Displaying items by tag: China
China to restrict capacity expansion in 2012
30 March 2012China: China intends to implement strict restrictions on the increase of new cement production capacity in 2012 to deal with a capacity surplus, said Liu Ming, an official with the department of industry within the National Development and Reform Commission.
Speaking at an industrial meeting, Liu said the main task for the time being is to contain the rapid increase of capacity. Currently China faces national overcapacity during the period of 2011-2015. Liu said the government will encourage mergers and acquisitions in the national industry, and increase financial support.
China's cement output increased by 11% to 2.09Bt in 2011 with an annual capacity of 2.9Bt. Liu added that China would roughly complete its task of phasing out out-dated capacity by the end of 2012. However, domestic producers remain optimistic about the growth of national consumption in 2012. The performance of China's cement industry will remain optimistic and annual output will reach new high with around 8% of growth, predicted Kong Xiangzhong, secretary general of the China Cement Association.
China's cement industry will see around 5% of growth in 2012 and 2013, said Cui Xingtai, chairman of the China United Cement Corporation. Cui said that the Chinese cement market will shake off its current weak performance from the second half of 2012 with the annual peak season. The decrease of cement demand in the first quarter of 2012 was directly related to the slowdown of construction projects in the railway, road and airport sectors and cement demand would have good performance in the second half, said Cui.
Chinese producers face profit drop in 2012
28 March 2012China: Analysts expect the profitability of China's leading cement producers to weaken in 2012 due to slowing demand and falling prices.
SWS Research analyst Ye Rong expects the earnings of China's second-biggest cement producer, Anhui Conch Cement, to plummet by half in the first quarter, because the Yangtze River Delta, where most of Anhui Conch's sales are based, has seen cement price drops of 5% to 20% since the Lunar New Year, on 23 January 2012. Citic Securities forecasts the Hong Kong-listed firm's net profit will drop by 40% in the first quarter.
The net profit of Anhui Conch soared by 88.1% to US$1.84bn in 2011, while revenue surged by 41% to US$7.71bn. The state-owned enterprise's results for 2011 were in line with market expectations, wrote Luo Yang in a Nomura report. However, Anhui Conch's profit margin was likely to deteriorate in 2012, due to downward pressure on selling prices, rising costs and decelerating productivity, Luo wrote. "Under severe overcapacity, the company is subject to higher price risk in comparison with most of its peers."
Anhui Conch chairman Guo Wensan said the industry would face unfavourable factors in 2012, such as a slowdown in investment growth, regulation of the real-estate sector and rising energy prices. Anhui Conch plans a capital expenditure of US$1.27bn in 2012 less than the US$1.44bn in 2011.
In an exception to this trend, mainland China's biggest cement producer, China National Building Materials, announced it expected net profit to jump more than 100% from 2011. However, JP Morgan expects prices and profit per tonne for most mainland cement producers in 2012 to be up to 10% lower than 2011, and has trimmed its earning estimates for most listed cement companies. The growth in the mainland's cement consumption would be 5% to 8% in 2012, against 11% in 2011, the China Cement Association said.
The net profit of China National Materials (Sinoma) rose by 32.78% to US$231m in 2011, while turnover grew by 14% to US$8.04bn. The Hong Kong-listed firm's cement sales surged by 40% to US$3.21bn in 2011, while sales of its hi-tech materials increased by 7.7% to US$981m and its cement equipment business dipped by 0.1% to US$3.85bn.
Sinoma's net profit in 2011 was 10% below market consensus and 11% below Nomura's estimate. This was mainly due to much lower top-line growth and a disappointing margin performance. The state-owned firm's biggest business sector, cement equipment, suffered a small drop in 2011, because China's fixed-asset investment in cement fell by 8.3% in 2011, Luo wrote. "We expect it to further decrease by 15% in 2012." Sinoma's cement prices were under significant downward pressure, especially in Xinjiang province, due to worsening overcapacity, Luo warned.
FLSmidth taps into Chinese pollution-control sector
09 March 2012China: The major Danish cement plant manufacturer FLSmidth has achieved authority approval of its first acquisition in China, which will help it to secure a lucrative share of the multibillion dollar Chinese market for environmental control technologies. The move comes less than a month after China announced new NOx emission regulations, providing an excellent market for FLSmidth's new capabilities.
Together with a minority shareholder, FLSmidth has started a company to market and sell air pollution control products to the cement industry in China. This local company is groundbreaking for FLSmidth as it combines local presence and relations with global technologies and resources. The founder company, Chinese Sino Environment Engineering Development Co. Ltd. (SEPEC), continues as a minority shareholder and brings a large reference base and contact network from the cement industry in China, both on a corporate and a plant level.
"FLSmidth and SEPEC are the perfect fit," said FLSmidth CEO Jørgen Huno Rasmussen. "FLSmidth's strong technological platform coupled with SEPEC's strong organisation, reputation and customer base in China will enable us to develop air pollution control products that are uniquely designed together with the Chinese customer and fit his specific requirements."
The local company will market FLSmidth's highly-efficient air pollution control products and thereby help Chinese cement manufacturers to fulfil the new and stricter emission standards imposed on the industry. As the majority shareholder, FLSmidth will retain the intellectual property rights to the technology. The Chinese market accounts for half of the total world market for air pollution control equipment. "With China's increased focus on environmental aspects as stated in the 12th five year plan, the timing of FLSmidth's local expansion is just right," said CEO of FLSmidth China, Anders Bech.
'Soft landing' shouldn't damage Chinese cement demand
07 March 2012China: On 5 March 2012 Premier Wen Jiabao lowered China's growth target for 2012 to 7.5% from 8%, signalling Beijing's determination to manage a 'soft landing' to moderate its runaway economic expansion. The slowdown will likely hit China's construction sector, which accounts for most of China's rampant cement consumption. China exported only 10.6Mt/yr of cement in 2011, just 1.1% of national output. The worries over China's plans are affecting certainty in all major materials markets.
Credit Suisse described China's more moderate growth target as 'acceptance of slower medium-term growth.' It also said that infrastructure spending was on a downward trend due to the completion of many large highway, railway and airport projects.
Despite this, Guo Wensan the chairman of China's largest cement producer Anhui Conch, has announced that demand for cement remains strong in China. He said that the government's drive to push the construction of subsidised affordable housing is successfully offsetting declining cement demand from the private housing market.
Guo said that cement demand from the 10 million affordable housing units started in 2011 will peak from the second quarter of 2012 onwards. "This year there will be another 7 million public housing starts, so we remain confident," he said. Guo added that the cement industry has benefited from consolidation since the start of 2011, which has seen the removal of older, inefficient kilns and the closure of some companies.
China aims at bold fuel-substitution rate
29 February 2012China: The Chinese Ministry of Information and Technology has announced that China's cement industry will source 65% of its electricity needs from waste materials by 2015, as part of the country's wide-ranging 12th Five-Year Plan period (2011-2015). It said that this would help China's building materials industry to see its energy consumption per unit of industrial value-added output reduced by 20% by 2015 compared to 2010.
China considers tough emission rules for cement producers
08 February 2012China: China's environment ministry is planning to launch stricter rules regarding nitrogen oxide emissions from cement plants, according to local press. An industry expert said that the policy change could wipe out a third of the industry's total net profits.
The report illustrates the challenges faced by the government to balance pressures for strong economic growth with public demands to lessen pollutants caused by industries that currently operate with few environmental restrictions. China had previously said that it planned to cut the cement industry's overall nitrogen oxide emissions, a key cause of acid rain and photochemical smog, by 10% by 2015.
Chinese Vice Minister of Environment Protection, Zhang Lijun, during a visit to the Anhui Conch Cement Company in January 2012, told accompanying officials and executives that the ministry plans to introduce stricter rules.
Kong Xiangzhong, the president of China's cement industry association, said that the ministry is considering tightening nitrogen oxide emission standards to 400mg/m3 from the current 800mg/m3. "It will translate into huge pressure for the cement industry," Kong was quoted as saying.
China's cement industry, polluting but profitable, has thrived during China's infrastructure spending spree. Anhui Conch, for instance, announced that its 2011 net profit is expected to be at least 80% higher than in 2010. China is the world's largest cement producer, with some 3000 plants producing 2Bt/yr. Beijing announced earlier that it wants to shut at least a third of the country's least efficient cement plants by 2015.
Xinjiang Tianshan plans five new lines
12 January 2012China: Xinjiang Tianshan Cement Co Ltd, a cement and concrete manufacturer based in the Xinjiang Uygur Autonomous Region, has today announced plans to raise up to US$444m via a public offering for six projects. According to the prospectus, the Shenzhen-listed firm will issue up to 120 million new shares at a price of US$3.27 each.
The proceeds will be used to build five cement production lines and a 1Mt/yr cement grinding facility in Xinjiang. Upon completion the projects company would see the company increase its number of cement production sites from 11 to 16.
By the end of 2013, the firm's total output capacity is expected to reach 46Mt/yr, of which 40Mt will be produced in Xinjiang. The cement supplier also targets 50Mt output capacity for 2015, including a massive 45Mt in Xinjiang.
China's cement growth down, but still high
04 January 2012China: China's cement output growth dropped in November 2011, but was still 6.1% up on November 2010 at 11.2%. State statistics show that China's cement output reached 1.89Bnt in the first 11 months of 2011, an increase 17.2% over the first 11 months of 2010.
Total profits from China's entire building materials industry surged by 53.1% year-on-year to US$38.68b in the first 11 months of 2011.
Chinese firm to build US$180m plant in Iraq
07 December 2011Iraq: Sinoma International Engineering Co Ltd, a Jiangsu Province-based Chinese company principally engaged in the mechanical equipment and cement businesses, has recently signed an engineering contract with Iraq-based Gulf Research Development. Sinoma will build a 5000t/day cement production line in the Kurdistan city of Sulaymaniyah at a cost of $180 million.
China pins hopes on top-ten for Five-year Plan
29 November 2011China: China aims to make its top ten cement manufacturers hold at least 35% of the domestic cement market by 2015 according to its 12th Five-year Plan. Currently China's top ten cement manufacturers hold less than 25% of the domestic market.
China's Ministry of Industry and Information Technology (MIIT) has released the 12th Five-year Plan (2011-2015) for the country's building materials industry and five sub-plans for five building materials sectors including cement and plate glass. From 2011 to 2015, the development of the industry will mainly focus on eliminating outdated production capacity and promoting mergers and acquisitions.
According to the plan, cement companies above a designated size will expand at an average rate of above 10% from 2011 to 2015. 250Mt of outdated production capacity will be eliminated. Cement producers are expected to cut emissions of nitrogen oxides and sulfur dioxide by 10% and 8% respectively. Emissions of carbon dioxide per unit of industrial added value will be reduced by 17%.
It forecasts the domestic market demand for cement to rise by 3%-4% annually on average to reach 2.2Bt in 2015, a slower pace than the current level as the country increases efforts to make its economy less reliant on fix-asset investment and more on technologies and consumption.