Short-term rapid rise in cement prices in some regions

Recently, many countries have seen “electricity shortage” in the off-season, and Zhejiang, Hunan, Jiangxi, Chongqing, and Guizhou have successively adopted measures to limit electricity and electricity. The cement industry, which is a sector with high energy consumption and high resource consumption, has become a key target for power curtailment. The strong demand has increased electricity production, which has led to a slight increase in domestic cement prices for several weeks. In some areas where the “electricity shortage” is serious, cement prices have risen rapidly in the short term.

According to the Ministry of Commerce's commercial forecast monitoring on May 4, as temperatures rose, localities entered the construction season and cement demand increased. The price rose slightly for six weeks in a row, accumulating a total of 3.7%. The national market price of high standard cement recently rose by 1.6% to 414 yuan/ton, mainly in the regions of Ningxia and Xinjiang in the south-central region of Hunan, Guangxi, and northwest, and the prices in different regions have increased by RMB 10-80/ton.

Data show that cement prices have risen 11.9% year-on-year this year, while cement prices in East China and Central China have risen by a big margin, rising about 50% from the same period of last year. Wang Xiaoliang, an analyst at Digital Cement, believes that rising cement prices are the first to increase the cost of raw materials and labor. In addition, the current off-season power shortage has pushed cement prices in certain regions to rise rapidly in the short term. As the government implemented the "orderly power supply," a differential power pricing policy was implemented for cement production enterprises. From May 2 onwards, cement prices in Hunan have been significantly raised. The increase rate of 60-80 yuan/ton in one week and the highest transaction price in high-grade cement market reached 500 yuan/ton. In the area of ​​East China, the price increase of cement in Nanjing and Nanchang ranked top. The rapid rise in cement prices in the two places mentioned above is also related to the “electricity shortage”. According to statistics, the biggest gap in Nanjing this summer's peak will exceed 1 million kilowatts, which is about three times the same period last year. From May 1st, Nanchang implemented a “four-limit-three” split-turn holiday system for some manufacturing enterprises.

As a high-energy-consuming industry, cement plants seem to have become the norm at the bottom of the “electricity shortage”. Mr. Shen, head of Southern Cement's Changxing Xiaopu Southern Cement Co., Ltd., told reporters that the company is still in normal production, but the power supply department has informed the company to suspend production from mid-June. Mr. Shen said that last year's power cuts caused the company's production to reduce by 10%, but the increase in cement prices compensated for losses caused by insufficient production, and there are certain benefits. However, it is still difficult to predict the impact of power restrictions this year. Severe power restrictions may cause losses.

Shenyin Wanguo research report believes that with strong demand and limited production capacity, it is expected that the price of cement will continue to rise slightly in the later period. CITIC Securities believes that the trend of cement price hikes in East China continues. It is expected that the shortage of electricity in East China and the pattern of continuous fermentation will make the supply of cement in East China continue to be tight, and prices are expected to continue to increase.