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Cement Research Institute: 2017 may not continue 2016 cement demand

Time:

2017-04-22

Source:

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Compared with previous years, investors will pay more attention to the annual reports of major cement listed enterprises this year.

In 2016, both the output and profit of the cement industry rose sharply. The industry realized a profit of 51.8 billion yuan, a significant increase of 55% year on year. The annual cement output was 2.4 billion tons, with a growth rate of 2.5%. The annual financial statements of a listed company and the audit report issued by a certified public accountant shall be provided to the public within 4 months after the end of the year. Judging from the situation that has been announced at present, the annual reports of major cement listed enterprises will be released intensively in the future. Recently rising cement stocks also reflect the continuously optimistic market in the cement industry since the Spring Festival.

What is the reason behind the good performance of the cement industry in 2016? What little is known behind the growth? Can we continue the good momentum in 2017? Recently, Tian Gang, an analyst at the Cement Research Institute, expressed his views on this.

"The large-scale and intensive implementation of off peak production, high real estate investment and high infrastructure investment are the most important reasons for the improvement of cement market last year," said Tian Gang. In October 2016, the Ministry of Industry and Information Technology and the Ministry of Environmental Protection jointly issued the Notice on Further Improving the Peak Shift Production of Cement, which is the whole line of peak shift production of cement in the fifteen provinces north of the Yangtze River. "This has greatly reduced the supply side of cement. On the demand side, the demand is at a high level because of the increase in de stocking of real estate and the acceleration of infrastructure construction. The strengthening of the contradiction between supply and demand and the rise in coal prices have jointly driven the rise of cement prices in 2016." Tian Gang said, "But we cannot be blinded by this growth."

As is generally believed in the industry, Tian Gang also believes that off peak production can only limit the cement industry in terms of output, which has no effect on alleviating serious overcapacity, but will hinder the pace of capacity reduction to a certain extent. The construction of real estate, which is a major cement consumer, also has great uncertainty. At the end of 2016, local governments have introduced real estate purchase restriction policies, causing the construction progress to slow down. "It will take about half a year for these policies to really reflect the cement industry, the second half of 2017. So the cement market in the second half of 2017 will be more complex from the current point of view, and not so optimistic. In general, it is impossible to continue the high growth in 2016." Tian Gang said.

Of course, Tian Gang does not think that the cement industry will experience a landslide like 2015 in 2017. Sichuan and other places have successively released the peak shift production plans for 2017, which just shows that the peak shift production will continue to be implemented this year, and the efforts will be gradually increased. "Once the peak shift is normalized, the cement market will remain stable. In addition, although the real estate investment has been compressed, the infrastructure can still maintain a high growth rate, the growth rate is about 20%, and the total amount is expected to reach 16 trillion. Therefore, the industry will not have a similar decline in 2015 again." Tian Gang believes.

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