Displaying items by tag: China

Today's report that cement producers from Taiwan are preparing for new Chinese NOx regulations is yet another reaction to several 'seismic' shifts of government-led change rocking the industry in China. These have included the closure of old, inefficient capacity and significant implementation of waste-heat recovery (WHR) systems. Last week's launch of the Guangdong Emissions Trading Scheme (GETS) is one more.

As reported by Reuters Point Carbon, GETS involves four cement plants from the start and it is the largest of seven such provincial schemes. It is as big and bold as the manufacturing hub that it covers. It includes over 800 manufacturing sites and will regulate the emissions from 42% of all power consumed in Guangdong and 63% of all its industrial emissions. It will be the fifth biggest ETS in the world after those in the EU, Australia, California and South Korea.

While GETS is large, the rate that it will be implemented will be more restrained. There will be three years of testing (2012-2015), an 'improvement period' (2016- 2020) and a proper market from 2020. The scheme's progress will be watched closely - its success or failure could determine the shape of emissions trading schemes (ETS) across China and the rest of Asia.

While the aims of ETS are laudable, they have met with 'mixed' reviews in other parts of the world. In Australia in 2011, there were dire warnings of the potential for job-losses and carbon-leakage, with China itself identified as a probable destination for both.

In Europe there is now a strong claim that the EU-ETS has been ineffective, with carbon prices slumping to under Euro10/credit (~US$13/credit), less than a quarter of projected levels for 2012. In the midst of the downturn Ireland's CRH 'earned' millions of Euros in unused credits. Security has also been a problem for the EU-ETS.

Even GETS, less than a month old, has drawn criticism. Unnamed commentators have suggested that the higher-than-expected prices, US$9.50/credit, (only slightly lower than in Europe), already look like the result of collusion in the market.

With all of these concerns, the immediate demand from the cement producers, China Resources Cement, Sinoma, Taipai and Yangchun Hailuo, looks a little strange. However, local media reports that there are advantages to be gained by buying early. All of the four producers have to buy credits for cement plant projects they are currently working on. They are gambling on the fact that carbon prices can only rise - something that is not expected by analysts.

In addition the producers can gain valuable experience of the scheme before it has to be used 'in anger,' which may give them an operational advantage over others. They also know that, unlike in other parts of the world, the government will not backtrack on its decision. Recent NOx regulations, closure of older capacity and implementation of WHR have all been imposed (or are being imposed) from above. They know that it is better to jump into the deep end than to be pushed.

China/Taiwan: Two cement producers from Taiwan have reacted to potential new Chinese environmental regulations. Taiwan Cement (TCC) has announced plans to invest US$23.3m on upgrading equipment for denitrogenation and desulphurisation at its Chinese plants. Asia Cement is reportedly also evaluating similar upgrades.

Industry reports suggest that the Chinese government will likely set nitrogen oxide emissions to 300mg/m3, a level below the international standard of 400mg/m3. Upgraded equipment to meet such tougher standard costs about US$3.33m per set, which may create losses for many cement producers in China.

Only four producers out of 3000 in China currently have denitrogenation and desulphurisation processing equipment, with two based in Xiangtan, Hunan Province and another two based in Chengdu, Sichuan Province. About one third of cement makers will be unable to afford the upgrades required to meet the new regulations.

A representative of TCC said that its subsidiary Taiwan Cement International Holdings has started installing new equipment in its plant in Chongqing, aiming to decrease 60% of nitrogen oxide emissions, with similar upgrades in progress at plants in Guizhou and elsewhere.

China: China National Materials (Sinoma) chairman Tan Zhongming has died. Tan, who was in his late 50s, reportedly died of a heart attack while in France for a company roadshow on 2 September 2012. Vice-chairman Yu Shiliang will succeed him.

The state-owned company is one of China's five biggest cement producers. Tan was also a director of Sinoma's Shanghai-listed subsidiary, Sinoma International Engineering, the world's biggest producer of cement equipment, with businesses in more than 30 countries.

Tan was chairman of Sinoma when it listed in Hong Kong in December 2007. He was also general manager of Sinoma's state-owned parent, China National Materials Group. From 1995 to October 2000, Tan held various positions in the State Bureau of Building Materials Industry. He had more than 35 years of experience in China's non-metals materials industry.

Tan graduated with a doctorate in management from Xian Jiaotong University in 1999 and was a professional senior engineer.

Taiwan: Taiwan Cement Co (TCC) will invest US$300m annually in China over the next three years to achieve an annual production of 100Mt by 2016. Chairman Leslie Koo made the announcement, adding that TCC's investment in 2012 will focus on second-phase plant construction in Anshun, Guizhou Province in China. To maintain a regional lead in the market, TCC intends to steadily improve production capacity in China and strengthen market share through mergers and acquisitions.

In his announcement Koo pointed out that, due to the EU debt crisis and China's macroeconomic controls, the cement market sagged in the first five months of 2012. Due to the easing of the debt crisis since June 2012, faster approvals of infrastructural projects and restored high-speed railway construction in China, the cement industry will likely see operations rebound in the second half. In addition public construction projects in Taiwan are also pushing demand for cement.

China: An accidental explosion at a quarry supplying a cement plant in southern China has killed ten people and left 18 with confirmed injuries.

Workers were in the process of unloading 13t of explosives from three trucks at a quarry of the Longshan Cement Company in Yingde city in Guangdong Province when some of the explosives ignited on 27 August 2012. Of the 18 injured, nine are workers from the cement company and the others are residents in the nearby town of Yinghong, which is separated from the quarry by a river.

At least nine people living in a nearby town were also injured in the blast when windows shattered. Among the dead were quarry workers and others who transported and unloaded the explosives.

An investigation team has been set up and sent to the site of the accident to search for evidence and handle the remains of the explosives. A probe into the cause of the blast is underway.

Longshan Cement Company, a subsidiary of Anhui Conch Cement, employs 950 people, including 240 who work at the quarry.

China: On the back of similar reports from numerous Chinese cement producers, two more companies have announced large drops in their profits in the first half of 2012.

Tangshan Jidong Cement Co Ltd, a Hebei Province-based cement producer, posted US$17m in net profit for the first half of 2012, a year-on-year drop of 85%. The company's operating revenue slid by 10.7% year-on-year to US$1.0bn.

Meanwhile, Jiangxi Wannianqing Cement Co Ltd, a Jiangxi Province-based cement maker has posted a net profit of US$9.1m for the first half of 2012, a year-on-year decrease of 80%. Its operating revenue slid by 22.1% to US$316m.

China: China's cement exports have dropped by 15% in volume and by 8.3% in value from January to May 2012. China exported 4.04Mt of cement clinker from January to May 2012, a decrease of 15% year-on-year. The value of export dropped by 8.3% to US$240m.

Exports of cement clinker to Africa and Hong Kong have dropped but those to Bangladesh, Mongolia and the ASEAN region have increased. China's export of cement clinker to Africa dropped by 20.5% year-on-year to 1.76Mt during the five-month period. Exports to Hong Kong also dropped by 17.2% to 244,000t. By contrast, exports to Bangladesh jumped by 230% to 385,000t. Exports to Mongolia increased by 65.6% to 396,000t and exports to the ASEAN region jumped by 4.7% to 348,000t.

A majority, 80%, of the exports were general trade but border trade of cement is also increasing rapidly. State-owned companies were major exporters, exporting 2.07Mt of cement and sharing 51.4% of China's total export of cement. Private companies, exported 17% less year-on-year, 1.40Mt of cement, comprising 34.6% of all cement export. Foreign-funded companies, sharing 14% of cement exports, exported 566,000t of cement. Among all kinds of cement exported 3.15Mt, of 78%, was Portland cement.

The slow economy offshore also hurt cement export to traditional markets. In the five-month period, China's export of cement to the EU dropped by 86.1% year-on-year, while exports to the Russian Federation and Latin America also slid by 61.9% and 57.7% respectively.

The commencement of major infrastructure, railway and transport projects approved by the State Council for the 12th Five-year period (2011-2015) are expected to drive the demand for cement up. A consolidation in cement output may also happen when more foreign companies start to withdraw or scale down their investments in cement projects.

China: West China Cement's net profit has fallen by 64.6% to US$23.4m in the first half of 2012. The cement producer's revenue dropped by 7.2% to US$250m in the same period.

Yet West China Cement expects better profits and revenue in the second half of 2012 as production capacity rises by up to 50%. "Our production costs will go down as our scale increases," said company chairman Zhang Jimin. "Our gross margin will rise in the second half. With selling prices and sales volume rising, our profits and revenue will increase." Zhang added that the company's cement sales would be boosted by infrastructure projects in Shaanxi province, including the Datong-Xian high-speed-rail project and the second Xian-Ankang rail project.

On 8 August 2012 US 'short seller' Glaucus Research Group accused West China Cement of fraud, inflated profits and suspicious acquisitions. West China Cement executive director Low Po Ling said that her company was consulting its lawyers and that is had reserved the right to take legal action against Glaucus. Low said that since the Glaucus report came out, Italcementi Group, West China Cement's third-biggest shareholder, had held discussions three or four times with the mainland company. "Italcementi was very unhappy. It will issue a statement," said Low.

China: China Resources Cement Holdings (CRC) has reporting a sharp fall in earnings and profit margins for the first half of 2012, dragged down by weaker demand. Despite turnover rising by 9.8% to US$1.42bn for the six months ending 30 June 2012, the company's net profit slumped by 68.9% to US$81.9m over the same period due to sliding selling prices.

CRC has attributed its poor performance to a number of factors including sluggish demand caused by weakened economy and poor weather conditions in the southern part of China, which led to accumulation of inventory as well as a series of price cuts. CRC expects prices to pick up in the fourth quarter of 2012 due to several large infrastructure projects, including resumed construction of railway networks and on-going affordable home-building drives.

China: Henan Tongli Cement Co Ltd, a Shenzhen-listed cement producer, said that its first half 2012 net profit rose by 8.6% year-on-year to US$15.2m. Its operating revenue dipped by 2.8% year-on-year to US$308m.

Meanwhile China Tianrui Group Cement Co Ltd, a Henan Province-based clinker and cement producer, said that it booked US$42.7m in net profit in the first five months of 2012, a plunge of 43% year-on-year. Its revenue dipped by nearly 6% year-on-year to US$485m.