2024, due to the sharp shrinkage of demand in the cement industry and the more serious impact of overcapacity, the competition in the industry intensified and the price of cement was running at a low level. In the first half of the year, the overall business situation of the cement industry was grim, and the profits of all cement enterprises declined sharply, and even some enterprises suffered huge losses.
However, in the semi-annual reports issued by major cement listed companies, despite the sharp decline in profits of the cement sector, the development of the aggregate sector is still steady. As can be seen
from the above table, the gross profit margin of sand and gravel aggregates remained at a high level when the performance of the cement sector was poor, and the earnings of this business became the "life buoy" of many cement enterprises.
However, cement enterprises need to pay attention to the fact that aggregate business is a temporary "life-saving straw" for the cement industry, not a long-term solution.
China Cement Network data show that in the first half of 2024, the demand for aggregate for concrete fell 10.8% year-on-year, with a total demand of 6.25 billion tons, dragged down by both downstream infrastructure and real estate.
In the first half of the year, domestic sand and gravel prices were weak as a whole, and the key price index showed a double decline in the ring ratio and the same period last year. By the end of June 2024, the National Gravel Price Index (CSPI) closed at 81.41 points, down 1.19% annually and 4.77% year-on-year. The National Machine-Made Sand Price Index (MSPI) closed at 84.10 points, down 1.31% from the previous month and 7.56% from the previous year.
At present, some sand and gravel enterprises with higher cost are at the break-even point. But if the price continues to decline, the cement industry is a lesson for the sand and gravel industry, and the sand and gravel market in the second half of the year is not optimistic.
Therefore, how long the aggregate can support cement enterprises is indeed a pessimistic unknown.
