With the property market showing signs of easing and infrastructure plans "moderately ahead of schedule", the market is looking forward to 2022.  In the view of the Sand and Cement Association, moderately advanced infrastructure, as opposed to real estate, may provide the main imagination for 2022.  

Disturbance of the epidemic, so that the cement market in the cold and warm march become confusing.  Price increases are coming in from the end of the line, but feedback and volume data from downstream point to weak demand.  

In January-February 2022, China's cumulative cement output was 199 million tons, down 17.8% year on year, with an increase of 61.1% in the same period last year. The absolute output was 41.96 million tons lower than the same period last year.  This is the lowest level for the same period since 2011, falling below 200 million tons again and only higher than the value of 2020, which was severely affected by the epidemic.  

Sand and cement as an important building materials market performance is also relatively weak.  Hu Youyi, president of the China Sand and Stone Association, told the Economic Observer that the overall decline in output is related to production stagnation caused by the epidemic and weak downstream demand.  The epidemic has led to the normal production of stone mines in some areas, reducing production;  Underconstruction of downstream infrastructure projects has reduced demand.  

But the real peak season doesn't seem to have started until April.  With the property market showing signs of easing and infrastructure plans "moderately ahead of schedule", the market is looking forward to 2022.  In the view of the Sand and Cement Association, moderately advanced infrastructure, as opposed to real estate, may provide the main imagination for 2022.  

1. COVID-19 and rising prices  

"No goods, we understand each other, I did my best."  At more than 10 o 'clock on the evening of March 19, a tianjin agent of a large cement brand in Hebei sent a message in moments of friends.  

In the evening, roads in Tangshan were closed.  Go to tangshan cement factory to pick up goods of the truck, in Tangshan and Tianjin junction was stopped, at this time the distance from the front of the cement factory has no far distance.  Roadblocks have been set up on the road, where some vehicles of health workers are on guard.  

"Cement factories in Tangshan are basically closed," the agent said.  On the evening of March 22, Tangshan city issued a Notice on the Strict implementation of temporary global containment management, requiring the city to "adhere to the principle of internal containment management, external containment, internal containment.  Each village, community only one entrance, 24 hours to arrange a person on duty, not less than 2 people on duty.  A local source from Tangshan told the Economic Observer that local regulations are strict and private cars are not allowed on the roads.  In the afternoon of March 24, the cement agent said, there is still no cement spot.  Production at large local companies continued, but traffic was blocked, making it difficult to move cement out.  

On the evening of March 24, the cement agent said it was unclear when supplies would return to normal and warned customers that it was best to stock up in advance because of unstable supplies and the recent rise in cement prices.  Not only cement plants, but also steel mills in Tangshan, the country's largest steel market, were quickly affected, the tangshan official said, adding that some blast furnaces had begun to shut down due to a shortage of iron powder raw materials.  

On March 24, Tangshan Municipal Bureau of Industry and Information Technology issued an Urgent Letter on Applying for Permits for Key Industrial Enterprises, requiring that key industrial enterprises in line with the principle of seeking truth from facts, being absolutely necessary and strictly controlled to apply for permits for transport vehicles for Emergency Supplies for Epidemic Prevention and Control in And out of Tangshan in a timely manner.  , according to another document "tangshan key industrial enterprise transportation vehicle control scheme, key industrial enterprises of transportation vehicles, should deal with a passport, to the county (city, area) apply industry management departments, county (city, area) ministry after approved, the administrative department at the county (city, area) government, various counties (city, area) even after the government audit and submitted to the municipal labor bureau letter,  City industry and information bureau to review, the final pass will be issued to apply for enterprises.  

In early March this year, a number of cement mainstream enterprises have increased the price of cement, the whole industry then follow up.  In Tangshan area, Jidong cement and other enterprises have issued price adjustment notice to customers.  Outside the north, the Yangtze River Delta region and the Pearl River Delta cement market prices are also generally rising, cement ushered in a significant wave of price rises.  

1. 2. Smart trashes  

The tangshan cement market disturbed by the epidemic is like an epitome.  

Curiously, the recent production figures do not seem to reflect the market's enthusiasm.  Statistics show that in January-February 2022, the cumulative cement output of China was 199 million tons, down 17.8% year-on-year, with an increase of 61.1% in the same period last year, and the absolute output was 41.96 million tons lower than the same period last year.  This is the lowest level for the same period since 2011, falling below 200 million tons again and only higher than the value of 2020, which was severely affected by the epidemic.  

Jidong Cement in the price notice mentioned the reason for price adjustment: due to the enterprise environmental protection input, power limit and coal and other raw materials cost is increasing, resulting in the cement cost is rising.  

When it comes to the cement price hike, local cement industry practitioners mentioned the "coal price rise" this reason.  Coal prices have risen by more than 30% since December, data show.  And according to the reflection of local industry personage, cement enterprise is in the wrong peak production state more in the first quarter.  

On March 24, the Economic Observer learned from the China Sand and Stone Association that as an important raw material for concrete with cement, the production and sales of sand and stone have also declined. From the point of view of the production of stone mines across the country, the first two months of this year did not reach full load, but the decline of sand and stone is smaller than that of cement.  

China sand association president Hu Youyi introduced that day, the production and marketing of sand aggregate and cement production and marketing market rules are basically consistent, however, in addition to the application of sand in construction, but also used in road asphalt concrete, railway daozha and other fields.  

'It's important to note that the production and sales figures aren't exactly the same, nor are the overall national and regional situations,' Ms. Hu said.  Cement consumption in Shanghai, for example, rose 21 per cent in January-February from a year earlier, even as national production fell sharply.  Similarly, for sand and stone, because sand and stone are localized products, there is a strong regional, the situation is not the same around.  As for the overall decline in sand and cement production, Hu believes that this is related to production stagnation caused by the epidemic and weak downstream demand.  The epidemic has led to the normal production of stone mines in some areas, reducing production;  The construction of downstream infrastructure projects is insufficient, and the demand for sand aggregate and other materials is reduced.  

In the first two months of 2022, China's fixed asset investment (excluding rural households) reached 5.08 trillion yuan, up 12.2 percent year on year, 22.8 percentage points lower than the same period last year, and 7.3 percentage points faster than 2021.  National infrastructure investment (excluding electricity) rose 8.1 per cent year-on-year, but fell 30.3 per cent in the same period last year, with investment in water management up 22.5 per cent, investment in road transport up 8.2 per cent and investment in railway transport down 8.0 per cent.  

From January to February 2022, China's investment in real estate development reached 1.45 trillion yuan, up 3.7 percent year on year, with the growth rate down 34.6 percentage points from the same period last year.  Housing construction area of real estate development enterprises reached 7.845 billion square meters, up 1.8% year on year.  New housing starts reached 150 million square meters, down 12.2 percent year on year.  The area of new residential construction fell 14.9%.  

3. "moderately advanced" infrastructure  

In accordance with previous years, the end of March with the arrival of the northern construction season, construction materials will start the peak season demand.  But will the biggest driver of demand in 2022 come from real estate, infrastructure or something else?  

Hu Youyi to the Economic Observer analysis that, with the warm weather, construction projects increase, downstream aggregate demand will increase rapidly.  

He analyzed, according to this year's "two sessions" released in 2022 government tasks: moderately ahead of infrastructure investment;  We will focus on building water conservancy projects, comprehensive transportation networks, and major energy bases and facilities. We will speed up the upgrading of urban gas pipelines and other pipelines, improve flood control and drainage facilities, and continue to build underground utility pipelines.  We will advance the coordinated development of the Beijing-Tianjin-Hebei region, the development of the Yangtze Economic Belt, the development of the Guangdong-Hong Kong-Macao Greater Bay Area, the integrated development of the Yangtze River Delta, ecological conservation and high-quality development in the Yellow River Basin, develop the Xiongan New Area with high standards and high quality, and support the development of Beijing as a sub-center of the city.  We will move forward with urban renewal in an orderly manner, improve operational facilities and our ability to prevent and mitigate natural disasters, begin renovating a number of old residential areas in cities, and improve barrier-free environments and make them suitable for aging.  Strengthen the county infrastructure construction, it can be seen that infrastructure construction will still be the focus of the sand aggregate market this year, which is the biggest driving force to pull the sand aggregate market demand is from the construction of a modern comprehensive three-dimensional transportation network.  

From the latest statistics, years later, as many as dozens of cities across the country showed signs of loose housing, such as lower down payment rates, lower mortgage rates, such as Hu Youyi thinks, "this year the government work report of the clear again insisted that the house is to live, not to fry, and puts forward to explore a new development mode;  We will promote the construction of low-income housing and support the commercial housing market to better meet the reasonable needs of home buyers.  Promote urban renewal in an orderly manner;  To promote the county as an important carrier of urbanization construction, coupled with the above said to reduce the down payment ratio, reduce mortgage interest rates and other information, this year's real estate market will be better than a few years ago."  

But he also believes that although the loosening of the property market may lead to steady growth in 2022, it is difficult for the real estate market to see explosive growth under the premise of sticking to the premise of housing speculation.  

Kong Xiangzhong, executive chairman of The China Cement Association, is also looking forward to the infrastructure growth space in 2022.  After his analysis, the central economic work conference and the National Development and Reform Commission, ministry of two ministries "about to refresh the industrial economic operation Implementation plan "to promote the development of industrial quality shows an obvious signal, is the industrial economic growth as the focus of the national economic growth stability, will advance and carry out infrastructure investment, as to enhance the development of endogenous power,  This has enhanced the industry's confidence in the future development of cement market.  "The key to stabilizing economic growth is to do a good job in industry.  In order to appropriately advance infrastructure construction, the Ministry of Finance has issued a special debt quota for 2022 to provincial-level financial departments to promote effective investment and strengthen construction in key areas, which is conducive to the construction of infrastructure projects.  In the real estate sector, we will continue to promote both rental and purchase, accelerate the development of the long-term rental market, promote the construction of low-income housing, support the commercial housing market, and adopt urban policies to promote a virtuous cycle and healthy development of the real estate industry."  Kong xiangzhong said at the time.  

Kong Xiangzhong expects that cement demand will have an upward course in 2022, and the overall demand for the whole year will remain at a high plateau period.  

(Source: Economic Observer)  

Key words: Chongqing Sanming Heavy Industry infrastructure project building materials market