Displaying items by tag: China
China orders some north-east cement plants to shut in winter
01 December 2014China: China has ordered several cement plants located in the northern provinces to shut for four months, starting on 1 December 2014, to reduce over-capacity and curb air pollution during the winter months, according to state news agency Xinhua.
The move, which will affect 103 production lines in the three Provinces of Heilongjiang, Liaoning and Jilin, is set to hit coal consumption and limit a rebound in domestic prices.
The China Cement Association and the three provincial governments jointly issued the order. Persistent over-capacity has dogged the sector for years, with northern China using only about half of its total production capacity.
The northern provinces, including Hebei, are a major source of industrial pollutants blamed for a toxic smog that often spreads to neighbouring regions like Beijing. Kong Xiangzhong, vice president of the China Cement Association, was quoted as saying the winter stoppage would greatly curb air pollution, as fuel consumption increases markedly when temperatures drop. Total cement output in northern China, including Inner Mongolia, hovers around 120Mt in the winter months and requires about 20Mt of coal. Fuel consumption falls to just 16Mt in summer, according to Xiangzhong.
The suspension in Xinjiang is expected to reduce coal consumption by about 1Mt and help increase plant utilisation rates to 75%, from the current 60%, according to local media reports. It takes about 200kg of coal to produce 1t of cement, according to the World Coal Association.
Despite efforts to cut output, China's cement production rose 9.6% to 2.41Bnt in 2013 from a year earlier, while total capacity has surged to more than 3.2Bnt/yr, according to data from the cement association.
China Gezhouba and Zhongxia Cement set up US$190m joint venture
28 November 2014China: Gezhouba Group Cement, a subsidiary of China Gezhouba Group, has signed an agreement with Hubei Zhongxia Cement to set up a joint venture to restructure the assets and businesses of Zhongxia Cement.
The joint venture, with a registered capital of US$190m, will be engaged in production and sales of cement, clinker and fine slag powder and opencast mining of limestone for cement uses. Gezhouba Cement will hold 51% of the venture and Zhongxia Cement will hold the remaining 49%. The venture will acquire the entire current assets of inventories for cement production and operation of Zhongxia Cement after establishment.
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!
Hebei to move excess cement production capacity overseas
19 November 2014China: Authorities in Hebei Province have revealed a plan to transfer excess capacity from its heavy industries, including cement, abroad by 2023. Hebei intends to move 5Mt of cement production overseas by 2017 and 30Mt by 2023. The initiative also covers excess production in the steel and glass industries.
Chinese cement, steel and glass producers are struggling, with sluggish growth in the world's second-largest economy crippling demand for their products. The local government will encourage cement producers to establish subsidiaries or joint ventures in regions like Africa, Southeast Asia, South America and Central and East Europe to meet local demand.
Hebei is a major source of industrial pollutants blamed for the smog that often spreads to neighbouring regions like Beijing. The smog has prompted the authorities to rethink and change the growth model and to take more stringent measures to fight pollution.
Zhu Yuming resigns as supervisor from Anhui Conch
12 November 2014China: The board of directors of Anhui Conch have announced that Zhu Yuming has resigned as a supervisor of the company due to other work commitments. Zhu's resignation will be effective upon the appointment of a new supervisor to fill the vacancy. Anhui Conch have thanked Zhu for his 'invaluable' contributions to the company.
Eurocement to sign US$280m in contracts with Sinoma
12 November 2014China/Russia: Eurocement plans to sign three contracts worth a combined US$280m at an Asia-Pacific Economic Cooperation (APEC) summit in Beijing. The contracts cover the construction of dry-process cement lines at the Kavkazcement, Belgorodsky Cement and Oskolcement plants. Each line will have a clinkcer capacity of 6200t/yr or a cement capacity of 3Mt/yr. Each contract is for US$93.3m and the contractor is Sinoma International Engineering.
In May 2014 Eurocement signed six contracts to build new plants with Sinomach, CNBM and Sinoma for a total of US$580m. All of the projects are being carried out as part of a programme to switch to dry-process cement production. Overall investments in the programme will exceed US$2bn.
"We plan to switch our enterprises to the new technological platform in three years, between 2014 and 2017," said Eurocement president Mikhail Skorokhod. By 2018, Eurocement intends to produce 100% of its cement using the dry-process. This will boost capacities by 5Mt/yr to 45Mt/yr, according to Skorokhod.
Eurocement has calculated that the programme will pay for itself in 7 - 10 years. Cost of production is planned to fall by 35% - 40%. The debt/equity ratio of financing for the programme is 70%:30%. In May 2014, Eurocement signed a strategic agreement with Sberbank to finance its investment programme.
China: Anhui Conch Cement Co Ltd has announced that its output and sales of its major subsidiaries hit record highs in September 2014.
Its Foshan subsidiary in Guangdong Province saw sales exceed 10,000t/day for five consecutive days in September 2014, with average sales stablising at 8000t/day. Anhui Conch claimed that the subsidiary's September 2014 output, sales, clinker and cement production all hit new highs in 2014, with output and clinker cement production reaching historical highs.
In Jiangxi Province, its Ganjiang subsidiary witnessed 67% year-on-year growth in sales in September 2014. Anhui Conch's production in Guangxi was also robust. Its Beiliu unit completed 104% of its production target in the third quarter of 2014, while its Tongling unit produced over 10Mt of clinker cement in the first nine months of the year.
Chinese companies to build cement plant in Indonesia
01 October 2014Indonesia: Two Chinese companies signed an agreement on 25 September 2014 to invest in an Indonesian cement plant as part of investment cooperation measures that were agreed by China and Indonesia in 2013.
State Development and Investment Corp (SDIC) and Anhui Conch Cement Company will fund the project for the plant located in West Papua Province. After the construction is completed, the plant will have 3Mt/yr of production capacity, serving Indonesia and neighbouring countries, including Papua New Guinea. SDIC and Anhui Conch will have stakes of 51% and 49% respectively.
Taiheiyo Cement ends joint venture with Chinese peer
10 September 2014Japan/China: Japan’s Taiheiyo Cement has dissolved a joint venture agreement with Xinjiang Tianye in Xinjiang, Chinese in response to Chinese government efforts to reduce excess capacity in the sector.
Taiheiyo Cement Investment, the company’s Chinese arm, signed the agreement with Xinjiang Tianye in December 2012. After receiving government approval, they set up a joint venture in April 2013, planning to produce 1.2Mt/yr of cement. However, in 2013 Beijing increased measures to curb investment in the cement industry to counter overcapacity. This cast doubt on whether the venture could build production facilities as planned. With the business environment for the region's cement industry worsening, Taiheiyo and Xinjiang Tianye opted to end the agreement.
Three Chinese cement companies fined US$18.6m for price monopoly
09 September 2014China: The NDRC, China's price regulator, has fined three Chinese cement companies a combined amount of US$18.6m for engaging in a price monopoly. The three companies are Jilin Yatai Cement Sales Co, Northern Cement Co and Jidong Cement Jilin Co.