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Cement Is Crazy? Demand For Epidemic Suppression Was Concentrated In The Two Quarter, And "Inflection Point" Was Set Up During The Year.

2020/5/12 10:54:00 2

CementEpidemic SituationSuppressionDemandInflection PointVolume And Price Rise

In the two level market in a dull state, the recent rise in cement prices is once again regarded as a hype theme. In May 11th, the western cement index of Wind rose 5.16%, and 000546.SZ and 600425.SH increased.

Behind it is the establishment of the turning point in the cement industry in April this year. According to the data provided by Zhuo Chuang in May 11th, the price of bulk cement in P.O 42.5 began to stabilize and rebound in the middle of 4 this year, and the average price of the country has rebounded to 429.12 yuan / ton in May, which is only slightly lower than that in the same period in 2019.

"After the Qingming Festival in April, downstream demand recovered rapidly. In the middle and late days, the sales and sales rate of some large and medium enterprises reached 100%. After May 1, although the weather factors were affected, the volume and price performance soon returned to normal. Hou Linlin, an analyst of information cement industry.

In other words, the demand for cement terminals affected by the epidemic in the first quarter was postponed to the two quarter of this year. The total demand for the current period has not decreased, but on the other hand, after overlaying environmental protection and capital construction overweight, the demand for the whole year is expected to increase.

The probability of "turning point" was established during the year.

Although there have been media reports recently that cement prices are clearly up, the price range is not large, and more highlights are focused on sales.

In the first quarter of this year, domestic cement demand fell by more than 20%, due to the traffic and stoppage caused by the epidemic. In early March, the newspaper reported that "the volume of less than 3 of cement enterprises is only fifteen before the first month of the previous year."

"There was no demand for the whole February, but after entering the March, the restrictions in some areas have been liberalized, but only by 14 days' isolation and other factors, the terminal staff's actual duty rate has been affected." Hou Linlin said.

Until April of this year, the construction workers' quarantine period ended, and the transportation and other aspects were released. The demand for suppression in the first quarter began to recover gradually after the Qingming Festival.

Relevant industry data can also provide evidence. Wind data show that in April, the total sales volume of excavators was 45426, an increase of 59.9% compared with the same period last year, and sales volume reached a record high. The growth rate of the annulus was significantly higher than that of March this year.

The centralized rework of downstream construction units directly affects the demand side of cement.

"After the Qingming Festival, many enterprises have reached 7 or above sales and sales volume. The sales volume of some enterprises has reached the peak of the fourth quarter of the previous year, which is mainly affected by the release of the demand in the first quarter and the rush hour of some projects." Hou Linlin said.

Under the above background, the shipment volume of Southern China area, which is not affected by weather factors, has increased significantly. Recently, the cement price in Guangdong and Guangxi has increased by 30 yuan per ton.

What needs to be pointed out is that because the cement industry has very obvious seasonal consumption characteristics, the traditional peak season is clear, and the price can be seen in April, the turning point of the whole year can almost be established.

In Hou Linlin's view, in June and July this year, there will probably be a "light season".

First of all, the demand for concentrated release in the two quarter of this year is expected to continue under the support of the construction site rush hour. Secondly, in May, the volume of demand in some areas was affected by the weather, and this factor may be diluted in June.

In addition, there is another important "technical" reason, that is, environmental factors still exist. At the end of March, new emission standards were issued in Anhui and implemented in October this year.

"According to the new emission standards, many local enterprises can not meet the standards, and in September is in the peak season of consumption, so many enterprises are expected to stop kiln transformation in 6 and July this year." Hou Linlin said.

Before that, the clinker stock in Anhui and other river basins has been significantly reduced, and supply is tightening. If the kiln is stopped in the future, the supply side will be tightened further, thus supporting the price. Therefore, the price of cement will not be significantly reduced during the year.

Leading A shares since April

At the enterprise level, better industry boom is expected to provide opportunities for relevant listed companies to enhance profitability.

In the first quarter of this year, revenues and profits of head enterprises including Conch Cement (600585.SH) declined to varying degrees.

From the two quarter to the current industry trend, the overall volume and price rise characteristics. Although the average price of bulk cement in May was slightly lower than that of the same period last year, the scope was limited, which decreased by only 1.68% compared with the same period last year, and remained stable throughout the whole year. The sales side was affected by the demand postponed in the first quarter, which was higher than the previous level.

It may also be based on the above expectations. Since the beginning of April, Shen Wan cement manufacturing sector has promoted all Shen Wan II industries with a 19.96% increase.

Among them, only 19 cement stocks fell during the Yatai group (600881.SH), while the other 18 stocks rose all the time, while the cumulative growth of the peak cement (000672.SZ) and Qilian Mountains (600720.SH) increased by 41.23% and 34.89% respectively.

Behind the strong two tier market is the possibility that the entire industry's profit scale will continue to increase throughout the year.

First of all, the suppression effect of the epidemic on demand side has been significantly weakened. From the trend of "volume and price rise" in the whole market in April and May, we can see that the total volume of demand has not dropped substantially, but the release of nodes has been postponed.

Secondly, in the environment of infrastructure investment overweight, the early landing of some key projects is expected to bring additional demand increments on the basis of stable demand.

According to statistics of China cement network, 25 provinces and autonomous regions have announced investment plans, and the total investment amount of 22 thousand projects has reached 49 trillion and 600 billion, of which 7 trillion and 600 billion is planned for this year.

"Recently, the national policy of steady growth has been overweight, and the central economic work conference has called for the guidance of funds to invest in the short board area of infrastructure. It is expected that the pressure of capital construction will be greatly alleviated in 2020, and the promotion of major projects will be accelerated. At present, local governments have issued articles gradually, increasing investment in infrastructure construction, and the demand for cement downstream will remain stable." Societe Generale Securities pointed out.

The negative factor is a relatively high profit base for the same period in 2019. Taking conch cement as an example, the net profit of the company has reached 33 billion 593 million yuan in 2019. If the price of cement does not rise sharply in the second half of the year, the increase in profits will not be very obvious only if sales volume is raised.

In addition, the early stage of the whole plate has also accumulated a considerable increase, and investment "cost performance" has been reduced.

 

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