the National Bureau of Statistics show that from January to August, the national real estate development investment was 7690 billion yuan, down 8.8% from the same period last year (calculated on a comparable basis); of which, the residential investment was 5842.5 billion yuan, down 8.0%. The
cement industry is most concerned about new construction, housing new construction area of 638 million 910 thousand square meters, down 24.4%. Among them, the new residential construction area was 466 million 360 thousand square meters, down 24.7%.
In addition, from January to August, the capital in place of real estate development enterprises was 8711.6 billion yuan, down 12.9% from the same period last year. Of this total, domestic loans were 1,067.1 billion yuan, down by 12.8%; utilized foreign capital was 3.5 billion yuan, down by 41.6%; self-raised funds were 271.95 billion yuan, down by 22.9%; deposits and advance receipts were 301.85 billion yuan, down by 7.3%; and personal mortgage loans were 154.53 billion yuan, down by 4.3%. In terms of land
acquisition, data from Kerui Research Center show that in August, the core cities continued to supply "a small number of batches" of land, and the overall land market size and heat were at a low level. The threshold value of the top 100 newly added real estate enterprises declined slightly year-on-year, the investment amount of the top 100 real estate enterprises decreased by 13% year-on-year, the sales ratio of the top 100 real estate enterprises was only 0.18, and there were still nearly half of the top 100 real estate enterprises that had not yet taken the land, and the investment willingness was at the bottom. In terms of
enterprise performance, central state-owned enterprises are still the main force in the land market, and continue to focus on first-and second-tier cities and core high-quality plots strategically.
Real estate is the main source of cement demand. Since
this year, due to the decline in real estate investment growth and other factors, domestic cement demand has continued to decline, prices are under pressure, and industry profits are expected to fall sharply. Data from
China Cement Network show that the current domestic average price has hit a five-year low, and the average price of cement in East China has returned to the level of 2009. Since the beginning of this year, the national cement price index (CEMPI) has fallen by nearly 40 points. At the end of August and the beginning of September, many places in China began to try to raise the price of cement, but due to insufficient demand and inadequate implementation, it soon fell back to its original position. In terms of
profits, in the first half of this year, the vast majority of domestic cement enterprises experienced a sharp decline in profits, or even a loss. The total profit of the industry was 16.4 billion yuan, a new low since 2015. The industry expects that the annual profit of the cement industry may be less than 40 billion yuan, also a new low since 2015. Land
acquisition is closely related to future cement demand. Land acquisition by
real estate enterprises is a good leading indicator of new housing construction, while cement demand is in the pre-cycle of real estate development, which is directly affected by the new construction area in the short term (usually developers start new construction within 6 months after land acquisition), and the total amount of land acquisition continues to decline from January to August, which means that the enthusiasm of real estate investment is still insufficient, and the demand for cement in the future lacks support.
In the context of the downturn of the real estate industry, the industry will focus more on the development of infrastructure. However, on the one hand, infrastructure investment lacks explosive force on cement demand, and it is difficult to hedge the downward pressure on demand brought by the downward trend of real estate; on the other hand, land finance has always occupied a large proportion in local areas, and the downward trend of the real estate industry will aggravate the local debt problem to a certain extent, thus affecting the implementation effect of infrastructure investment.
From this point of view, the domestic demand for cement is still worrying in the future.
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