Short Term Price Rise Of Cement Industry In 11 Provinces

The supply of cement is shrinking and the price of cement is rising rapidly.

It is reported that Zhejiang Provincial Development and Reform Commission issued the notice on starting orderly power utilization scheme on September 27. According to the notice, Zhejiang started the B-level orderly power consumption plan from September 28, requiring enterprises and equipment including the cement industry to implement the "weekly fault peak avoidance (line rest day)" system according to the published power supply line rotation rest table, and at the same time implement the peak avoiding power consumption every day.

According to the statistics of Tianfeng securities, there are 11 provinces that have adopted or are about to adopt the requirements of power and production restriction for cement enterprises. The production capacity of these 11 provinces accounts for 50% of the national cement production capacity. This is the first time in history that the scope and strength of the production restriction is wide.

The tightening of market supply has brought about a sharp rise in cement prices. According to the price adjustment letter from several cement manufacturers, the price increase is mainly due to the superposition of two factors, namely, the high price of coal and other bulk raw materials and the failure of normal production caused by power restriction. In addition, there are also manufacturers due to market marketing, comprehensive production reduction expectations and price increases.

Guo Hui (pseudonym), a cement dealer in Zhejiang Province, told the 21st century economic report that the average price of P.O42.5 bulk cement in some parts of Zhejiang Province has exceeded 700 yuan / ton, "even so, money may not be able to get the goods, and some factories will directly stop production.".

Stop production in peak season

"Since September 10, we have received more than ten power rationing notices." on September 28, a person in charge of a cement production enterprise in Liaoning Province introduced to the 21st century economic reporter that it was initially from 4:00 p.m. to 8:00 p.m., and then more and more time was required to cooperate. Now, employees can go home after work from 1:00 p.m.

The person in charge said that the power rationing efforts have been strengthened, and the main implementation scope has not changed, all of which are high-energy consumption industries such as cement, steel and non-ferrous metals. It was the peak season of the industry. Now half of the workers in the factory have already taken the National Day holiday ahead of time.

In some southern regions where energy consumption is more strictly controlled, some cement production enterprises "start half a month and stop half a month". Chen Liping (not his real name), the person in charge of an enterprise, showed the reporter of the 21st century economic news that the power sector would stop production for half a month in the next three months, and stop for five days every 10 days. "It will last until the end of the year at least, and it is not known whether there will be additional charges in the future.".

In the face of the shortage of power coal supply, stop selling and price increase have become the choice of many cement production enterprises. Chen Liping told reporters that due to the high coal price and tight supply, enterprises did not dare to produce in large quantities, for fear of increasing income but not increasing profits, and failing to meet the performance targets by the end of the year. "The inventory is pulled very low all of a sudden, after the cost passes, the price rises naturally."

According to Chen Liping, the cement industry has entered the peak season from September, and the plant generally reserves 10 days of cement inventory. After power rationing, the inventory will be consumed in one or two days, basically in the situation of instant production and sales or no supply. The production can't keep up with the demand. The company can only stop selling some kinds of cement products and give priority to the supply of key customers.

According to Bao Rongfu of Tianfeng securities, under the pressure of dual control of energy consumption and shortage of power coal supply, cement production in 11 provinces has been limited, and the total production capacity accounts for 50% of the national weight.

At the end of August, Guangxi took the lead in issuing production restriction measures for local cement enterprises, and then Guangdong, Yunnan, Jiangsu, Ningxia and other provinces also successively issued production restriction notices. Among them, Yunnan Province is the most powerful one, requiring the cement output in September to be reduced by more than 80% on the basis of that in August, and the peak production time of all cement enterprises from October to December shall not be less than 40 days. On the other hand, under the pressure of power coal supply shortage, some non energy consumption dual control first-class early warning provinces, such as Guizhou, Zhejiang, Shandong, etc., also began to implement production restriction. Recently, Hunan and Anhui have successively issued emergency notices on orderly power utilization.

As the cement is basically produced and used locally, at present, the regions with greater power and production restriction have the highest price increase. As of September 24, cement prices in the Yangtze River Delta, Sichuan Chongqing, Lianghu and Yunnan Guizhou regions have increased by more than 200 yuan since the end of July. A number of industry insiders introduced to the reporter that the spectacular scene of long queues buying cement appeared in many places. The highest quotation of some dealers exceeded 1000 yuan per ton, and related dealers tried every possible means to stock up.

Short term price is bullish

"This year's price is like riding a roller coaster." Qin Shizhang, a cement dealer in Guangxi, told the 21st century economic report that the cement price, which has rarely fallen since May, bottomed out in July and opened up a new way to rise, breaking through the historical high.

The rising and falling prices make the downstream building materials enterprises also feel pressure. Recently, Hubei, Zhejiang, Jiangsu, Anhui and other places have issued early warning on price fluctuation of building materials, reminding major construction enterprises to fully consider material fluctuation factors in bidding quotation, contract signing and material procurement, and take effective measures in time to actively prevent engineering cost risk caused by price fluctuation.

A building materials company in Hengyang is facing the dual pressure of no cement supply and power restriction, which raises the supply threshold. According to a letter of notice displayed by the person in charge of the company, the cement price reaches 700 yuan / ton and there is no cement supply. It is suggested to stop production for one month before supplying materials. If it is necessary to supply materials, please pay off the payment according to the contract and discuss the current supply price.

On September 22, the China Cement Association issued the notice on stabilizing cement market prices in Guangdong, Guangdong, Jiangsu and Zhejiang provinces and Yunnan Province (hereinafter referred to as the notice), requiring all major groups to take measures to increase logistics scheduling, fill in market gaps, and curb the excessive price rise in some regions. The notice pointed out that since September, prices have risen rapidly, which is not in line with the high-quality development requirements of the supply side structural reform of the cement industry.

The rapid rise in cement prices has also attracted the attention of local governments. Recently, the market supervision bureau of Liuzhou city of Guangxi organized a special inspection on the trading price behavior of cement and other bulk commodities in the city. The key crackdowns include collusion and manipulation of market prices; Fabricating and disseminating information on price increases to drive up prices and push up commodity prices; In addition to production and self-use, a large number of goods with tight market supply and abnormal price fluctuations are hoarded beyond the normal storage quantity or storage cycle.

Kong Xiangzhong, executive director of China Cement Association, said in an interview with 21st century economic reporter that the purpose of dual control is to increase the proportion of green energy and promote enterprises to carry out structural adjustment, transformation and upgrading. However, some places do not have enough understanding of the dual control system. When the assessment time point comes, they increase the policy level by level and take more drastic measures to limit the growth of energy consumption. At present, the normal production of many cement enterprises has been affected, which is not the purpose of dual control.

Kong Xiangzhong said that some leading cement enterprises have a nationwide layout, and are ensuring market supply by allocating the production capacity of each district, so as to stabilize the excessive price rise in some regions. In the short term, the increase in coal price offsets most of the profits of cement enterprises, and power rationing makes enterprises passively reduce production, "cement prices may continue to rise".

Data show that while cement prices are rising, coal prices continue to rise. At present, the market price of Qinhuangdao Port steam coal (q5500, Shanxi production) is as high as 1503 yuan / ton, 908 yuan / ton year-on-year, with an increase of 153%. According to industry estimates, the impact of coal price rise on the cost side of cement enterprises is about 118 yuan / ton.

"It is expected that areas with low price or low price increase in the early stage may continue to make up for the increase in the later period." Bao Rongfu analyzed that the fourth quarter is the traditional peak season in southern China, and the demand still has certain support. On the other hand, the intensity of production restriction in some provinces may slow down marginally, but the production restriction will not be completely abolished, and the market supply gap still exists. Therefore, under the market law, the price will continue to rise.