
Displaying items by tag: Hebei
CBMI launches calcined clay pilot project in Tangshan
15 January 2025China: CBMI Construction has officially launched a flash calcination clay project in Tangshan, Hebei province. Karen Scrivener, head of the Laboratory of Construction Materials at the School of Engineering at the Ecole polytechnique fédérale de Lausanne (EPFL), attended the event. Scrivener is a prominent researcher and advocate for LC3 (limestone calcined clay cement).
CBMI’s other clay projects around the world as a contractor include the SPL Calcined Clay Project in France, the CIZ Calcined Clay Project (rotary calciner) in the Czech Republic, the Guayaquil Calcined Clay Project in Ecuador and the Ivory Coast Calcined Clay Project (flash calciner).
China: Tangshan Jidong Cement and Xinjiang Tianshan Cement have announced the planned launch of a new joint venture in the cement industry. Reuters News has reported that the new cement producer will have registered capital of US$129m.
Tangshan Jidong Cement and Xinjiang Tianshan Cements' headquarters lie 3000km apart, in Beijing, Hebei Province, and Ürümqi, Xinjiang Province, respectively.
Hebei province to replace 1000 polluting factories before 2026
04 January 2022China: Hebei province will screen out a total of 1000 existing factories for replacement with less-polluting alternatives under the Chinese government’s 14th Five Year Plan, which covers the period up to the end of 2025. The Xinhua News Agency has reported that factories, including cement plants, will undergo upgrades in order to conform to the plan’s emissions restrictions or close down. The province currently has a total of 233 green factories. Under the 13th Five Year Plan, which concluded in 2020, it reduced its installed cement production capacity by 12Mt/yr.
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.
Jidong Group completes IKN cooler installation
15 February 2021China: Germany-based supplier IKN says that its customer Jidong Group has started up a 6200t/day-capacity cooler at its Lincheng cement plant in Hebei province. The supplier also said that installation of another cooler for the cement producer for a new production line was underway and scheduled for completion later in 2021.Jidong Group completes IKN cooler installation
Crazy cement prices in China
11 December 2019In case you’ve missed it there’s been a boom in cement demand in China during the current quarter. Henan province saw a run on cement prices in November 2019 that the local press described as ‘crazy.’ Some companies were issuing price adjustments twice a day, according to the China Cement Association. The article on the CCA’s website also includes a video showing dozens of cement trucks queuing at a mill with the caption ‘all the plants are like this, don’t ask the price any more.’
The CCA’s blamed the situation in Henan on pollution controls on production and a rebound in cement demand. Weather-based pollution controls enacted in late October 2019 shut-down or limited production at 66 of the province’s 72 clinker production lines. Builders were then forced to source cement from neighbouring Shanxi, Hebei and Shaanxi provinces. At the same time demand for cement from real estate and infrastructure sectors picked up in the fourth quarter of 2019. Following advice from the local cement manufacturers’ association, the provincial government relaxed the rules on peak shifting that normally run from November to February in a bid to control the situation. Cement prices in Henan hit a high in mid-to-late November 2019 and have since subsided somewhat.
Nationally, Chinese cement prices hit a high in late November 2019 beating the highest level in 2018 and also setting the highest price since 2011. The key regions driving the increase have been in central and south China, including Guangxi, Guangdong and Henan. One more thing to note here is that peak shifting or seasonal shutdown of production capacity has different dates in different provinces. So, potentially, the situation could repeat itself if unexpected demand continues and provincial governments fail to monitor the situation.
Recently a couple of economic indicators in China have suggested a recovery in infrastructure spending in recent months, supporting increased cement demand. Data from Wind quoted by the Financial Times newspaper suggests that the cement price rose by 15% since September 2019 in large cities. Reinforced steel (rebar) and aggregates prices have increased similarly. At the same time the South China Post newspaper has reported a growth in the Purchasing Managers’ Index (PMI), an indicator of manufacturing activity that could also point to renewed infrastructure spending. Central government is also reported to be taking measures to support provincial infrastructure development.
If true then this may be creating some pretty direct lessons in economic interventionism. The Chinese government appears to be stimulating demand for cement via infrastructure growth while restricting production at the same time. Cement prices have reacted in a ‘crazy’ fashion. The real tension here is between two conflicting desires: protecting the economy and protecting the environment. The state planners may be grappling with this one for a while.
Half-year update on China 2019
28 August 2019The publication of CNBM’s financial results presents a good opportunity to take stock of the Chinese cement industry in the first half of 2019. Looking at the big picture first, cement sales rose by 5% year-on-year to 1.03Bnt in the first half of 2019 from 0.98Bnt in the same period in 2018. Graph 1 below shows the sales over the last five years since 2014. Generally, sales are decreasing each year but there has been some variation in the half-year periods.
Graph 1: Cement sales in China, 2014 – 2019. Source: National Bureau of Statistics of China.
As the China Cement Association (CCA) pointed out in its summary for the first half of 2019, the cement industry ‘swelled in volume and price’ as industry efficiency grew but that the growth rate dropped ‘significantly’ compared in 2018. By region, as Graph 2 shows, variation can be seen between the south-east of the country where growth was slow or even fell compared to stronger performance elsewhere. Cement production increased by above 20% in Jilin, Shanxi, Shandong, Tibet and Heilongjiang and by over 10% in Hebei, Gansu, Tianjin, and Liaoning. However, it fell in Hainan, Beijing, Qinghai, Guizhou, Guangxi, Hunan, Guangdong and Ningxia. Most of these changes were attributed to either rising or falling demand for cement, except for Jilin where reduced imports from neighbouring provinces pushed up its demand. In most of these latter regions it attribute the decline to falling demand for cement.
Graph 2: Cement production growth by province in first half of 2019. Source: China Cement Association.
Other points of note from the CCA include the surge in imports to China. Imports of cement and clinker rose by 149% year-on-year to 8.97Mt in the five months from January to May 2019. Vietnam supplied 68% of this followed by 11% from Thailand. On the production side, 10 new production lines with a total capacity of 15.5Mt/yr were commissioned in the period. These were fairly scattered across nine provinces, in Shanxi, Anhui, Hubei, Fujian, Guangxi, Hunan, Guizhou, Gansu and Yunnan respectively.
Sales and profits were supported by growing demand and prices on the corporate side. CNBM’s operating income for its cement businesses grew by 16% to US$8.14bn from US$7.04bn. Its adjusted profit increased by 40% to US$2.76bn from US$1.98bn. Anhui Conch’s sales rose by 17.9% to US$2.15bn from US$2.11bn. It blamed poorer profits in the south of the country on adverse weather leading to weakened demand.
The weaker sales in the south could be seen in China Resources Cement’s (CRC) results with its turnover down by 6% to US$2.22bn from US$2.36bn. Likewise, its earnings before interest, taxation, depreciation and amortisation (EBITDA) dropped by 8.5% to US$820m from US$896m. The majority of its cement plants are based in Guangxi, Guangdong and Fujian. Jidong Cement was also reported as having received US$30m in subsidies from the government during the first half of 2019 in relation to its ‘daily activities.’
As is usual for these kinds of roundups the dynamic in China is between government industrial policies, like peak shifting and pollution mitigation, and local demand and price trends. One of the latest spins on peak shifting, for example, is a rating system that is being considered to decide which companies should be subject to production limits and for how long. General cement sales are slowly falling each year but the rise of imports into the word’s biggest cement producing nation (!) mark an interesting trend. Also, it may not be connected, but lots of those provinces with falling demand so far in 2019 are those on the south coast facing the heavy clinker exporting nations of South-East Asia. Given the decisiveness with which the Chinese government dispensed with imports of waste materials under its National Sword initiative since 2017, those countries importing cement to China should beware. It could change very quickly. The Chinese cement market is never dull.
Tangshan shuts down cement plants for five days
17 July 2018China: The city of Tangshan ordered cement and steel plants to shut down for five days to prevent pollution. The directive followed a forecast of heavy smog in mid-July 2018, according to a source quoted by Reuters. Tangshan, an industrial city, is located in the northeast of Hebei province.
China: A new special economic development zone in the north of Hebei province is expected to significantly boost demand for cement in the region. President Xi Jinping announced that that the new development named Xiongan New Area would be built southwest of Beijing, according to the ET Net News Agency. The development will be on the same scale as Shenzhen and Shanghai Pudong. Using these previous projects as a benchmark HSBC Global Research estimated that Shanghai Pudong uses around 6Mt/yr and that the region had used 133Mt since its creation in the early 1990s.
BBMG’s shares spiked following the announcement. The largest cement producer in the Beijing-Tianjing-Hebei area is widely expected to benefit from the project. After its restructuring with Jidong Cement it will hold 57% of cement production capacity in the region.
China rides out
19 November 2014Startling news from Hebei, China this week. The northerly province intends to move out its excess capacity in heavy industries, including cement, to other countries by 2023. 5Mt of cement production capacity is planned for transfer by 2017 and 30Mt is planned for transfer by 2023. The larger figure is about the same as the cement production capacity of France or Germany!
Hebei isn't the biggest cement-producing province in China but it has received attention as the authorities have cut down on 'out-dated' production capacity. The region was targeted in a programme to cut emissions from heavy industry due to its proximity to Beijing and that city's smog issues.
The Ministry of Industry and Information Technology (MIIT) set a target of 60Mt/yr in cement production capacity to be cut by 2017. The region was also the site of massive cement plant demolitions in late 2013 and early 2014. 18 cement plants were demolished in December 2013 followed by 17 cement plants in February 2014 alongside the destruction of connected grinding and storage capacity. Overall an incredible 74 cement plants in the area surrounding Shijiazhuang alone were targeted for demolition by March 2014.
Following this massive spate of capacity elimination, the public announcement to actively move abroad marks a stark change to China's general cement industry strategy so far. The country's equipment suppliers like Sinoma have been taking business from European rivals like FLSmidth or KHD for some time now especially in developing markets.
In 2013, FLSmidth reported a cement market order intake of US$575m and KHD reported an order intake of US$216m. In comparison Sinoma's cement equipment and engineering services reported order intake of US$5.59bn. In its annual report for 2013 FLSmidth estimated that the global market for new kiln capacity was 50Mt. At a capacity construction price of US$150/t this suggests that Sinoma took orders for nearly three quarters of the world's required capacity for new cement kilns in 2013. Order intake covers more than just building cement plants, so this quick calculation presents only a rough impression of what's going on.
More recently Chinese cement producers have started building their own cement plants or funding them outside of China. In October 2014 State Development and Investment Corp and Anhui Conch Cement Company announced plans to fund a plant in Indonesia. In September 2014 ground breaking was held for a Chinese-funded plant in Kyrgyzstan. In June 2014, Huaxin Cement invested in Cambodia Cement. This was its second overseas investment following a project in Tajikistan in 2011.
With China's government still attempting to avoid a hard economic landing as its growth slows, moving industrial overcapacity overseas makes sense. International and national players must be worried about the potential scale of this transition. On the plus side, however, those notorious inscrutable Chinese production figures in the cement industry will be far easier to analyse in plants outside of China facing international competition. Today Hebei, tomorrow the world!