Cement prices have fallen in an all-round way: In addition to supply and demand, we must also pay attention to the problem of high carbon emissions
Entering November, cement prices have entered an adjustment period after experiencing a spike during the “Golden Nine and Silver Ten” period.
According to data from China Cement.com, cement prices across the country dropped significantly in November. Among them, Hubei, Guangdong and other regions experienced the largest declines, down by about 100 yuan/ton from their highs at the end of October.
This year's cement prices fluctuated significantly.
The monitoring data of China Cement Network shows that the average price of ordinary Portland cement (P.O42.5 bulk cement) in late July was about 422 yuan/ton, reaching a historical low. The price began to continue to rise in early August. The average price of salt cement (P.O42.5 bulk cement) reached 649 yuan/ton, a cumulative increase of more than 50%.
In mid-November compared with early November, the average price of ordinary Portland cement (P.O42.5 in bulk) dropped by 13.1 yuan/ton to 585.7 yuan/ton.
Image source: China Cement Network
From the supply side, cement production is also declining.
According to the National Bureau of Statistics, the national cement output in October was 20.14 million tons, a year-on-year decrease of 17.1% and a month-on-month decrease of 1.78%.
Judging from the national mill start-up load data, it is expected that the national cement output in November will fall by about 15% year-on-year and by about 4% month-on-month.
The nationwide cement industry as a whole is dominated by production reductions. In November, the clinker production lines in the northwest, northeast, and north China provinces began to produce staggered peaks one after another.
Cement mills in most provinces in East China, Southwest, and Central South have been shutting down kilns to reduce production in order to reduce coal consumption, electricity consumption, and ease supply pressure.
From the demand side, affected by the tightening of real estate regulation and the sudden cooling of financing, the cold of real estate affects the demand for cement.
The real estate industry is a "barometer" of the cement industry, and its start-up affects cement demand.
From January to October, the newly started area of real estate fell by 7.7% year-on-year, and the area purchased by real estate development companies fell by 11%.
In addition, as the main energy consumable of the cement production industry, the price of thermal coal can directly affect the cost of cement production.
It is estimated that, on average, about 100 kilograms of thermal coal is consumed for every ton of cement produced. Therefore, for every 100 yuan per ton of thermal coal price drop, the cost of cement will drop by 10 yuan per ton.
As the National Development and Reform Commission began to issue a series of documents since October, taking multiple measures to ensure the supply of coal and stabilize the price, coal prices have returned to a reasonable level.
At the beginning of November, the closing price of 5,500 kcal thermal coal in Bohai Rim ports fell below 1,200 yuan/ton, and the pit price of 5,500 kcal thermal coal in Shanxi, Shaanxi, and Mongolia fell below 1,000 yuan/ton.
Since mid-November, the price of 5,500 calories in Shanxi and Shaanxi has been limited to 900 yuan/ton.
In this context, the cost of cement production has dropped by about 31% from the peak in mid-October, providing room for cement price reductions.
As the central government has repeatedly released signals of easing real estate financing, the property market at the end of the year, driven by policies, blew a "warm wind", and the demand for real estate construction next year is expected to improve.
The "China's Listed Companies Carbon Emission Ranking (2021)" jointly released by Caijing magazine and China Venture Carbon shows that the emission intensity of the power and cement industries is much higher than that of other industries.
At present, the cost of coal and electricity accounts for more than half of the total cost of cement. Under the goal of "dual energy consumption" and "carbon reduction", the future production cost of the cement industry will become higher and higher. How to enter the field of clean energy such as photovoltaics and adopt technology R&D to achieve its own carbon reduction and cost reduction may be the key to the development of the cement industry.
The Paper Journalist Wang Jingjing