Aggregates are the largest, indispensable and irreplaceable raw materials for infrastructure construction in China. Each year China consumes about 20 billion tons of aggregates. And it is also the largest raw material, mineral product and bulk commodity in the world. The annual output value of aggregates in China is more than 2 trillion yuan, and the transportation cost is as high as more than 500 billion yuan. According to incomplete statistics, by the end of 2021, per capita aggregates consumption in China is 13.9 tons, and there are about 15,000 aggregates mines, more than 30,000 related enterprises, creating jobs for more than one million people. The annual output and consumption of aggregates in China has topped the world.
Right now, China’s aggregates industry has fully entered a new stage of high-quality development marked by green and low carbon. The green and low-carbon management system of China's aggregates industry with distinctive features of “green mines, green factories, and green bases” is rapidly being built.
2021 Aggregates Industry Overview
In 2021, the supply of the aggregates industry was affected by factors such as carbon peaking, dual control of energy consumption, normalization of epidemic prevention and control, and tight transportation capacity in some areas. The demand-side infrastructure construction and real estate investment will continue to grow. The operation showed a stable and good development trend.
In 2021, the national sand and gravel output will be 19.7 billion tons, a slight decrease from 2020 by 1%. In 2021, the sand and gravel industry will be affected by the slowdown in the growth rate of infrastructure and real estate, and the growth rate of sand and gravel demand will slow down. In addition, the normalization of epidemic prevention and control, carbon peaking, and double control of energy consumption will affect the start-up time of sand and gravel mines. Production has contracted slightly.
In the first half of 2021, the national price of sand and gravel, and crushed rock is relatively stable. In the second half of the year, with the arrival of the peak project season, the national demand for aggregates will increase. However, on the supply side, enterprises are affected by the double control of energy consumption, causing the continuous tight of supply, resulting in the rise of price in the second half of the year.
According to the National Bureau of Statistics, in 2021, fixed asset investment in the national mining industry increased by 10.9% year-on-year. The investment in fixed assets of sand and gravel mines is significantly higher than that of other minerals since the price of sand and gravel continues to rise due to the shortage of some areas in China. According to preliminary statistics, the annual growth rate of investment in aggregates is about 15%.
In recent years, small-scale aggregates mining rights have been rapidly integrated, and the number of quarries in the country has shown a downward trend.
Operation report of aggregates industry
1. Production has dropped slightly
Figure: Changes in China’s aggregates production in the past five years
In 2021, the national aggregates production is 19.7 billion tons, 1.0% decrease from 2020. In 2021, due to the slowdown in the growth rate of infrastructure and real estate investment, the growth rate of aggregates demand slowed down. In addition, the normalization of Covid-19 prevention and control and the impact of environmental inspections on the start-up time of quarries result in a slight contraction in production.
2. The price change of aggregates
Figure: The average price of aggregates in general (yuan/ton) in 2021
According to the Big Data Center of China Aggregates Association, Chinese national average price of aggregates in 2021 is 113 yuan/ton, a year-on-year increase of 2.2%.
Figure: Average price of natural sand (yuan/ton) in 2021
Figure: Average price of manufactured sand (yuan/ton) in 2021
In the first half of 2021, the average price of natural sand and gravel and manufactured/machine-made aggregates was affected by factors such as the construction progress of the demand-side construction market, the fluctuation of production of quarries on the supply side, and the tight shipping in the middle and lower reaches of the Yangtze River on the transportation side. Therefore, the price fluctuated greatly in the first half of the year; in the second half of the year, with the arrival of the peak engineering season, the demand for aggregates has steadily increased, which has also pushed up the price of natural sand and stone. The prices of natural sand and stone and manufactured/machine-made aggregates continued to rise since the second half of the year.
As of December 31, 2021, the national average price of machine-made sand was 102 yuan/ton, unchanged from the previous month; the average price of natural sand was 142 yuan/ton, up 0.7% from the previous month.
Figure: Average price of stone for construction (yuan/ton）
In the second half of 2021, the price of crushed stone rose along with the changes in supply and demand in the aggregates market. As of December 31, the average price of crushed stone was 102 yuan / ton, unchanged from the previous month.
3. Overview of quarries
Figure: Distribution of quarries by province
As of the end of 2020, from the perspective of the distribution of quarries in various provinces, autonomous regions and municipalities, Guizhou and Yunnan have the largest number of quarries, with 1,632 and 1,049 respectively; the number of quarries in Xinjiang, Sichuan, Hunan, Guangxi and Jiangxi is between 500 and 800; the number of quarries in Inner Mongolia, Gansu, Heilongjiang, Guangdong, Shanxi, Chongqing, and Hubei is between 300 and 500; the number of quarries in Zhejiang, Jilin, Shaanxi, Fujian, Hebei, Henan, Anhui, Liaoning, Qinghai, Shandong, Ningxia, Hainan, Tibet and Jiangsu is less than 200; in addition, the number of quarries in Beijing, Tianjin and Shanghai is zero.
Figure: Newly-built major aggregates production lines in 2021
In 2021, judging from the new major aggregate production lines in various provinces, Fujian and Shanxi has more than 10 new aggregate production lines; Henan has 6, Guangxi has 5, Liaoning has 5, Guizhou has 4, Anhui has 3, and Hunan has 2; Sichuan, Chongqing, Hubei, Shaanxi, and Shandong all have 1.
Figure: Newly established aggregates mining rights in 2021
In 2021, the number of newly established aggregates mining rights nationwide reached 805, of which Yunnan and Xinjiang will rank the top two with 166 and 156 respectively; The number is between 50 and 100; the number of newly established aggregates mining rights in Jilin, Guangxi, Gansu, Hubei, Sichuan, Chongqing, Guangdong, Zhejiang, Shaanxi, Anhui and Shandong is less than 10.
Figure: Mineral distribution of newly approved aggregates rights in 2021
In 2021, among the newly established aggregates mining rights nationwide, there are 11 kinds of minerals, including limestone for construction stone, sand for construction, granite for construction, sandstone for construction, stone for construction(tuff), basalt for construction, andesite for construction, and dolomite for construction, diorite for construction, diabase for construction, marble for construction. Among them, limestone for construction stone and sand for construction have the largest number of minerals, 346 and 215 respectively; secondly, the number of granite sandstone for construction is 86; The number of mineral rights of sandstone for construction, stone for construction (tuff), basalt for construction, andesite for construction, and dolomite for construction is between 10 and 50; The number of mineral rights of diorite for construction, diabase for construction and marble for construction are all within 5.
In 2021, the large-scale development of Chinese aggregates industry has achieved certain results. The 0.1-1 square kilometer mining rights will replace the 0-0.1 square kilometers mining rights and become the mainstream of new mining rights in 2021. In 2021, among the newly established aggregates mining rights, there are 365 mining areas with an area between 0 and 0.1 square kilometers, accounting for 45.3%. There are 422 aggregates mining rights with a mining area between 0.1 and 1 square km, accounting for more than half; 18 are between 1 and 10 square kilometers, accounting for 2.2%.
4. Analysis of key regions
Eastern region: The number of quarries in eastern China is about 1,200, and aggregates demand is 6.7 billion tons. At present, Chinese eastern region has strong demand and shortage of supply of aggregates. Among them, the aggregates shortage in Shandong, Jiangsu and Guangdong provinces are relatively high; Hebei, as a province with large aggregates resources, produce aggregates that meet the demand for Beijing, Tianjin and its own. Among the key provinces in the eastern region, the supply and demand of aggregates in Guangdong is seriously insufficient. The self-produced crushed stone is 350 million tons, the annual production of manufactured sand is about 100 million tons, and the annual demand is 1.5 billion tons; Shandong high-quality aggregates are generally in short supply with 120 million tons of aggregates each year. The shortage of aggregates in Jiangsu reached 40%, and the annual demand is about 1.15 billion tons; Hebei guarantees 40% of the supply in Beijing, and provides nearly 1 billion tons of construction sand and gravel materials to the market every year.
Central region: The number of quarries in central China is 2,107, and the demand for aggregates exceeds 5 billion tons. Among them, Hunan has a supply shortage of 200 million tons, and the consumption of aggregates in Hunan is stable at about 900 million tons per year, and the actual total production is about 700 million tons.
Western Region: The number of quarries in western China is 6,288, and the demand exceeds 7 billion tons. Among them, Guizhou’s current planned production capacity exceeds 1.5 billion tons, and there is a general problem of excess capacity in the province.
Northeast China: There are 789 quarries in northeast China, and the demand exceeds 800 million tons. Among them, the current demand for aggregates in Liaoning is about 240 million tons per year with 400 million tons of production, which can meet the market demand, but the oversupply is becoming more and more obvious. The ex-factory price of crushed stone is between 22 and 28 yuan/ton, and the ex-factory price of manufactured sand is between 30 and 36 yuan/ton.
As aggregates price rises, the “Transportation of North Sand to the South” came into being. Most of the aggregates resources in Liaoning province were transported to the South.
Development trend of aggregates industry
Chinese aggregates industry has been highly valued by the state government since 2012. On June 22, 2018, the Ministry of Natural Resources released the “Green Mine Construction Specifications for the Aggregates Industry”, and aggregates industry becomes one of the nine major mining industries in China. On November 4, 2019, ten national departments jointly issued the “Opinions on Promoting the High-quality Development of Machine-made Aggregates Industry”; on March 25, 2020, the fifteen national departments jointly issued the “On Promoting the Healthy and Orderly Development of the Aggregates Industry”. The National Mineral Resources Planning (2021-2025) has been completed in 2021. According to the above relevant industrial policies and planning requirements, the future development trend of the aggregates industry is intelligent, green, high-quality, well-managed, efficient and large-scale. Chinese aggregates industry has entered a new stage of high-quality development marked by green and low carbon.