Recently, the auction of 10 million tons of river sand in Poyang Lake has attracted a lot of attention. It is reported that in the first auction, there were more than 200 participants, and the scene was very lively. However, it is surprising that the first auction of Poyang Lake sand, which has attracted much attention, has failed. This result has undoubtedly brought a certain shock to the market, and also caused people to think deeply about the relationship between supply and demand in the current sand and gravel market. Despite the large number of participants, the actual demand and price expectations of the market did not reach the ideal state, resulting in the failure of the auction.
1. Excessive supply and fierce
competition for natural sand At present, the main producing areas of natural sand in China are two lakes and one river, namely Dongting Lake, Poyang Lake and Yangtze River Basin. In September
2023, the Department of Water Resources of Hunan Province issued a circular to issue the "Sand Mining Plan for the Main Stream of Xiangzi yuanli and Dongting Lake in Hunan Province (2023-2027)" (hereinafter referred to as the "Plan"). According to the Plan, 26 mining areas are planned for the main stream of Xiangzi yuanli River and Dongting Lake River in Hunan Province (2023-2027), with a total of 942.69 million tons of river sand planned to be exploited in five years, with an average of 200 million tons of river sand put into the market every year.
Table 1: Statistical Table of Minable Areas in the Main Stream of Xiangzi, yuanli and Dongting Lake in Hunan Province (by city and state)
Data source: Cement Big Data (https://data.ccement.com/)
In March 2024, Dongting Lake in Hunan Province entered the fishing ban period. At that time, only Miluo mining area was exploited normally. At the end of April 2024, the mining volume of Miluo mining area rebounded to more than 100,000 tons. With the resumption of normal exploitation of Nanyi Lake sand in Xuancheng, the supply of natural sand has increased. At the beginning of May 2024, there were ten sand dredgers working at the same time in the Xiangyin mining area of Yueyang, and the daily output of natural sand in the mining area was nearly 200,000 tons. On May 20, 2024, a large area of mining in Dongting Lake mining area was stopped, and the shortage of goods in major mining areas was serious in a short period of time. However, on June 26, 2024, the latest market data showed that Xiangyin, Yiyang, yuanjiang, Miluo, Hanshou, Minglang and other mining areas have resumed normal mining activities, with a daily output of more than 200000 tons.
At the same time, in March 2024, Jiangxi Province officially issued the "Jiangxi Province Ganjiang Fuhe Xinjiang Raohe Xiu River Middle and Lower Reaches of the River and Poyang Lake Sand Mining Plan (2024-2028)". According to the plan, Poyang Lake has planned two operating areas in the Duchang area, with a total reserve of more than 215 million tons (215.03 million tons) in its mineable area, and plans to mine 17 million tons annually.
With the arrival of July, Poyang Lake sand will enter the market in large quantities, which will inevitably intensify the price competition of natural sand.
Second, demand is weak, both infrastructure and real estate are declining
. At the level of market demand, both infrastructure and real estate are showing a weak trend. Specifically, from January to April 2024, the total investment in highway construction in China was 745.11 billion yuan, down 9.11% from the same period last year. On the other hand, from January to May 2024, the cumulative investment in real estate development in China was 40632 135 million yuan, down 10.1% from the same period last year. Among them, the new construction area of real estate declined significantly, down 24.2% year-on-year, to a 30089 of 53000 square meters.
At present, the recovery of the downstream key demand market is slow, the start of new projects is slow, the situation of capital in place and repayment is not ideal, the overall market demand is far from the expected level, and the market maintains a cautious attitude.
Figure 1: National Highway Infrastructure Investment Growth Declines
Data Source: Cement Big Data (https://data.ccement.com/)
Figure 2. 3: Decline
in investment in real estate development and new construction area across the country Source: Cement Big Data (https://data.ccement.com/)
III. Market confidence is challenged
, and the imbalance between supply and demand makes the natural sand market face tremendous price pressure. On the one hand, the supply side continues to release a lot of resources; on the other hand, the demand side is weak and lacks strong momentum. This situation has led to a backlog of natural sand stocks and falling prices.
Faced with the increasing contradiction between supply and demand, the price prospect of natural sand is worrying, and market confidence is challenged. Up to now, the price of natural sand in Dongting Lake has dropped to 60 yuan/ton, which is significantly lower than 68-70 yuan/ton at the end of May. There is widespread concern in the industry that if the demand side continues to be weak, the price of natural sand may fall further to below 50 yuan/ton. Figure
4 and Figure 5: Arrival price of Dongting Lake sand (left) and Poyang Lake sand (right), unit (yuan/ton)
Data source: Cement Big Data (https://data.ccement.com/)
