Recently, cement prices in many places have begun to rise, especially in the Yangtze River Delta region, such as Anhui, Zhejiang and Jiangsu in East China, with a large-scale increase of 15-20 yuan/ton. During the "golden nine silver ten" period, the peak demand season seems to have arrived, but is this really the case? Since the middle of
September, Anhui, Jiangsu and Zhejiang in East China, Liaoning and Jilin in Northeast China, Henan and Hunan in Central and South China have intensively raised cement prices, and the implementation remains to be observed. However, a small number of regions such as Sichuan and Guangdong are still lowering cement prices, and all of them have been implemented. Generally speaking, there is a strong atmosphere of rising prices in the market, but the upward momentum seems to be insufficient. The author believes that the slow recovery of demand and the overall weakness is the fundamental reason why the current industry price increase is difficult to fully implement, September this year is difficult to say "peak season", the price increase space remains to be observed.
Table 1: Recent cement price changes
in some regions Source: Cement Big Data Research Institute
II. Coal price is strong in the off-season and the cost pressure is increasing
. In September, coal should be used in the off-season, but the coal price is "strong in the off-season". On the one hand, frequent accidents in coal production areas, intensified security inspection, and temporary suspension of production of many coal mines have led to periodic tight supply; on the other hand, the continued rise in international crude oil prices has led to the restoration of domestic chemical profits, the increase in the operating rate of the chemical industry, and the increase in the purchase of chemical coal. Under the interweaving of multiple factors, the coal price fluctuated and rose in September. At present, the coal price is around 990 yuan/ton, up 145 yuan/ton from the beginning of the month, an increase of 17%, and the production cost pressure of cement enterprises is increasing. According to the feedback from some enterprises, even if the current cement price is raised by 20 yuan/ton, it is difficult to offset the pressure of cost increase brought by the rising coal price. The main driving force of this round of cement price rise is the rising coal price.
Figure 1: Fluctuation and rise of coal price in September (yuan/ton)
Data source: cement big data (https://data.ccement.com/)
III. Marginal improvement of demand
According to the rhythm of the peak season in September in previous years, the shipment rate of cement enterprises is mostly 7-8%, and even more than 90% in the areas with strong demand such as East China and Central South China. However, at present, the national cement shipment rate is only 48.7%, less than 50%, even less than same period in 2022, and the shipment volume in the hot areas such as East China and Central South China is less than 60%. Although demand is marginally better than before, the overall situation is still weak, and the foundation of cement price rise is not solid. At the same time, the mill operation rate has steadily increased, the cement storage capacity ratio has reached a high level of 74%, the manufacturer's inventory is high, and the price is under great upward pressure.
Figure 2: Trend of national cement shipment rate (%)
Data source: Cement Big Data (https://data.ccement.com/)
IV.
With the gradual improvement of downstream demand, cement prices still have room to rise, but should not be too optimistic. First, the cost factor. The main reason for the current rise in coal prices lies in the phased tightening of supply caused by the intensification of security inspection. Once the coal mine rectification is completed and the policy of guaranteeing supply and increasing production continues to work, coal will return to the pattern of loose supply and demand. At that time, coal prices may fall and cement cost support will be weakened. Second, demand is still weak. In August, the area of land transactions in 100 large and medium-sized cities was 70.711 million square meters, down 24% from the same period last year. High-frequency data in September showed that this decline may expand. The weak land market will affect new construction and investment. It is expected that the real estate side will continue to grind the bottom in the short term, the demand for cement will be weaker than same period, and the "golden nine silver ten" will be difficult to reach.
Figure 3: From January to August 2023, the land transaction area of 100 large and medium-sized cities is at a low level in the same period (10,000 square meters) 
Data source: cement big data (https://data.ccement.com/)
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