[Overview of Cement Market] May: Manufacturers Continue to Accumulate Stocks, and the Market Declines Unilaterally

1. Overview

of national and regional market (1) National market: manufacturers continued to accumulate stocks, and the market went down

unilaterally. In May, there were more rainy weather in the whole country, the shortage of funds in some areas was still prominent, the downstream construction progress slowed down, the market demand was tepid, and the overall performance was weak; On the supply side, many places carried out peak staggering and kiln shutdown, and the supply contracted slightly. In general, the supply and demand of cement market in May was still loose, manufacturers continued to accumulate, and the market competition was fierce. The national cement price index (CEMPI) was 135.74 points at the beginning of May and closed at 126.54 points at the end of the month, down 6.77% from the previous month and 20.46% from the previous year.

From the regional point of view, the demand of the six regions is weak as a whole, and the weakening of the southern region is relatively obvious. Specifically, there are frequent rains in the central and southern regions, and the market sales are weak; the demand in East China is weak, and the inventory is under high pressure; the downstream construction in the southwest region is light, and the inventory is obviously high; the shipment in the northeast market is low, and the price pressure is high; the demand in North China is tepid, and the demand is still general; the kiln in the northwest region is off-peak, and the supply and demand are relatively balanced.

Figures 1 and 2: May 2023 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 May, the average spot price of 5500 kcal steam coal was 837 yuan/ton, down 20.21% annually and 28.46% year-on-year. In May, the coal market price was sluggish. Although the output of some main producing areas dropped slightly due to the impact of security inspection, the overall level was still high. The downstream power plants had sufficient stock and the consumption of non-electric industries was weak, and the price of thermal coal went down all the way. At the end of the month, the cost of coal per ton of cement was about 81.94 yuan, down 20.76 yuan from the end of April, and the cost pressure continued to ease. At the end of May, the cost price difference between cement and coal was 246.4 yuan/ton, down 1.24% from the previous month, the price difference between cement and coal narrowed, the cost transfer ability of cement enterprises was still weak, and the production efficiency was still low.

Figure 3: Cement price, coal cost and price difference in May 2023 (yuan/ton)

Data source: cement big data (https://data.ccement.com/)