The Party Central Committee and the State Council attach great importance to the healthy and orderly development of the aggregates industry. In recent years, central government have successively issued “Several Opinions on Promoting the High-Quality Development of the Manufactured Aggregates Industry”, “Guiding Opinions on Promoting the Healthy and Orderly Development of the Aggregates Industry” and other documents. The rapid development of the industry has attracted lots of attention from all walks of life. However, what is the current basic situation of Chinese aggregates industry? Has the problem of aggregates shortage in recent years been alleviated? Can the supply meet the demands of national and local key projects? What is the solution to the high-quality development of the aggregates industry?
Economic Daily and China Building Materials News visited China Aggregates Association, and its relevant member units, and related companies on site, conducted investigations, and successively published multiple in-depth reports. Among them, the Economic Daily recently published a report entitled “How to Solve the Problem in the Aggregates Market”.
Below is the report.
Aggregates, as an important and irreplaceable part of concrete raw materials, is an indispensable basic material in infrastructure construction, and its consumption is huge. In recent years, the domestic price of aggregates has continued to rise, which directly affects the construction of the project. In some places, the situation of extreme shortage of aggregates has even appeared, which has caused delays in the construction of some key projects.
What caused the tight supply of aggregates? How can we truly solve the problem of tight supply in the market under the premise of meeting environmental protection requirements? Has the situation of tight supply of aggregates eased in China?
The supply and prices vary across regions
The seemingly obscure aggregates have caused a lot of waves in the field of construction in recent years. With the commencement of infrastructure projects and the continuous increase in environmental protection efforts, the extraction of sand and gravel in lakes, and rivers have been restricted, resulting in continued tight supply of aggregates in the market in some areas, and prices have also been rising.
This situation was changed in June this year. Recently, with the gradual implementation of policies, timely follow-up of logistics, and the gradual slowdown in demand caused by the arrival of the rainy season, the national aggregates price has changed from the continuous upward trend from March to May this year, began to fluctuate downward, and gradually fell. Data show that as of June 30, the national average price of manufactured sand was 103 yuan/ton; the average price of crushed stone was 96 yuan/ton; the average price of natural sand was 136 yuan/ton. The fall in the price has benefited from multiple measures taken by various regions and departments, which effectively promoted the healthy and orderly development of the aggregates industry. The supply of aggregates market has begun to stabilize, prices have generally remained stable, and the development of the industry has tended to be healthy and orderly.
According to Hu Youyi, President of the China Aggregates Association, the increase in aggregates prices can be traced back to 2017. Since 2019, the supply of aggregates in most economically developed areas of China has been tight, and aggregates shortage has become the normal state.
In the first quarter of 2020, due to the impact of the Covid-19, the progress of many engineering projects has been delayed, and the price of aggregates has fallen. But it didn’t take long. From March to May this year (2021), regional aggregates prices fluctuated again. According to statistics, the price of aggregates in the lower reaches of the Yangtze River where aggregates are consumed has risen by more than 20% at most within two months, and some sizes of aggregates have risen by nearly 30%.
Hu Youyi analyzed that there are three main reasons for the increase in the price of aggregates:
First, from the demand side, the country is adjusting its industrial structure and developing towards high quality mode. At the same time, it vigorously promotes infrastructure construction, and the demand for aggregates is large; from the supply side, the country strengthens the construction of ecological civilization and eliminates backward industries. The non-environmentally friendly aggregates production capacity has been knocked out the supply has been drastically reduced.
Second, for a long time, most local government management departments have relatively lacked policies, regulations, and management measures for the aggregates industry. They have insufficient understanding of the importance and territoriality of the industry. Closing old mines and not approving new mines has led to a significant reduction in the production capacity of aggregates that originally supported infrastructure construction.
Third, outdated aggregates production capacity has been eliminated, and non-environmentally friendly enterprises have been closed down, but it takes 1 to 2 years to build a modern aggregates producing enterprise. There has been a gap in the conversion process of new and old kinetic energy, resulting in a relatively huge short supply.
During the visit and investigation, the reporter found that the price of crushed stone and machine-made sand in the south is generally higher than that in the north. The south is lack of aggregates resources, but the market demand is strong, and there is often a situation of short supply in peak seasons, so there is a significant rise on the prices of aggregates.
“At present, the market price of aggregates in Guangzhou has stabilized, and the price per ton is basically stable at around 150 yuan, with occasional fluctuations of a few yuan.” General Manager Zhang Yuanfa of Guangzhou Taihe Concrete Co., Ltd. told the reporter that compared with the northern area, the development of the manufactured aggregates industry in Guangdong province has been relatively slow. In 2018, companies were unable to find a source of aggregates, and they scrambled for sand in the market.
“The local government attaches great importance to the issue of aggregates, and urgently introduced various policies to accelerate the development of manufactured aggregates, and establish a large state-owned manufactured aggregates producing company. After 2019, the local tight supply of aggregates has gradually eased, and market prices have begun to slowly decline.” Zhang Yuanfa said, at present, Guangzhou aggregates market is dominated by manufactured aggregates, and concrete companies no longer use sea sand. “After adjustment of the formula, the application of manufactured sand in concrete can reach the same quality of concrete made of river sand as raw materials, and the quality of the project can be guaranteed.”
Multi-pronged approach to ease the tight supply of aggregates
China is the world’s largest producer and consumer of aggregates. After years of large-scale extraction, natural sand and gravel resources have gradually decreased. In recent years, the amount of sand from major domestic rivers has dropped significantly. In addition, some areas have not coordinated the relationship between “blocking the back door” (forbidding illegal quarrying) and “opening the front door” (creating new source of aggregates), and have not worked hard to maintain supply while curbing indiscriminate quarrying. This has led to a significant reduction in aggregates production and a short-term imbalance between regional supply and demand. Prices have risen sharply, and low-quality aggregates have entered the market. What’s more, it increased the cost of major project construction, and also affected the progress of project construction and brings hidden dangers to quality and safety.
In order to stabilize the supply of aggregates in the market, maintain the overall stability of prices, and promote the healthy and orderly development of the industry, relevant state departments and local governments have attached great importance to the industry and introduced relevant policies. In November 2019, 10 departments including the Ministry of Industry and Information Technology jointly issued the “Several Opinions on Promoting the High-Quality Development of the Manufactured Aggregates”. In May of this year, the State Council’s executive meeting addressed many times to ensure supply and price stabilization of the bulk commodities, of which aggregates is involved.
Experts said that the proportion of alternative sand sources such as manufactured sand and gravel should be gradually increased, and the layout of production and sales should be optimized in order to accelerate the establishment of a regional supply-demand balance, reasonable price, green environmental protection, high-quality and efficient aggregates industry system. In September 2020, the National Development and Reform Commission jointly issued the “Guiding Opinions on Expanding Investment in Strategic Emerging Industries, Cultivating and Growing New Growth Pole”, which listed manufactured sand as a key product and service of strategic emerging industries.
The survey shows that currently manufactured aggregates are gradually replacing natural sand and gravel to fill the market demand, which has accounted for about 70% of the aggregates used for construction. Aggregates produced by the comprehensive utilization of solid wastes such as construction solid waste and road construction cave residues and tailings waste rock has gradually become an effective supplement to the current aggregates market. The technology of sea sand desalination has made breakthroughs, and the standard system is improving.
The future of Chinese aggregates industry is promising
In the construction waste disposal and resource production workshop of Beijing City Lvyuan Environmental Protection Technology Co., Ltd., the reporter saw a comprehensive production composed of a fixed environmental protection construction waste crushing production line, 2 sets of concrete mixing units, and 1 set of inorganic material mixing units. In operation.
“This is Beijing's first officially planned and constructed new fixed environmental technology-based plant for construction waste treatment and resource utilization.” said Zeng Bo, deputy chief engineer of Metropolis Luyuan Company. The company vigorously promotes the "integrated implementation + integrated application of construction waste" "The disposal and reuse model has formed a comprehensive environmental protection industry segment based on construction waste, such as solid waste disposal and recycling, ecological treatment and environmental restoration." Supply to Beijing and surrounding markets." Zeng Bo said.
With the advancement of ecological civilization construction, the utilization of solid waste resources has become a hot topic. The aggregates produced by the comprehensive utilization of solid wastes such as construction waste, roads and other engineering construction slag, tailings and waste rocks have become an effective supplement to the current aggregates market.
“In recent years, the industry has shown development trends such as environmental-friendly, large-scale, intelligent, etc., a large number of green, environmentally-friendly, intelligent and modern aggregate production lines have been built.” Hu Youyi said, “No matter from the 20 billion tons of annual consumption, or from the the level of intelligence, it can be said that modern aggregates enterprises have appeared in China.”
When it comes to the future development of the industry, Hu Youyi is full of confidence. He believes that for a long time, people have paid high attention to yet low recognition of quarrying, and if the aggregates industry is to gain a new life, it should take the path of “cross-border” cooperation and innovation.