While Chinese aggregate production has significantly reduced in recent years, the world’s biggest producer continues embracing the sustainability agenda. Guy Woodford reports
China’s aggregate production stood at 16.8 billion tonnes in 2023, according to figures quoted on RocksTalk, the podcast of Aggregates Europe – UEPG, during an interview with Xu Beibei, China Aggregates Association’s international department director at the 7th GAIN (Global Aggregates Information Network) Conference in Cordoba, Argentina (October 20-23, 2024).
While 16.8 billion tonnes is significantly down from the nearly 20 billion tonnes produced in 2020, RocksTalk stressed that China is by far the world’s largest aggregate producer (India is second, producing a GAIN-estimated 5.6bn tonnes in 2023). China has around 13,000 extraction sites, a huge reduction from more than 56,000 a decade ago. The nation produces over five times the tonnage in Europe annually on half the number of sites (Europe has around 26,000 extraction sites). China’s largest quarry sites produce around 100 million tonnes of aggregates annually.
Shortly after the latest issue of this magazine was due to go to press, the global aggregates industry was descending on China for major dual conferences.
More than 1,000 senior quarrying sector professionals will share their experience, good practice, and vision for the aggregates industry’s future during the 9th China International Aggregates Conference and the 7th China International Conference on Comprehensive Utilisation of Construction and Demolition Waste, Tailings, and Waste Rock.
The China Aggregates Association was hosting the dual conferences in Chongqing from 16-18 December 2024.
Speaking to Aggregates Business ahead of the big events, Hu Youyi, president of China Aggregates Association, said the continued decline in Chinese real estate investment and the slowdown in infrastructure spending were major factors in China’s declining aggregates production volumes and product prices.
“The industry is going to face big challenges for a long time. However, the challenges also provide valuable opportunities for the industry’s transformation and upgrading,” said Hu.
“With the adjustment and transformation of the Chinese macro-economy, the aggregates industry, as the cornerstone of the construction industry, is inevitably impacted. According to the ‘China Aggregates Industry Operation Report’, released by the China Aggregates Association, from 1 January to 31 October 2024, China’s national aggregates production was 12.5 billion tonnes, a [year-on-year] decrease of 10.6%. Behind this figure is the grim reality and heavy pressure the industry faces.”
Hu said that on the supply side, the shadow of gradually expanding overcapacity looms over the entire Chinese aggregates industry. Although China’s existing aggregate production lines can meet the current market demand, the continuous addition of new production lines has further exacerbated the risk of overcapacity.
“This phenomenon not only reflects the industry’s blind expansion in the past few years but also exposes the problem of enterprises’ lack of foresight and flexibility in the face of market changes,” said Hu. “Real estate and construction investment have declined on the demand side. Although infrastructure investment has maintained growth, the growth rate has slowed significantly, making it difficult to effectively fill the gap in the real estate market, resulting in insufficient effective demand for sand and gravel. Regarding price, statistics from CAA show that in October this year, the average comprehensive price of aggregates in China was 94 Chinese Yuan/tonne, a year-on-year decrease of 9.6%.”
Looking at the next few years, Hu said China’s aggregates industry will experience a process of de-capacity and enter a new round of adjustment, deep adjustment and high-quality development. In this round of adjustment, some enterprises with overcapacity, backward technology, high costs, and no comprehensive advantages will be eliminated until the supply and demand relationship reaches a basic balance.
“Faced with such a predicament, the aggregates industry started to have profound reflection and self-examination. How to survive adversity, find opportunities in challenges, and reshape the industrial ecology under the new situation have become issues that every sand and gravel company must face and think about.”
Faced with a complex industry environment, Chinese aggregates-producing companies have begun to explore the path of transformation and upgrading.
“The aggregates and equipment industry is a field full of infinite possibilities. A small technological improvement, concept innovation or model change may bring huge benefits,” said Hu.
The CAA president outlined the key difficulties faced by China’s aggregate enterprises. For the built quarry, if the design and equipment selection is reasonable, there is still profit to obtain, but as the price of sand and gravel continues to fall, the profit margin will become smaller and smaller; for enterprises with the cement, aggregate, and concrete industry chain, there is still room for price reduction; and for newly-built quarries, the cost of investment in resource fees and construction is large, and it isn’t easy to recover the cost when the price of sand and gravel products is reduced, and the company’s funds are tight. For quarries with unreasonable design and equipment selection, the operating expenses are high, and the room for price reduction is limited. Technical improvement is required to reduce costs but requires a large amount of capital investment. Hu believes that innovation is the key to breaking the deadlock, with aggregates producing companies’ focus needing to be on “actively exploring new market areas and growth points”.
Hu said green building and ecological conservation concepts have become more popular in China. The government’s support for new energy and materials has continued to increase. He believes the national aggregates industry can take this opportunity to develop in the direction of high-end, refined, and green products and improve the core competitiveness and market share of enterprises by developing high-quality aggregates products and expanding new application areas and market channels.
“Although the current aggregates industry faces many challenges and difficulties, we should remain optimistic,” said Hu. “Although market demand has declined, the total volume is still huge, and a certain intensity of construction is maintained. The renovation of old urban communities and constructing small and medium-sized rural infrastructure are also key support projects. Accelerating the ‘three major projects’—construction of affordable housing, the renovation of urban villages and public infrastructure for both normal and emergency use are major strategic deployments made by the CPC (Communist Party of China) Central Committee and will remain an important task at present and in the future.”
Off-Highway Research (OHR) has stated that the Chinese off-highway machinery market collapsed in 2022 with a 39% decline to 237,317 units after two years of “abnormally high” sales in 2020 (412,595 units) and 2021 (389,312 units).
OHR noted that this was partly due to government stimulus money being spent. The same source adds that the steep fall in demand was also compounded by shocks in the Chinese real estate sector, coupled with difficulties in tackling the COVID-19 pandemic. A further 38% drop in construction equipment sales in 2023 to 146,981 units was, said OHR, partly attributable to falling prices and mounting bad debts in the retail estate sector.
OHR forecasts a further 4% fall in sales in 2024 to 140,710 units, which it believes is the market “bottoming out” and “arguably the best-case scenario for the country.” However, further bad news and property developer insolvencies could, notes OHR, further depress the equipment market.
OHR also reported that wide-bodied trucks (WBTs) have emerged as by far the most popular type of off-road hauler in the Chinese mining, quarrying, and construction sectors. According to OHR, sales reached almost 18,000 units in 2023, compared to 260 traditional rigid dump trucks and just three articulated haulers.
Produced exclusively in China by indigenous OEMs (original equipment manufacturers), WBTs are said by OHR to be manufactured primarily with locally available diesel engines or batteries, transmissions, and axles. They feature a large hopper on a relatively low chassis. They have a much lower purchase price than traditional off-road dump trucks and better rough terrain capabilities than standard on-road trucks.
The increased width of the vehicle body has significantly improved its load capacity. However, the prominent feature of the ‘wide body’ exceeds the national standard limit of 2.5 metres, said OHR in a November news release. As a result, WBTs are not allowed to travel on the highway but are limited to use in open-cast mines or on private land.
The payload capacity of WBTs usually ranges from 20 tonnes to 130 tonnes. Demand for smaller models with payloads under 60 was evident around 20 years ago, further notes OHR, while the most popular models in their first decade of use had a gross weight of 70 tonnes.
MarketsandMarkets supports OHR’s analysis that the Chinese construction equipment market is mainly supported by stimulus spending provided by the government in 2020, which resulted in “tremendous growth” in the next two years.
After weaker demand in 2022 and 2023, akin to pre-2020 sales levels, the leading US-based business markets consultancy predicts a recovery in 2024, mainly due to growing demand for compact equipment and the gradual increase in residential housing projects.
The size of China’s construction market was US$4.7 trillion in 2023, according to GlobalData. The market is projected to attain an AAGR of over 3% from 2025 to 2028. Investment in energy and infrastructure projects will support the sector’s growth. The Chinese government plans to invest CNY92.4 trillion ($13.7 trillion) by 2060 for green power transformation. As part of the programme, the government plans to attain net-zero emissions of greenhouse gases by 2060. China plans to source 33% of power from renewable sources by 2025.
At the start of last year, China’s Ministry of Industry and Information Technology (MIIT) unveiled 15 measures to stabilise growth further and adjust the structure of SMEs (small and medium enterprises). This includes financing support for high-quality SMEs. GlobalData states that China plans to increase the number of SMEs involved in manufacturing to 150,000 and ‘little giant’ enterprises to 10,000 by the end of 2023. In September 2023, the Chinese government revealed plans to add 2,500km of high-speed railway lines and expand its total rail network by 50,000km by 2025.
Reportlinker, an AI-driven market intelligence platform, agrees with GlobalData’s take that the Chinese construction market will grow over the next three years. The same source says the market’s prospects will be boosted by continuing urbanisation, which leads to a rising demand for sustainable building practices and construction materials like concrete, cement, steel, bricks, sand, and gravel.
Meanwhile, the World Cement Association’s CEO, Ian Riley, has welcomed China’s recent expansion of its national carbon trading market to include the cement industry, among other hard-to-abate sectors, by the end of this year.
The move announced by China Minister of Ecology and Environment Huang Runqiu in June 2024 marks a significant step in China’s environmental plans.
“The inclusion of cement in the Chinese ETS [emissions trading scheme] is a critical and long-awaited step,” said Riley. “As we have seen in Europe, a well-implemented carbon ETS can be beneficial by not only curbing emissions but also catalysing industry restructuring that favours the most efficient and lowest-emitting producers. This move signals China’s intent to prioritise sustainability in high-emission sectors, a move welcomed by the World Cement Association.
“In addition to the ETS, China has also successfully used energy efficiency standards to encourage widespread adoption of the latest low-energy technology. This approach is essential for meaningful climate action.”
China is by far the world’s biggest national producer and user of cement, producing 2.1 billion tonnes a year, half the global total. India is a very distant second, producing around 410 million tonnes annually.
In January 2024, the China Cement Association (CCA) and the Global Cement and Concrete Association (GCCA) signed a milestone MoU (memorandum of understanding) agreement to help accelerate the sector’s decarbonisation worldwide.
“We are delighted with this MoU and will work with the CCA to deliver a China cement industry roadmap similar to that used in India and the rest of the world to achieve decarbonisation. This means that the roadmaps are consistent and comprehensive across geographies,” said Dr Andrew Minson, GCCA director of concrete and sustainable construction, during an interview with Aggregates Business earlier this year. “Getting China on board is also significant in a wider context, as the country is a significant manufacturer of cement and concrete machinery and plants and a big contributor to the industry sustainability research agenda. China is also a major player in developing and commercialising carbon capture solutions.”
The Wirtgen Group showcased new products and technologies for the Chinese and wider Asia market at bauma China 2024 (6-29 November). As part of the Group’s extensive display, Wirtgen’s Kleemann brand highlighted how its premium crushing plants can be operated easily and efficiently with the SPECTIVE operating concept.
Since 2004, the Wirtgen Group has been manufacturing products that fulfil German quality standards at its ultra-modern factory in Langfang, a city in Hebei province. Tailored to the specific needs of the local market, the models manufactured here offer long life, cost efficiency, ease of use, and low operating and maintenance costs.
With seven locations, two service centres, and an extensive network of dealers, Wirtgen China operates a tight and efficient sales and service network that now serves almost all 22 Chinese provinces. As a result, the Wirtgen Group subsidiary in China is always close to its customers and can offer solutions from a single source.
During another key industry exhibition, Hillhead 2024 in Buxton, England (23-25 June), Pat Brian, vice president of the aggregates business within Terex Materials Processing (Terex MP), a division of Terex Corporation, highlighted the notable increase in the production of Powerscreen and Finlay-branded crushers and screeners at Terex MP’s 18,000m² site in Shanghai’s Jiading district.
“We acquired the facility just as the coronavirus pandemic hit. The team there has done a remarkable job. This year, we will pretty much double production from last year. We use that facility to supply the local Chinese market and support our business in Southeast Asia and Australia. Due to the domestic economy, the China market has been quite difficult. However, we are seeing a few signs of improvement. To our benefit, some other international [crushing and screening] brands have now exited that market. From our [China] factory, we can, in time, leverage many of our brands and products.”
