Recently, some cement enterprises have publicly stated that the 2024 cement industry has difficulties and challenges, but more is a bright future.
Many people in the industry also agree with this, believing that the cement industry is still confident despite the difficulties. However, in my opinion, the cement industry may be bright in the long run, but the "darkest" moment of the cement industry has not yet arrived.
No matter from which angle to analyze the "crux" of the cement industry, it is inseparable from both supply and demand. In fact, the development and stability of any industry depends on these two factors. Whether the supply and demand of cement industry can maintain a benign dynamic balance directly affects the rise and fall of cement prices , as well as the adjustment and optimization of the entire industrial structure.
But at present, the contradiction between supply and demand in the cement industry has not yet found a reasonable solution. On
the supply side, the total production capacity of clinker in China is 1.803 billion tons, but it has not yet reached its peak. In 2023, 16 production lines will be put into operation in China, with a total clinker production capacity of 23.529 million tons. According to the tracking of China Cement Network Cement Big Data Research Institute, 27 clinker production lines with a capacity of more than 40 million tons will be put into operation in China in 2024.
Although most of the above production lines were established/constructed in the high-profit period of the industry, the cement industry at that time may still be able to "bear" the consequences of the new production line, but for the current complex situation of the industry, the production of any production line may be the "last straw to crush the camel". On the
demand side, real estate, infrastructure and civil market are the three main driving forces for cement demand. However, in recent years, real estate investment has gradually declined, and the demand for infrastructure is difficult to hedge the downward impact of real estate, which has dragged down the demand for cement. Taking 2023 as an example, the national cement output is estimated to be 2.05 billion tons, down 3.3% from the same period last year.
China Cement Network Cement Big Data Research Institute predicts that in 2024, the drag of real estate will be weakened and infrastructure will still be pulled. Cement production in 2024 is expected to be around 2.01 billion tons, down about 2% from the same period last year. China's cement output will fall to around 1.5 billion tons by 2030, said Xiao Jiaxiang, executive chairman of the China Cement Association.
On the other hand, with the change of China's economic growth structure, the gradual decline of traditional building materials consumption of 10000 yuan GDP is an unchangeable fact. In the first half of 2023, cement production was only 0.16 tons per 10,000 yuan of GDP, down 74% from the same period in 2000 and 58% from the first half of 2014, and the rate of decline has accelerated since 2017. With the expansion of
production capacity and the shrinkage of demand, the two unfavorable factors are superimposed on each other, which means that the winter of the cement industry is cold and long.
Regrettably, up to now, we have not found an effective way to alleviate the current situation. The key to
resolving the "stubborn illness" of the cement industry lies in the removal of production capacity, but due to the production of a large number of new production lines in the past few years and the phenomenon of "overproduction" through technological transformation, the cement industry seems to be in a dilemma of "more and more production capacity", although the industry has tried a variety of measures to remove production capacity. But at present, there is no substantial breakthrough.
Staggered peak production days continue to extend, but the effectiveness is weakening, the long-term formation of the past "competition and cooperation relationship" has appeared cracks, some enterprises clearly oppose staggered peak production..
Carbon market construction is steadily advancing, but the impact on the cement industry is long-term and far-reaching. Even if the cement industry is incorporated into the carbon trading market in 2024, it will take time to substantially change the structure of the cement supply side from carbon trading.
Of course, as an important basic raw material and the characteristics of "rigid demand", the cement industry will never disappear and can not be replaced. However, the above situation shows that in the journey towards a bright future, the "darkest moment" of the cement industry may not come in the short term. The darkness before
dawn is the darkest, and no one can give an accurate answer to whether the cement industry is now "dark" at night or "dark" at dawn.
