South China's cement prices are weak

Stimulated by the release of credit for public rental housing, the cement sector soared by 4.48% on September 21st, led by the southern cement leaders Huaxin Cement, Conch Cement, and Tower Card. The cement sector is weak in Nanqiangbei, and has a certain relationship with Southern Cement's second price increase in Fengcheng, Jiangxi. However, the current cement demand is still weak, and the second price increase of cement in the south is hard to be heard. In response to Southern Cement, only Hongshi Cement is the only one, and it is limited to Jiangxi area. Prior to this, the East China Cement Leading Company paid for the insured price and reached a limited production and insured price agreement in secret, but it could only affect cement prices in the short term. The current situation of the oversupply of the cement industry in the medium and long term is still difficult to change. As demand for ASEAN building materials is strong, companies with export capabilities and brands such as Conch Cement are expected to benefit.

On September 20, the Digital Cement Network once again received news of Jiangxi cement price increase in the south. It is reported that on September 21, Jiangxi South Cement has raised RMB 20/ton in various administrative regions of Fuzhou, P. O42.5 bulk ex-factory price reached 440 yuan / ton, which is the second leading Jiangxi Jiangxi cement in the second area after leading the Fengcheng area. Prior to this, on September 10th, Jiangxi Southern Cement announced that the price of cement was raised by RMB 20/t in Fengcheng, and on September 15 Hongshi Cement also increased the price of different varieties by RMB 20-40/t. At present, the cement price in the region is stable and the market response is stable.

The demand for cement is still weak. In response to Southern Cement, only Hongshi Cement is the only one, and it is limited to the Jiangxi region. The price increase of cement in the south is hard to come by.

The continuous and active price increase of leading enterprises in Jiangxi Province can be successful, mainly because the market in this area is relatively closed and the market for leading companies is highly controlled. Prices are not excessively fast and excessive, and downstream customers can still accept it. At present, most other companies in Jiangxi are still mainly wait-and-see, and will consider whether or not to follow up on the cement implementation and market response situation in the south of Jiangxi. Jiangxi cement market is monopolized by the three major cement giants including Anhui Conch Cement (600585), Nanfang Cement and Hongshi Group. The market share is nearly 80%, mainly due to the acquisition of small and medium-sized cement companies including Jiangxi Cement (000789) by Southern Cement in recent years. The degree of industry concentration has increased.

Since the second half of the year, the cement market in the middle and lower reaches of the Yangtze River has been affected by continuous rain weather and macro-control. Demand has been relatively weak. Even if the leading enterprises in Jiangsu and Zhejiang stopped production for 10-15 consecutive days, cement prices continued to decline slightly.

According to statistics, last week's drop in cement prices was mainly reflected in Hunan, Hubei, and Chongqing in the southwestern region of Central China. Among them, cement prices in Chongqing fell the most, reaching 40-50 yuan/ton, and the lowest ex-factory price for individual companies had reached 235 yuan/ton. Ton. The only rising region was Guangdong, which was affected by factors such as electricity restrictions. The cement market price rose by RMB 20-30/t, P. O42.5 price is 450-460 yuan / ton, clinker in place price of 410 yuan / ton, compared with prices rose about 7% a month ago.

Prior to this, the East China Cement Leading Company paid insured price and communicated in secret to reach a limited production price insured agreement. However, in the context of macro-tightening, the agreement can only affect cement prices in the short term, and the current situation of the oversupply of the cement industry in the medium and long-term is still difficult to change. It is estimated that by 2015 China's total cement production capacity will be maintained at more than 2.5 billion tons, while the demand is only about 2 billion tons, and the overcapacity is very serious.

In August, the export orders index dropped sharply. Coupled with the expected slowdown in the European and US economies, the market generally expects China's economic growth to slow in the second half of the year. In addition, the main real estate control policies affecting cement are still under overweight. Although interest rates have not been raised again after interest rate hikes in early July, the central bank has introduced new regulations to freeze funds by 900 billion yuan.

From the supply point of view, cement investment has shown signs of resurgence in the near term. In the medium term, future supply growth will continue into 2013, and even if all backward production capacity is considered to be eliminated, the capacity increase in 2011 and 2012 will exceed 100 million tons. Moreover, the northwest and north China regions, where supply was mainly concentrated before 2010, have aggravated the imbalance in supply and demand in the cement industry.

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