The Fluctuation Of Cement Price In Rainy Season In Southern China Benefits From "Carbon Neutral" Transformation, And There Is Still Room For Increase In The Whole Year

In the rainy season of Meiyu, the cement industry in southern China started its periodic callback.

Since June 2, the prices of clinker from major manufacturers along the Yangtze River in Anhui Province have been reduced by 40 yuan / ton. At present, the FOB price along the river is about 390-400 yuan. In the Yangtze River Delta, Northern Zhejiang, Southern Jiangsu and other places may follow suit. Subsequently, with the arrival of high temperature and plum rain season, cement will enter the off-season of demand, and the price will continue to weaken.

Before that, the national cement price index on June 1 fell by 1.5% compared with that on May 25; Among them, the cement prices in East China and Yangtze River decreased by 2.3% and 2.5% respectively, with a large decline.

"The overall impact of this year's rainy season is still within the normal range." On June 3, Wei Yu, senior analyst of cement big data Research Institute of China cement network, said in an interview with 21st century economic report reporter that cement is a regional product, and the price rise and fall is affected by local demand and supply, and the price will tend to be stable after the off-season in June.

North South Division

The fall of clinker prices in the Yangtze River Delta region may reflect that the demand of cement market is weakening after the whole South enters the Meiyu season.

According to the Centennial construction network regional cement price index, in May, East China, North China and Northwest China rose slightly, among which North China rose the most, close to 3.5%; Other regions fell, of which central China saw the largest decline, reaching 4.95%, while the northeast region saw the smallest decline, at 0.38%.

It is worth mentioning that may is the watershed of cement demand from strong to weak in East China. Although the overall cement index still rose slightly, after the end of May, the cement market demand declined due to heavy rainfall in the middle and lower reaches of the Yangtze River, and the sales pressure of cement enterprises intensified. In order to promote sales, cement prices in many places in East China fell, mainly in Jiangsu and Northern Anhui.

Not only that, the cement delivery rate in Central South and southwest China also fell further, and the enterprise shipment rate generally dropped to 60% to 80%. Affected by this, the cement price began to fall.

According to the data of Tianfeng Securities Research Report, the average cement price of key cities in China last week was 471 yuan / ton, with a weekly decrease of 2.6 yuan / ton, and a year-on-year increase of 25.2 yuan / ton. The price falls mainly in Jiangsu, Fujian, Henan, Hubei and Guangdong, with a range of 20-30 yuan / ton.

But at the same time, the North continues to grow. The price increases are mainly in Inner Mongolia and Yunnan, with a range of 30-50 yuan / ton. The downstream demand in northern China is relatively stable, supported by the rising prices of raw materials and fuels, enterprises actively implement the price increase of cement. Specifically, the production cost in North China is increased due to the rise of coal, and the price of cement rises greatly; Due to peak load shifting and power limitation in Southwest China, cement operating rate is limited and cement rises; Northeast, northwest demand is general, the market to partial stability.

After entering the peak of summer power consumption, the power supply in many provinces is insufficient, and the power rationing mode is opened in many places in the country. The drought in Yunnan and Guangxi has continued, but it has not entered the flood season. The power supply mainly based on hydropower has also been in short supply, and the external power transmission has been hindered; Prior to this, Shandong, Shaanxi and other major cement production provinces have also issued power rationing notices.

The sharp rise of cement price in Yunnan may be related to power restriction“ Due to the overdraft of the reservoir in Yunnan Province, there is a serious shortage of electricity and coal. Cement is a secondary power limiting management and control industry. The start-up of cement enterprises is greatly affected, and the cost of power shortage and coal shortage increases. On the whole, the southern rainy season, the northern wheat busy, the market into the off-season, market demand weakened, combined with the impact of the upstream market clinker prices, leading to a recent decline in clinker prices. Because Shandong Province this month summer stagger peak production is about to start, it is expected that the later period of cement price may have some support. " Wei Yu said.

Year round or up

In fact, in the first four months of this year, cement production is increasing compared with that in 2019 and 2020. The data shows that the cement output from January to April in 2021 is 680 million tons, which is 30.1% and 12.3% higher than that of the same period in 2020 and 2019. The cement output in April is 239 million tons, which is 6.3% and 12.1% higher than that in 2020 and 2019 respectively. The prosperity of cement demand in April exceeds the expectation.

Since May, although affected by the Meiyu rainy season, there has been a price correction in the southern region, but in the medium and long term, the stable growth of downstream infrastructure demand is affected by the supply side structural reform with "carbon neutral" as the core, and the cement price still has a large space to rise in the whole year.

On May 25, the State Administration of market supervision, the Ministry of industry and information technology, the national development and Reform Commission, the Ministry of ecological environment, the Ministry of Commerce, the General Administration of customs and the State Intellectual Property Office jointly issued the opinions on improving the quality of cement products and standardizing the order of cement market (hereinafter referred to as the opinions) To strengthen the management of cement standard sand, it is required that by the end of 2025, the capacity utilization rate of the enterprise will basically return to a reasonable range, the intelligent and green industry will be significantly improved, the quality level and the supply capacity of high-performance products will be significantly enhanced. At the same time, the inspection and supervision of imported cement should be strengthened, and the imported clinker should be included in the statutory inspection catalogue, so that the supply side will continue to develop well.

This also means that, in the medium and long term, cement, as a high energy consuming industry, may benefit from the "carbon neutral" transformation, and its prospects will be improved in the supply side structural reform.

Bao Rongfu, an analyst at Tianfeng securities, believes that the supply side has improved significantly this year, and more regions are actively promoting peak shift production in summer or adding the time limit for peak shift production“ The peak shifting production is strictly implemented, and the effect of collaborative shutdown of enterprises according to the peak shifting policy is better. The price side has obvious reflection. The cement price in Northeast China has increased significantly year on year. At the same time, the lower warehouse location this year can also provide certain support for the off-season price, and the annual price is likely to achieve positive growth year-on-year. "

Zhang Guoguo, CO chief analyst of real estate industry of CITIC Securities, also pointed out that reducing the production capacity of building materials and power rationing in high energy consuming industries have affected the supply of cement, glass and other industries. At present, not only domestic infrastructure investment and real estate development investment are growing steadily, but overseas demand has become a marginal increment, and import substitution has gradually contributed to demand. From a global perspective, the price of cement also has room to rise.

"Overall, cement demand is stable this year. At present, prices are adjusted in the low and peak seasons. Generally, there will be a certain range of downward adjustment from May to June, stop falling from July to August, and enter the peak season from September to November. The price level of the peak season in the fourth quarter of this year is expected to be close to the peak in the second quarter of this year. " Wei Yu concluded.