to use the quality management system at cement plants in Shangsi and Guigang, Guangxi. A so-called ‘lighthouse plant’ is also planned to work with environment, health and safety, operation, production, equipment, quality, mines and logistics at a cement plant in Fengkai County, Guangdong. The group’s platform for sharing auxiliary materials and spare parts was launched in Fujian in April 2020 and has since been rolled out to sites in Guangdong, Guangxi and Hainan. Finally, the company’s ‘Smart Card’ logistics system has put into operation at cement plants in Fengkai, Huizhou, Luoding and Dongguan, Guangdong and has been operating at 25 cement production plants by the end of 2020.