Displaying items by tag: Shaanxi

In 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.

China: West China Cement’s sales revenue rose by 24% year-on-year to US$881m in 2018 from US$709m in 2017. Its cement sales volumes fell by 3.2% to 18.1Mt from 18.7Mt. Its earnings before interest, taxes, depreciation and amortisation (EBITDA) grew by 40.6% to US$393m from US$279m. Despite falling sales volumes, the cement producer said that increased prices boosted its margins.

By region the company said that sales volumes in Shaanxi Province remained stable, while the continuous low demand in the Xi’an Metropolitan Area and Central Shaanxi region led to occasional peak-shifting production halts by all producers during low season periods. Sales volume in Xinjiang Province remained low, while that of Guizhou Province were stable.

China: Anhui Conch Cement plans to buy and import a hydraulic drilling rig for a limestone quarry supporting a cement plant at Tongchuan in Shaanxi. Atlas Copco is one of the lead suppliers of the equipment, according to Inside International Industrials. Delivery is scheduled by February 2018. The estimated cost is around US$1.7m.

The overall mining project is expected to have a production capacity of 4500t/day with a total value of US$61m. Construction is planned to begin in the first half of 2018. It was approved by Shaanxi Provincial Development and Reform Commission in mid-2017.

China: Sinoma Hanjiang Cement, a subsidiary of China National Materials Company (Sinoma), has been ordered to pay back a US$8.3m tax rebate by the Tax Office of Hantai District, Hanzhong City in Shaanxi. A notice issued by the office said that the cement producer failed to meet the requirements for the rebate, according to ET Net News agency. The office decided to disqualify Sinoma Hanjiang from the entitlement due to its policies regarding rebate and exemption of value-added tax for products and labour services involving comprehensive utilisation of resources. Sinoma said that the extra cost is expected to decrease its profit in 2016.

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.

National: The Ministry of Industry and Information Technology has released a third list of 58 companies, including cement companies, which should cut their excess production capacity by the end of 2013 as a part of the country's economic restructuring drive. The ministry said that local authorities must ensure that overcapacity is eliminated, rather than transferred to other regions.

Regional: South-eastern Fujian province produced 52.1Mt of cement in the first eight months of 2013, a year-on-year increase of 13.3%, according to data released by the local statistics bureau. Jiangxi Province produced 54.8Mt of cement in the first eight months of 2013, a year-on-year increase of 21.1%.

Central Hubei province saw cement output increase by 8.3% year-on-year to 60.3Mt in the first seven months of 2013.

North-west Shaanxi province saw cement output total 53.9Mt in the first eight months of 2013, a year-on-year increase of 9.3%.

Southern Hainan province has produced 10.5Mt of cement in the first seven months of 2013, a year-on-year increase of 26.3%. South-central Hunan province produced 9.47Mt of cement in August 2013, a year-on-year decrease of 2.8%.

Corporate: Gansu Qilianshan Cement Group plans to spend US$43.4m on acquiring a 100% stake in Longnan Runji Cement to expand into the Gansu province market. Runji Cement currently operates a 2500t/day dry-process cement plant.

China: Cement output in China increased by 7.4% year-on-year in 2012 to 2.18Bt, according to data released by the Ministry of Industry and Information Technology. Clinker output rose by 1% to 1.28Bt. Obsolete cement production capacity of 220Mt/yr was eliminated.

In other news the China Building Material Federation has released production information for regions in north-western China. Xinjiang Uyghur Autonomous Region produced 41Mt of cement in 2012, a year-on-year increase of 32.8%. Ningxia Hui Autonomous Region saw cement output increase by 10% to 16.1Mt. Shaanxi Province saw cement output increase by 16.3% to 76Mt. Gansu Province saw cement output increase by 32% to 36.7Mt.