Cement prices will still rise in 2020

Recently, the epidemic situation in China has been gradually controlled, and Zhong Nanshan also announced that the epidemic situation can be basically controlled by the end of April. With the easing of the epidemic throughout the country, the resumption of major projects around the country has been put on the agenda. According to the statistics of China Cement Network Cement Big Data Research Institute, up to now, the overall number of industrial enterprises above designated size in East China has exceeded 95%, the average number in other regions except Hubei is more than 80%, and the recovery rate of SMEs is expected to be 45%~50%.
In terms of the resumption of production of building materials enterprises, in late February, the Ministry of Housing and Urban Rural Development and Guangdong, Hainan, Chongqing, Sichuan, Jiangxi, Shaanxi and other provinces issued intensive policies to ensure the supply of cement, steel, sand and gravel and other building materials, and relevant enterprises resumed construction as soon as possible.
According to the statistics of the Cement Big Data Research Institute, the return to work rate of cement enterprises nationwide has increased from 15% on February 15 to 75%;
The resumption rate of commercial concrete enterprises increased from 5% on February 15 to 90%, but their capacity utilization rate was low;
In addition, as of February 25, the resumption rate of construction enterprises was 30%, which will accelerate the resumption in March.
In terms of the resumption of housing construction projects, East China has resumed construction since February 20; In central and southern Hubei and Henan, after March 10, work will resume gradually after February 20; The three northeastern provinces resumed work in mid April. A small number of civil works have resumed since February 20, such as housing construction, mainly since March, and the bagged sales in the southwest have recovered.
What is the impact of the epidemic on the cement industry in the first quarter? Zheng Jianhui, chief analyst of the Cement Big Data Research Institute, said that, affected by the epidemic, except in Hubei, the recovery period of cement demand is expected to be around the middle of March. In the first quarter, the national cement sales range is [290 million tons, 350 million tons], with a median of 320 million tons, shrinking by more than 17% year on year.
Zheng Jianhui said that the recovery period of cement demand is expected to be around the middle of March, not only affected by the demand side, but also closely related to the current high level of cement clinker inventory in China. According to the statistics of the Cement Big Data Research Institute, the national cement inventory at the end of February is estimated to be 40 million to 50 million tons, and it will take about two weeks to fully digest (excluding clinker inventory).
Zheng Jianhui predicted that affected by the epidemic, the average price of cement in the next quarter of the high warehouse will drop by about 50 yuan/ton, which will not be lower than the price of the same period on a year-on-year basis. Among them, the price in the north is expected to be stable; The inventory pressure in East China market is high, and the expected decline is more than 100 yuan/ton. On the whole, he believes that the national cement price has a certain degree of resilience, and there is no panic price drop.
Throughout the year, he said that the monthly average price range of P.O42.5 bulk cement nationwide was [440510], and the price rose slightly throughout the year.
He analyzed the reasons for the slight rise of cement prices throughout the year from five aspects:
(1) During the demand platform period, the impact of the epidemic situation will stabilize the economy. Infrastructure and real estate will continue to play an important role in determining. The contradiction between urban pollution and pollution prevention will inevitably lead to an increase in cement prices.
Specifically, in the first two months of 2020, the special debt amounted to nearly trillion yuan, an increase of 1.9 times over the same period of the previous year. It mainly went to the field of infrastructure. Later, the "14th Five Year Plan" projects were planned in advance, and the projects were speeded up. The growth of infrastructure accelerated.
In terms of highway and waterway investment, it accounts for more than 70%. The planned investment in 2020 is 1.8 trillion yuan, which is expected to be completed again more than expected;
In terms of railway investment: the proportion is about 25%, which has stabilized at about 800 billion yuan annually in recent years, and is expected to remain stable this year;
Civil aviation infrastructure investment: less than 3%, with little impact.
In terms of real estate: in 2019, the negative growth of land purchase will be suppressed to the commencement, and the commencement growth rate will fall back, but the completion is expected to pick up. It is expected that the real estate delivery pressure will be great. In 2020, the construction growth will slow down, and the growth of cement demand will be suppressed.
(2) Peak shift, production restriction and high concentration in East China are still favorable in peak season.
So far, except Hainan and Tibet, other provinces in Chinese Mainland have the policy of off peak production.
(3) The anti-monopoly bureau has further tightened its supervision on cement prices, and the risk of substantial price increase of enterprises will be greatly enhanced in 2020; The pressure of maintaining stability on cement price stability.
(4) The high price attracts imported cement/clinker, forming impact.
(5) The profit margin of the cement industry is close to 20%, and the management will re-examine the policy on the cement industry.