77 cement enterprises in Xinjiang reported losses in 1Q14

Byrebecca3360

Updated 2014-05-22

It’s understood on May 20th from Xinjiang Building Materials Industry Office that in the first quarter of 2014, 88 above designated cement enterprises in Xinjiang achieved main business income of 668mln yuan, a YoY increase of 8%; net loss of 492mln yuan, a YoY decline of 8.4%, and the net loss ranked the second in China; the number of unprofitable enterprises reached 77, and the percentage of loss-incurring enterprises was 87.5%, which was 51.5% higher than the national average.

Since 2012, the benefits of Xinjiang cement industry have been sharply falling for two consecutive years, and profit per ton of cement has fallen from 82 yuan / ton in 2011 to 2 yuan / ton in 2013. According to the analysis from staff of Xinjiang Building Materials Industry Office, the decline in benefits of Xinjiang cement enterprises is mainly due to the overcapacity in cement industry which has led to oversupply in the cement market, and the cement price has been falling sharply for two consecutive years.

In the first quarter of 2014, the benefits of cement industry went off with a bad start, and the price continued to decline. According to the all Xinjiang key contact cement price statistics from Xinjiang Building Materials Industry Office, in April, the average price of general cement 279 yuan / ton, down by 1 yuan / ton MoM, and down by 27 yuan / ton YoY; the average price  of 32.5 grade was 255.53 yuan / ton, down by 6.66 yuan / ton MoM, and down by 18.74 yuan / ton YoY; the average price of42.5  grade cement was 347.65 yuan / ton, down by 2.56 yuan / ton MoM, and down by 26.47 yuan / ton YoY.

The downturn in price benefits of the cement industry has led to a large number of credits sales extended to enterprises, tight liquidity of enterprises, and increasingly difficult capital turnover. At the same time, new emission standards for the cement industry will be implemented in 2014, which means more efforts made to control the environmental pollutions. Therefore, cement enterprises are facing greater challenges in the production cost. Responsible persons of some cement enterprises said that the situation of the cement industry so far was even worse than that in 2004 during which the benefits were the lowest. Some cement enterprises are willing to implement restructuring.

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