[Summary of Cement Market] June: The characteristics of off-season are obvious and the market competition is fierce!

1. Overview

of the national and regional market (1) National market: The off-season characteristics are obvious, and the market competition is fierce

. In June, affected by the high school entrance examination, busy farming and hot and rainy weather, the market officially entered the off-season, and the downstream demand further weakened; On the supply side, kilns were shut down in summer in many places, and the supply side contracted slightly, but in general, the demand for cement market weakened more obviously in June, manufacturers continued to accumulate, and the market competition was fierce. At the beginning of June, the National Cement Price Index (CEMPI) was 126.23 points, closing at 117.61 points at the end of the month, down 7.06% from the previous month and 19.09% from the previous year.

Regionally, demand in the six regions as a whole continues to weaken. Specifically, there is still a lot of rain in the central and southern regions, and the demand and sales are low; the demand in East China is seasonally declining, and the shipment of enterprises is not good; the high temperature weather in North China is obvious, and the downstream construction is slowing down; the inventory in Northwest China is high, and the market pressure is high; the market in Southwest China is off-season, and it is difficult to raise the price in some areas; the demand in Northeast China is still there, and the supply and demand are relatively stable.

Figures 1 and 2: K-line Chart

of National Cement Price Index CEMPI and Cement Price Index (CEMPI) in June 2023 Data Source: Cement Big Data (https://data.ccement.com/)

Cost. At the end of June, the average spot price of 5500 kcal steam coal was 840 yuan/ton, up 5.66% annually and down 33.6% year-on-year. On the demand side, the hot weather combined with non-electric consumption has certain support, and the demand has turned better on a month-on-month basis; on the supply side, due to the initiative to reduce production due to security checks, holidays and other reasons, there has been a certain contraction, the coal market price first declined and then rose, and finally rose, but the price center of gravity continued to fall on a month-on-month basis. At the end of the month, the cost of coal per ton of cement was about 82.24 yuan, up 4.41 yuan from the end of May, and the cost pressure increased. At the end of June, the cost price difference between cement and coal was 222.92 yuan/ton, down 11.01% from the previous month, and the price difference between cement and coal narrowed. In terms of

benefits, although the average price of power coal in June was 801.9 yuan/ton, which was 192.7 yuan/ton lower than previous month, and the average cost was 18.9 yuan/ton lower than previous month, the average price of cement in June was 368.8 yuan/ton, which was 29.2 yuan/ton lower than previous month. Cement industry profits are expected to continue to deteriorate in June.

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

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