[Cement Market Overview] December: Demand is drawing to a close, and the market is weak!

1. Overview

of the national and regional market 1.1 The national market: the demand is coming to an end, and the market is weak

. After entering December, the construction in the northern region is gradually reduced, and the demand is basically over. The temperature in the southern region drops, and the impact of the epidemic is superimposed, and the demand is obviously weakened. On the whole, the downstream demand further weakened, while the coal price fell, the production cost pressure of cement enterprises was reduced, coupled with the continuous development of winter peak staggering in many places, the supply and demand weakened synchronously, and the cement price fluctuated lower. The national cement price index (CEMPI) was 152.06 points at the beginning of December, and closed at 141.64 points at the end of the month, with a month-on-month decrease of 7.02%; due to the high absolute price in the same period, the cement price in this period decreased by 23.16% year-on-year.

From the regional perspective, the supply and demand relationship in the six regions as a whole continues to show a double weak trend. Specifically, there is a small amount of construction in the northwest region, and the shipment of enterprises is declining; the northeast region has staggered peak and stopped kilns, and the market has entered the winter break state; the market in North China is in the off-season, and the overall demand is weak; the demand in the southwest region is weak, and the market sales are low; the construction in the central and southern regions has slowed down, and the demand continues to shrink; the market in East China has entered the off-season, and the market performance is poor.

Figures 1 and 2: December 2022 National Cement Price Index CEMPI, Cement Price Index (CEMPI) K-line

Chart Data Source: Cement Big Data (https://data.ccement.com/)

Cost. At the end of December, the average spot price of 5500 kcal steam coal was 1226 yuan/ton, down 10.58% annually and up 57.18% year-on-year. In December, the inventory of power plants was sufficient and at a high level as a whole, the demand for non-coal continued to be depressed, coupled with the tendency of traders to clear the goods at the end of the year, the price of thermal coal rose first and then declined, and the overall shock declined. At the end of the month, the cost of coal per ton of cement was about 120.03 yuan, which was 14.2 yuan lower than that at the end of November, and the cost pressure was reduced. At the end of December, the cost price difference between cement and coal was 247.5 yuan/ton, a decrease of 5.2% compared with the previous month. The price difference between cement and coal widened, the cost transfer ability of cement enterprises increased, and the production efficiency continued to improve.

Figure 3: Cement price, coal cost and price difference in December 2022 (yuan/ton)

Data source: Cement Big Data (https://data.ccement.com/)