2017 cement industry outlook: steady growth
In 2016, thanks to the national investment in infrastructure and the hot market of the real estate market, the cement industry entered a recovery period. The cement output increased significantly, and the cement price increased by nearly 29% compared with the end of 2015. In 2017, according to various economic measure documents issued by the government, the investment in infrastructure construction will continue the momentum of 2016,
In 2016, thanks to the national investment in infrastructure and the hot market of the real estate market, the cement industry entered a recovery period. The cement output increased significantly, and the cement price increased by nearly 29% compared with the end of 2015. In 2017, according to various economic measure documents issued by the government, the investment in infrastructure construction will continue the momentum of 2016, and the construction of the real estate market will also move forward steadily. However, the problem of overcapacity in the cement industry will continue, and the problem of capacity reduction and restructuring is still faced by cement enterprises. In 2017, the cement industry will enter a year of opportunities and challenges.
1、 Overall situation of cement industry in 2016
1.1 External macroeconomic environment
In 2016, the global economy continued to suffer from trade protectionism, the trend of anti globalization and the European economic and political crisis. Although China's economy was also under the pressure of the downward channel, it continued to maintain a stable growth. The annual GDP growth was expected to reach 6.7%, maintaining the top position of global economic growth.
In the first 11 months of this year, China's fixed asset investment reached 53.85 trillion yuan, up 8.3% year on year; Real estate investment reached 9.3 trillion yuan, up 6.5% year on year, 5.2 percentage points higher than the growth rate of the same period last year. Thanks to the strength of the two traditional markets, the demand for cement in 2016 increased significantly. According to the data of the National Bureau of Statistics, the cement production and sales rate has also increased compared with 2015, and the ending inventory has decreased slightly compared with the beginning of the period.
Therefore, the cement industry in 2016 changed from the "decadent" negative growth market in 2015. Since March this year, the cement output has maintained a rapid and stable growth momentum against the trend. Except for the traditional high temperature off-season in July and August, the remaining months have maintained a growth range of 2.5%~3.5%. In the first 11 months of this year, the accumulated cement output has reached 2.206 billion tons, which is only 69 million tons short of the historical high level in the same period of 2014. In 2016, the cement output is expected to reach 2.4-242 billion tons.
1.2 The output in North China, East China, Central South China and Southwest China increased year on year, while that in Northwest China and Northeast China continued to decline slightly
From a subregional perspective, in 2016, except for the northeast and northwest regions, which still maintained a negative growth, other regions had higher growth compared with 2015, realizing the transformation from negative to positive. North China performed well, achieving a high annual growth rate of 8.85%, followed by Southwest China, with a high growth rate of 8.54%. The growth rate in Central and South China was 2.5%. Although the growth rate in East China was only 0.99%, compared with the negative growth rate of - 5% last year, it stopped the trend of continuous decline in output.
In Northeast China, governments at all levels continue to make great efforts to reduce cement production and promote industrial upgrading and transformation. Liaoning Province strictly prohibits the filing of new capacity, and uses the Internet platform to drive industry reform and innovation. Jilin Province plans to reduce the cement production capacity by 13 million tons within two years. Heilongjiang Province will carry out denitration and dedusting transformation for the entire cement industry. Therefore, even if the price and output of the entire cement market rise, Northeast China is still in the negative growth range of - 4.34%, but compared with the growth rate of - 20.58% in 2015, it has still improved significantly.
From the perspective of output growth of all provinces and cities, Tianjin, Hebei, Shanxi, Inner Mongolia, Heilongjiang, Shandong, Hubei, Hunan, Guangdong, Sichuan, Yunnan, Qinghai and Ningxia reversed 15 years of negative growth and achieved positive growth in 2016; Tibet, Yunnan, Hebei, Ningxia, Heilongjiang, Guangxi and Guizhou have achieved a high growth rate of more than 8%.
1.3 Cement prices rose all the way in 2016
In 2015, the price of cement fell all the way down, reaching a historical low in the past four years. After entering 2016, the price of cement began to reverse and adjust. At the end of May 2016, the price increased by about 5% accumulatively. Later, with the arrival of the high temperature season, the price of cement retreated again, with a decline of about 2.4%. After entering August, the price of cement entered the rising channel, and made great progress all the way. As of December 30, 2016, the price of cement was higher than the beginning of 2016, It has increased by 29.1%.
Since the beginning of 2016, the prices of coal, iron ore, papermaking raw materials and other raw materials began to rise, and then affected the entire industrial field. In September of the same year, PPI finally reversed after four years of negative growth. Affected by policy factors such as capacity reduction and strengthening the supply side structure, the prices of industrial raw materials such as coal and steel continued to soar. The cement industry was driven by rising costs and the rising trend of overall industrial product prices, and the prices maintained a high growth rate throughout the second half of the year.
Although the price of cement rose in 2016 as a whole, the price of cement in each province and city was relatively high. The price of cement in Inner Mongolia, Liaoning, Jilin and Heilongjiang provinces fluctuated slightly, with the increase below 10%. The price of cement in Jiangsu, Shaanxi, Shandong, Hebei, Guizhou, Tianjin, Henan, Hainan and Tibet increased significantly by more than 35% at the end of the year compared with the beginning of the year, especially in Henan, The cement price at the end of the year rose by 69% compared with the beginning of the year, and Hebei and Guizhou provinces also saw an increase of nearly 50%. Apart from the growth rate, the price of cement in Tibet still remains relatively high in China, exceeding 800 yuan per ton, while the price of cement in Inner Mongolia and Liaoning is at a low level nationwide, both below 250 yuan per ton, and the price fluctuation is the smallest compared with the beginning of the year.
The annual sales of cement in 2016 dropped significantly compared with that in 2015. The accumulated sales revenue in the first 11 months was 784.54 billion yuan, down 2.91% year on year. Compared with the continuous decline of cement sales revenue, the cement sales profit showed a completely different trend from the previous low to the latter high. Although the national cement price recovered slightly in the first seven months of 16 years, the overall industry profit did not rise but fell due to the decline of cement sales. By the end of July, the national cement sales profit had reached 13.68 billion yuan, down 10.24% compared with the same period last year; After the off-season in July, the price of cement rose rapidly. By the end of December, it had exceeded the high value of 2016. The cement profit began to exceed the level of the same period last year. By the end of November, the sales profit had reached 42.3 billion yuan, far exceeding the total annual profit of 32.97 billion yuan last year.
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