Displaying items by tag: China

It won’t be a surprise to most readers that the Chinese cement industry continued to struggle in the first half of 2024. The China Cement Association (CCA) summarised the situation as a "continuous decline in demand, low price fluctuations and continuous losses in the industry." Cement output fell year-on-year and four of the six large cement companies featured in this article reported falls in revenue. The CCA estimated that the sector as a whole lost about US$140m in the first half of the year.

Graph 1: Cement output in China, 2019 to first half of 2024. Source: National Bureau of Statistics of China.

Data from the National Bureau of Statistics of China shows that cement output fell by 13% to 855Mt in the first half of 2024 from 980Mt in the same period in 2023. That’s a fall of more than 100Mt and around the annual cement production capacity of the US! Analysis by the CCA reckons that the first half of 2024 saw the lowest cement production since 2011. It blamed the situation on the failure of the real estate market to stabilise and a slowdown in infrastructure investment. Geographically the areas with the biggest declines were the Northeast, Northwest and Central and South regions. Those provinces with the smallest declines were Tibet, Jiangsu, Yunnan and Hebei. However, the CCA was keen to point out that staggered production, through initiatives such as peak shifting, took place in the second quarter of 2024, the producers’ cement inventory fell and cement prices rallied somewhat in June 2024.

Graph 2: Sales revenue from selected Chinese cement producers. Source: Company financial reports. Note: For CNBM Basic building materials segment revenue shown only.

CNBM says that it is the largest cement producer in the world. However, Anhui Conch appears to have sold more cement and clinker than CNBM did… in the first half of 2024 at least. Anhui Conch sold 126Mt of cement and clinker, a drop of 3% year-on-year, compared to 114Mt by CNBM, a drop of 20%. Anhui Conch’s sales revenue and net profit fell by 30% to US$6.4bn and 48% to US$490m respectively. The sales revenue from CNBM’s Basic Building Materials segment, its division that manufactures cement, deceased by 31% to US$5.73bn. Tangshan Jidong and CRC reported similar situations to their larger peers with declines in revenue and profit.

Huaxin Cement and Taiwan Cement both managed to raise revenue, but this was mostly due to their businesses outside of China. Huaxin Cement increased its operating income by 3% to US$2.3bn, with sales volumes of cement falling at home but growing abroad. Indeed, its domestic operating income fell by 32% to US$716m, a similar rate of decline to the other companies featured here. By comparison, the operating income from its overseas cement business rose by 55% to US$502m. Combined with a boost in aggregate sales volumes, this helped to stabilise the company’s financial performance. Taiwan Cement, meanwhile, completed its acquisition of Cimpor Portugal in March 2024 giving it a majority stake in OYAK’s cement business in Türkiye. Subsequently, its revenue in the second quarter of 2024 shot up year-on-year.

CNBM hit the nail on the head in its half-year report when it said: “The overcapacity has not been fundamentally resolved.” China is a big country with lots of regional variation but when cement plants stopped manufacturing cement in the second quarter of 2024 the price improved. Funny that should happen! The government is slowly making adjustments to the real estate market and other mechanisms, including the China national emissions trading system, are due to be applied to cement plants soon. Yet, until that overcapacity is addressed or unless some market fundamentals change then expect to see more of the same in China in the near future.

China: The sales revenue from CNBM’s cement manufacturing division fell by 31% year-on-year to US$5.70bn in the first half of 2024 from US$8.25bn in the same period in 2023. The group blamed the decline on falling sales volumes of cement and aggregates and decreasing prices of heavy building materials. Its Basic Building Materials segment reported an operating loss of US$261m from an operating profit of US$348m previously. The division sold 114Mt of cement and clinker, a fall of 20% from 142Mt.

In its interim report the group said that its Basic Building Materials segment had been “…affected by a combination of factors, such as the in-depth adjustment of the real estate and funding constraints for infrastructure projects.” Subsequently the cement industry had faced low demand and prices. It added that market overcapacity had not been resolved.

Overall the group’s revenue and gross profit fell by 19% to US$11.7bn and by 25% to US$1.86bn respectively. However, income from its Engineering Technology Services segment rose by 2% to US$2.89bn. This division includes cement plant and equipment supplier Sinoma International. The group noted that global engineering and construction demand remained stable in the first half of 2024.

Cambodia: China-based Jiangxi Provincial Building Material Group plans to establish a cement plant in Cambodia. Company president Wensheng Chen led a delegation on 29 August 2024 to assess investment opportunities, meeting with officials from the Council for the Development of Cambodia (CDC).

Chea Vuthy, secretary-general of the CDC’s Cambodia Investment Board (CIB), said "The CIB’s management and officials look forward to providing all possible arrangements for the company to invest in Cambodia."

China: Anhui Conch Cement recorded a decline in its net profit of 49% year-on-year in the first half of 2024, Reuters has reported. The group’s Building Materials Industry business reported a 21% year-on-year decline in its sales to US$4.71bn. Its Cement business also recorded declining sales, by 23% to US$3.87bn.

Kyrgyzstan: 174,800t of cement entered Kyrgyzstan in the first half of 2024, more than double first-half 2023 import volumes of 83,200t. Neighbouring Kazakhstan supplied 152,000t (87%) of the total, according to data from the Kyrgyz National Statistical Committee. Central Asia News has reported that other imports originated from China, Iran and Uzbekistan.

Kyrgyzstan’s first-half cement production declined by 2% year-on-year in the period under review, to 1.3Mt. However, it grew by 10% year-on-year in June 2024. The country exported 190,000t of cement throughout the first half of 2024, all of it to Uzbekistan, down by 21% from first-half 2023 levels.

A couple of stories have popped up this week regarding restrictions on cement imports. First, authorities in Taiwan have launched an anti-dumping investigation into Vietnamese cement. Secondly, and perhaps more surprisingly given its growing economy, the authorities in Kyrgyzstan are planning to ban overland imports of cement from within Central Asia. More on that later…

First, to the Far East, where Taiwan’s Trade Remedies Authority has launched an anti-dumping investigation into cement and clinker imported from Vietnam. It will assess imports covering the year from 1 July 2023 to 30 June 2024 and target seven specific Vietnamese cement producers among others. The Vietnamese companies are mandatory respondents – they will be compelled to answer investigators’ questions.

Vietnamese cement has long been among the cheapest in the region due to the country’s drive to hit production targets, rather than simply meeting demand. The situation has resulted in a vast amount of cement available for export. This, coupled to Vietnam’s long, indented coastline, makes it easy to ship cement overseas.

Even with export volumes falling by 1.2% year-on-year to 31.3Mt in 2023, around a third of Vietnam’s capacity, this is a massive volume of cement - and it’s only getting cheaper. The average export value of Vietnamese cement and clinker fell from US$46-48/t at the start of 2023 to just US$31-32/t in May 2024, a decline of 30-35%. These changes have been due, in part, to an increase in tax on clinker exports from 5% to 10% on 1 January 2023 and an anti-dumping investigation launched by the Philippines in March 2023. Falling prices and volumes represent a ‘double-whammy’ for producers, several of which have announced that they made losses in the first half of 2024. Vicem’s top management said that challenges also arose at home due to a reduced demand following limited civil engineering projects and a stagnant real estate market.

It is easy to see why Taiwanese cement producers may feel threatened by the prospect of greater volumes of cheap cement on their doorstep. Taiwan only made 4.9Mt/yr of cement in the first half of 2024. With domestic prices in the region of US$65-70/t according to Cement Network, this provides a very attractive margin of US$33-39/t for Vietnamese producers to export to Taiwan. It will be interesting to see how far the country’s authorities are willing to go to protect the country’s producers and whether any anti-dumping policies lead to further falls in the landed volumes of Vietnamese cement.

Meanwhile, 4600km to the west, Kyrgyzstan has announced that it will enforce a six-month road import ban on several types of cement including Portland cement, alumina cement and slag cement. The ban, affecting both cement and clinker, will take effect on 1 October 2024 and last for six months. According to the State Statistical Committee of Kyrgyzstan, the country saw a 76% year-on-year increase in cement imports – mainly from Iran, Kazakhstan, China and Uzbekistan - between January 2024 and May 2024. The total import volume over the five months was 125,737t. For a country that made just 1Mt over the same period, this is a major change.

The overland import ban is more of a surprise than the Taiwan / Vietnam situation, as Kyrgyzstan recently reported that the North of the country was experiencing a ‘construction boom’ and cement shortages. However, two new plants due to start production in the coming months could help the country out... unless it too would like to export its newly-developed cement production capacity.

And here we arrive at a ‘classic’ impasse. From Pakistani cement in South Africa, to price arguments in West Africa, import bans in Central Asia and Vietnamese cement in Philippines and Taiwan, more and more exporters are finding that their markets are already self-sufficient in cement, with the US perhaps the notable exception. Soon there will be nowhere left for cement to be exported to. Are we at peak cement?

China: Eaton and Langham hotels have collaborated with Green Island Cement to transform 8t of oyster shells into a sustainable cement alternative, sourcing 80% of the required limestone for cement.

Amie Lai Gor, general manager of sustainability at Great Eagle Holdings, parent company of the two hotels, said "We brought together like-minded partners to repurpose oyster shells as a sustainable raw material alternative for cement production. Our goal is to encourage more hotels and restaurants to participate, diverting more discarded oyster shells from landfills through upcycling.”

Raymond Cheung Wai-man, division manager at Green Island Cement, highlighted past challenges of separating the shells from impurities like mud and residual meat, which initially deterred the project.

Lai Gor added that future plans include working with local universities to assess the carbon reduction potential of substituting limestone with oyster shells in cement production. Despite the higher costs—tenfold compared to traditional limestone—Cheung believes that scaling up could significantly lower expenses.

China: Shanshui Cement has appointed Teng Yongjun as its chair.

Teng, aged 54 years, worked as the general manager of the Jinan Public Transportation Group from 2023 to July 2024 and he was a director for the Jinan Financial Investment Fund from 2020 to early 2023. Before this he spent his career working in government roles, mostly in the Huaiyin District of Jinan, Shandong Province. He is a graduate in county and rural economy management from the Shandong Economic Institute and holds a degree in economy management from the Shandong Province People’s Party University.

Namibia: The Namibian Competition Commission (NaCC) has imposed a US$269m fine on two companies for completing a merger without prior approval. The acquisition of Hong Xiang Holdings’ shares by Wang Zhongke from Fan Qingmei led to the companies being fined after an investigation found that the merger would create a monopoly in the cement market. NaCC spokesperson Dina Gowases stated that the merger failed to meet the notification requirements under the Competition Act, aimed at safeguarding competitive markets crucial for the construction industry and the national economy. The settlement also requires the companies to implement a competition law compliance programme in Namibia.

China: China Energy Engineering (CEEC) has announced the completion of reliability testing for ‘CarbonBox’, Asia's ‘largest direct air capture device by capacity’, according to the company. Developed jointly by a CEEC subsidiary and Shanghai Jiao Tong University, CarbonBox can reportedly capture over 600t/yr of CO₂. This technology will help to contribute to the production of green methanol and aviation fuel. The device aims to reduce the traditionally high energy consumption and costs associated with direct air capture devices.

A recent report by the Administrative Centre for China’s Agenda 21 and two other institutes revealed that China is advancing in CCUS deployment, with nearly 100 planned and operational projects.