Market monitoring by the Ministry of Commerce (MOC) shows that China’s cement market has operated steadily, with comparatively inert prices. Monitoring shows that cement price averaged 316 yuan/ton in the first half of May, down 1.3 percent from the latter half of April.
However, the cost pressure remains huge. As cement consumption enters peak season and the output growth falls slightly, cement price may be under certain pressure of rising.
Production cost has increased obviously recently. Coal price rose in April and may still maintain the rising trend in near future. Coal consumption accounts for over 30 percent of the production cost of cement, and price hike of coal will inevitably increase the production cost of cement.
The demand for cement is brisk now. Nationwide, by the end of April, the number of construction projects with contractual value exceeding 500,000 in urban area totaled 137,900, a year on year increase of 15,000; and the total planned investment, ¥19.17trn, up 16.9 percent year on year.
China’s fixed assets investment operated well, and investment in real estate has increased. Statistics show that China’s investment in real estate totalled ¥695.2bn in the first four months, up 32.1 per cent YoY.
Meanwhile, the growth of China’s cement output has slowed down. Under the pressure of energy saving and reduction of pollutant discharge, China has speed up the pace of eliminating backward production capacities. China eliminated 48.28Mt of backward clinker production capacities and 80Mt of backward cement production capacities in 2007. Statistics also show that China’s cement output was 257Mt in the first quarter, up 9.2 per cent YoY, and the growth is 5.3 percentage points lower than in the same period of 2007.