Displaying items by tag: Tangshan Jidong

China: Tangshan Jidong Cement and Xinjiang Tianshan Cement have announced the planned launch of a new joint venture in the cement industry. Reuters News has reported that the new cement producer will have registered capital of US$129m.

Tangshan Jidong Cement and Xinjiang Tianshan Cements' headquarters lie 3000km apart, in Beijing, Hebei Province, and Ürümqi, Xinjiang Province, respectively.

China: Tangshan Jidong Cement’s operating income rose by 3% year-on-year to US$2.44bn in the first half of 2022 from US$2.36bn in the same period in 2021. However, its net profit fell by 7% to US$165m from US$178m. Its sales volumes of cement and clinker dropped by 20% to 38.4Mt from 48Mt. It has a reported clinker and cement production capacity of 110Mt/yr and 176Mt/yr respectively. The cement producer said that demand for cement was weak, especially in April and May 2022, with no seasonal rebound. It blamed its falling profits on geopolitics, coronavirus and a downturn in the real estate sector.

China: Tangshan Jidong Cement plans to raise US$148m through an issuance of bonds. Reuters News has reported that the producer will use some of the funds to repay its debts, and the remainder to replenish its capital.

China: Tangshan Jidong Cement expects to record a 3.9 - 12% drop in its net profit in the first half of 2022. This would result in a figure of US$157 - 171m, compared to US$178m a year earlier.

China: Tangshan Jidong Cement plans to launch a share buyback scheme by mid-2023. Reuters News has reported the value of the planned scheme as US$39.9 - 55.8m.

China: China Resources Cement’s profit was US$993m in 2021, down by 13% year-on-year from 2020 levels. Its cost of sales grew by 22% to US$3.81bn from US$3.12bn. The group noted that the average cost of coal increased by 54% in 2021. It also pointed out that infrastructure investment growth slowed down in 2021. The company increased its turnover for the year by 9.7% to US$5.62bn. Sales volumes of cement and clinker fell by 7% to 81.3Mt and 7% to 3.3Mt respectively. Concrete sales volumes grew by 11% to 14.8Mm³.

During 2021 the group started construction of a second clinker production line and two cement grinding lines at its plant in Wuxuan, Guangxi. Once the upgrades are completed the plant will have a total cement and clinker capacities of 2.4Mt/yr and 1.4Mt/yr respectively. The group also acquired a 51% stake in Hunan Liangtian Cement in January 2022 to enter into the market in Chenzhou, Hunan. This company has cement and clinker production capacities of 1.6Mt/yr and 2Mt/yr respectively. An ongoing upgrade will increase the cement production capacity of 2.1Mt/yr. In March 2022 it sold its 72% stake in Shanxi China Resources Fulong Cement to Tangshan Jidong Cement to enable it to leave the northern market.

China Resources Cement has also been growing its co-processing capabilities in 2021. At the end of the year it reported 10 co-processing projects with a total capacity of 1.7Mt/yr. The projects, mostly based in Guangxi and Yunnan provinces, process municipal solid waste, urban sludge and industrial waste.

Holcim has announced today that it has concluded the sale of its 75% stake of its Zambian business to Huaxin Cement. Meanwhile, in Tanzania last week, Huaxin Cement officially commissioned a cement grinding line at its Tanzanian Maweni Limestone plant. China produces about half the world’s cement and some its producers are expanding overseas as domestic growth dwindles. These actions and others place increased scrutiny on sustainability issues for Chinese cement producers. Readers therefore may be interested to note the publication last week of a list of the 100 largest Chinese corporate emitters of CO₂ in 2020.

The Chinese Cement Association (CCA) website carries some highlights on the work by from the cement sector’s perspective. China Venture Carbon and Caixin compiled the list of publicly listed companies using a mixture of freely available data such as sustainability reports, by adjusting public data or by making estimates. The companies covered released 4.42Bnt of CO₂ in 2020 or 45% of the Chinese total. The 15 cement firms in the top 100 were responsible for 893Mt of CO₂ or around 9% of the national total. This ratio is in keeping with the usual 5 – 10% share of global CO₂ emissions attributed to cement production.

Graph 1: Global gross CO₂ emissions by large cement companies in 2020. Source: China Venture Carbon/ Caixin, corporate sustainability reports. Note: Includes all reported direct and indirect emissions for all company business lines.

Many of the Chinese cement companies already release sustainability data each year so this data isn’t exactly new. Yet seeing it all in one place like this is illuminating. Unsurprisingly, on the cement side the ranking is a list of producers ordered roughly by production capacity. The world’s biggest cement producer CNBM is also the cement company that emits the most CO₂. It released 255Mt of CO₂ in 2020. If it were a country, for example, it would be around the 20th largest emitter in the world with a similar output to France or Thailand. In China CNBM is then followed by Anhui Conch, BBMG, Tangshan Jidong Cement and China Resources Cement (CRC).

Graph 1 above also includes the total gross CO₂ emissions for other large cement producers outside of China in 2020 for comparison. These figures are estimates compiled from company sustainability reports and they attempt to cover all direct and indirect emissions across all business lines not just cement. Similar to the Chinese list, generally, the less CO₂ a cement company emits on this graph the less cement it produces. It is also worth noting that 2020 was an unusual year given the outbreak of the coronavirus pandemic. Generally this reduced global manufacturing output but there was wide regional variation.

The other interesting point to note from the China Venture Carbon-Caixin project is that they re-ranked their list by carbon emission intensity, measured as emissions as a proportion of revenue. This totally changes the ordering. Where before the 15 cement companies were fairly evenly spaced out amongst power generators, coal producers and petrochemical companies, now all of them are in the top 50. As the CCA notes in its commentary, “The emission intensity of electricity and cement is much higher than that of other industries. The top 30 companies in terms of carbon emission intensity are almost all power and cement companies.” Whilst most of these companies are probably safe for the time being, given their size, what this might mean for smaller Chinese cement companies with high emission intensity in light of the Chinese government’s energy efficiency drives might be seen as worrying.

Promoting gross CO₂ emissions by cement producers is generally avoided by cement producers because it makes them look bad! It prompts an argument with the environmental lobby and doesn’t recognise the essential nature of cementitious building products to society. However, to their credit producers are publishing the data. The preferred metric for the non-Chinese multinationals is specific emissions per tonne of cement as this better shows the hard-work made to reduce emissions. However, this risks a credibility gap from the outside world, if specific emissions go down but total emissions keep rising each year. In the meantime though the more data the better from China and everywhere else.

China: Tangshan Jidong Cement has announced plans to issue a tranche of bonds with a total value of not more than US$155m. Reuters News has reported that the issuance is the second by the company.

It’s time for a macroscopic view of the Chinese cement sector this week with the release of the half-year financial results by some of the larger Chinese cement producers. On the national level the picture so far in 2021 has been one of continued recovery from the coronavirus lockdowns at the start of the year and then a slowing market as state controls on real estate speculation started to take effect. However, poor weather in the spring and mounting raw material prices appear to have compounded the effects of the real estate regulations, leading to price falls.

Cement output data from the National Bureau of Statistics of China in Graph 1 shows that local production took a knock in the first quarter of 2020 due to the coronavirus pandemic and this strongly recovered in the same period in 2021. The market recovered fast in mid-2020 and so the year-on-year growth for the second quarter was less in 2021. Output on a monthly basis remained ahead year-on-year from April 2020 and stayed ahead until May 2021. However, output in June 2021 was behind the figure in June 2020 and the figure for July 2021 was behind both July 2020 and July 2019.

Graph 1: Cement output by quarter in China, 2019 – mid-2021. Source: National Bureau of Statistics of China.

The Chinese Cement Association (CCA) was lamenting falling cement prices at the start of July 2021. It blamed the situation on slowing infrastructure development in some regions, increasing government restrictions on real estate development, especially poor mid-year weather and higher input prices such as for steel. China Resources Cement (CRC) expanded upon the point about increasing real estate regulations in its financial results for the first half of 2021 explaining that the Chinese government has been promoting a policy that aims to ensure that “residential properties are not for speculation” including controls on the financing of real estate. Later in mid-August 2021 the CCA reported that prices were recovering in east and central-southern regions although the situation remained poor in Guizhou province with shipments down to 60% of normal levels. Production control measures are expected to be implemented to stabilise the situation.

Graph 2: Sales revenue of large Chinese cement producers in first half of year, 2019 – 2021. Source: Company reports.

On the corporate side the sales revenue from some of the large Chinese cement producers mostly show the usual gap-tooth pattern that coronavirus has created everywhere as the market recovered. Notably Anhui Conch managed to avoid falling sales year-on-year in the first half of 2020. However, the CCA’s observation above about rising input costs is visible in the falling profits of some (but not all) of the companies covered here. For example, Anhui Conch’s net profit fell by 7% year-on-year to US$2.32bn in the first half of 2021. It blamed this on a significant rise in the price of raw coal. CRC also reported falling profits attributable to increased production costs.

CNBM reported an increase to cement and clinker sales volumes of 7.6% to 177Mt and concrete sales volumes by 13.4% to 52Mm³. It noted that, “In the first half of 2021, the national cement market showed the characteristics of high price level fluctuation adjustment.” From January to April 2021 local fiscal policy boosted demand for cement but from May 2021 continuous heavy rainfall and increasing bulk commodity prices slowed infrastructure project development. Anhui Conch’s cement and clinker sales volumes for both production and trading grew by 11.5% to 208Mt. It reported stable market demand in eastern, central and southern regions but noted falling prices in the west.

Looking ahead, two issues, among many, to consider are carbon trading and imports. The former has been coming for a while and was launched formally online nationally in mid-July 2021 for the power generation industry. The carbon price was nearly Euro7/t in late July 2021 in China compared to around Euro53/t in the European Union. Cement and steel are expected to join the Chinese national scheme in the next phase although analysts believe that issues such as data gathering, permit allocation rules, accounting standards, sector reduction targets and related financial support all need to be improved before this can happen. Imports are a connected issue and it has been interesting in recent months to hear financial analysts point out the risks, for example, of major exporting nations such as Vietnam relying on China so much. The CCA reckons that China imported 33.4Mt of clinker in 2020, an increase of 47% year-on-year, with 60% of this derived from Vietnam. With the Chinese government trying to tackle cement production overcapacity and meet growing environmental targets, imports look set to become a ‘hot ticket’ issue. In this context it is telling to see talk from the CCA of ensuring standards for imports such as verified carbon emissions. Naturally, the imports that could be trusted the most will probably be the ones from plants that Chinese cement producers have built themselves overseas. As waste importers into China found out previously, relying heavily on one market with strong state controls carries considerable risks. Cement exporters in South-East Asia take note.

China: Tangshan Jidong Cement net loss fell by 82% year-on-year to US$7.93m in the first quarter of 2021, down by 82% year-on-year from US$43.3m in the first quarter of 2020. Its operating income rose by 64% to US$785m from US$478m.