China: Cement Prices Expected to Rebound in 2024, According to Cement Big Data Research Institute

Li Kunming, a cement analyst at China's Cement Big Data Research Institute, predicts a rebound in cement prices in 2024, despite ongoing market pressures and capacity oversupply in China.

China: Cement Prices Expected to Rebound in 2024, According to Cement Big Data Research Institute
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Looking ahead to 2024, the cement industry in China faces continued market pressures, but the downward trend is expected to slow, according to Li Kunming, a cement analyst at the Cement Big Data Research Institute. Li Kunming suggests that while cement prices are likely to rebound to some extent in 2024, the increase may be limited due to severe overcapacity in the industry. Consequently, the average cement price for the year is expected to be lower than in 2023, with industry profits not looking optimistic due to the combination of falling average prices and rising costs.

On the demand side, the drag from the real estate sector is expected to weaken, while infrastructure construction is likely to continue driving demand. Cement demand is projected to decline slightly in 2024, with a continued narrowing of the decrease. The total cement production for the year is estimated to be around 20.1 billion tons, approximately a 2% decrease compared to the previous year.

Regarding supply, capacity deployment may still fall short of expectations, but overall supply pressure is considered manageable. In 2023, 16 new clinker production lines were commissioned, involving a total capacity of 23.16 million tons, which was only 43.5% of the planned production capacity and far below expectations. The Cement Big Data Research Institute tracks that in 2024, 27 new clinker lines with a capacity exceeding 40 million tons are planned for commissioning, along with some lines that were initially planned for 2023, indicating a higher actual planned production.

Regions such as Southwest China's Chongqing and Yunnan, Central South China's Hunan and Guangdong, and East China's Fujian are expected to commission 2-4 lines each, facing significant operational pressures. Given the continued industry pressures in 2024, the release of new production capacity is expected to fall short of expectations. Despite this, the supply-demand contradiction during the demand downturn remains prominent, with the issue of overcapacity still severe.

As for cement prices, they are currently at a relatively low level, with many companies showing a strong willingness to increase prices. Given the relatively stable demand, a significant weakening of cement prices is unlikely. Quarterly trends indicate that the year-on-year decline in cement prices will gradually narrow, with the possibility of turning positive in the second half of the year.