CEMENT:CEMENT PRICES CONTINUED TO RISE LAST WEEK;SOME REGIONS IN SHANDONG ANNOUNCED SUSPENSION PLANS
The average cement price (nationwide) increased 0.6% to RMB420/tonne last week.
Coal prices increased slightly last week.
Some regions in Shandong announced winter production suspension plans, which is largely in line with the schedule last year.
Cement stocks under our coverage increased 2.27% on average last week.
Overview of last week
The average cement price (nationwide) rose by 0.6% to RMB420/tonne compared with the price in the previous week. There was an increase in cement prices of RMB20- 30/tonne in Hunan, Guangxi, Chongqing and Yunnan. Cement demand stabilized and shipment levels were 80%-90% of the normal level in mid-September. Inventory levels also remained reasonable, so the upward trend in cement prices is likely to continue. The average inventory level (nationwide) decreased from 55.94% to 54.81% last week.
Coal prices rose slightly last week
The comprehensive average price index for Bohai-Rim Steam Coal (Q5500K) increased by RMB1/tonne to RMB578/tonne last week. The index increased 1.58% on a year-on- year basis.
Winter production suspension will start in mid-November in Zaozhuang, Shandong
The winter production suspension will last from 15 November 2019 to 15 March 2020. With the latest information, it is unclear how much production capacity will be temporarily suspended at different times during this period. We expect more regions in Shandong to announce their plans later. Last year, the off-peak production suspension was between 1 November 2018 and 15 March 2019. Therefore, the impact on production volume on a yoy basis looks limited, in our view.
Cement stocks under coverage increased 2.27% on average last week
The share price of best-performer CR Cement [1313.HK; HOLD] rose 7.73% last week. Conch Cement [600585.CH; ADD], the weakest among our coverage stocks, dropped 1.71% week on week.