Henan Cement Price Fluctuates Frequently, Restart Price Increase Plan on August 15

Recently, the price of cement market in Henan has fluctuated frequently. Since

August 15, leading enterprises in the region have once again tried to push up the cement price by 30 yuan/ton, which is the third round of recent push up of Henan cement price. Around July 5, the leading cement enterprises in Henan notified to raise the cement price by 20 yuan/ton; around August 6, the leading cement enterprises in Henan raised the price of high-standard cement and clinker by 20 yuan/ton.

The first two rounds of price increases failed to land effectively, and the price quickly fell back to the original point after a short rise. This is closely related to the persistent inventory pressure in the cement industry in Henan. Higher inventory makes the market supply relatively adequate, in the absence of a significant boost in the demand side, price increases are difficult to get an effective response from the market, which leads to price callbacks.

Despite the setbacks in the last round of price increases, the leading cement enterprises in Henan still chose to start the price increase again on August 15 under the dual effects of cost pressure and supply regulation expectations. As an important raw material for cement production, the rising price of coal has directly pushed up the production cost of cement, and enterprises are facing greater cost pressure, which has become one of the important factors driving up the price of cement.

On the other hand, off-peak production expectations also provide support for the price increase. The 20-day summer kiln shutdown plan will be fully launched in Henan from August 15, when the clinker production capacity will shrink

in stages. The price adjustment has a certain impact on the downstream market. Stimulated by the expected price increase, the downstream stock sentiment has improved, and the shipments of some cement enterprises have shown signs of recovery. However, whether this rebound can be sustained still depends on whether the price rise can really fall to the ground and the actual changes in downstream demand. The implementation of

this round of cement price increase remains to be observed. Although cost pressures and supply regulation provide impetus for price increases, industry inventory pressures still exist, and the acceptance of price increases in the downstream market remains to be seen.