Sinolink: Cement prices in the Yangtze River Delta and Hubei regions continue to rise, with cement price increases exceeding expectations.

Sinolink released a research report stating that compared to the start of 2024, the timing of cement price increases in 2025 is earlier, the pace is faster, and the implementation is smoother, showing characteristics of a "slow jog." In April of this year, some enterprises in the Yangtze River Delta region planned to stagger production over 10 days, expecting a reduction in output by about one-third. Hubei planned to halt production for 5 days, with a staggered schedule significantly longer than in previous years. In February and March, production halts were also significant. Therefore, after the Spring Festival in February, inventories continued to decline, with the average cement inventory in the Yangtze River Delta region falling below 65% in late February and early March for three consecutive weeks, currently at 67%, compared to 73% at the same time last year. Last year, due to weak staggered production, the average inventory in mid-March/April/May exceeded 70%. From the perspective of production restrictions and inventory alone, there are more conditions for price increases this year. Sinolink's main points are as follows: Event: According to the Digital Cement Network, some cement enterprises in Jiangsu Nanjing, Suzhou, Yangzhou, Shanghai, and Hangjiahu in Zhejiang recently announced a third round of bulk price increases, with a magnitude of 20 yuan/ton; starting from April 1st, cement enterprises in Wuhan, Hubei, and the eastern region of Hubei plan to raise prices by 30 yuan/ton. Post-holiday cement price hikes show a "slow jog" pattern, with price increases exceeding expectations. (1) In the Yangtze River Delta region, four rounds of clinker price increases totaling 60 yuan: On February 6th, the first round of clinker price increases by 10 yuan/ton, with the clinker warehouse price ranging from 230-240 yuan/ton, aimed at stabilizing prices; On February 21st, the second round of clinker price increases by 10 yuan to 240-250 yuan/ton, along with cement; On March 5th, the third round of clinker price increases by 20 yuan to 260-270 yuan/ton; At the end of March, the fourth round of clinker price increases by 20 yuan to 280-290 yuan/ton. (2) In the Yangtze River Delta region, three rounds of post-holiday cement price increases totaling 70 yuan: On February 21st, cement enterprises in Jiangsu Suzhou, Shanghai, and other areas plan to raise prices by 20 yuan/ton; On March 5th, cement prices in Jiangsu Suzhou, Shanghai, Zhejiang Hangjiahu, and other areas plan for a second round of price increases by 30 yuan/ton; At the end of March, some cement enterprises in Jiangsu Nanjing, Suzhou, Yangzhou, Shanghai, and Zhejiang Hangjiahu announced a third round of bulk price increases by 20 yuan/ton. (3) Two rounds of cement price increases in Hubei: On March 17th, cement enterprises in the Wuhan area announced the first round of price increases by 30 yuan/ton; Starting from April 1st, cement enterprises in Wuhan and the eastern region of Hubei plan for a second round of price increases by 30 yuan/ton. Compared to the start of 2024, the timing of cement price increases in 2025 is earlier, the pace is faster, and the implementation is smoother, showing characteristics of a "slow jog." Looking back at 2024, with the Spring Festival on February 10th, cities along the Yangtze River began to test price increases in mid-to-late March, for example, on March 25th, 2024, cement enterprises in Nanjing and Zhenjiang announced a bulk price increase of 20 yuan/ton; on April 10th, 2024, the Yangtze River Delta along the river announced a clinker price increase of 30 yuan/ton, with a shipment price reaching 240-250 yuan/ton; on April 11th, 2024, cement prices in Wuhan and eastern Hubei were raised by 30 yuan/ton. The implementation of staggered production restrictions is the main reason, good weather is a bonus item, the second derivative of the cement supply and demand price curve is time, precise monthly staggered production can alleviate supply and demand contradictions. On the one hand, with the implementation of production halts, enterprise inventories are effectively controlled. In April of this year, enterprises in the Yangtze River Delta region planned to stagger production over 10 days, expecting a reduction in output by about one-third. Hubei planned to halt production for 5 days, with a staggered schedule significantly longer than in previous years. Production halts were also significant in February and March, so after the Spring Festival in February, inventories continued to decline, with the average cement inventory in the Yangtze River Delta region falling below 65% in late February and early March for three consecutive weeks, currently at 67%, compared to 73% at the same time last year. Last year, due to weak staggered production, the average inventory in mid-March/April/May exceeded 70%. From the perspective of production restrictions and inventory alone, there are more conditions for price increases this year. On the other hand, a monthly staggered production schedule demonstrates the scientific nature of "precise staggered production," an evolved version of the cement industry's "staggered production" method. In previous years, production restrictions were scheduled annually or quarterly, and enterprises could arrange production freely within the quarter, often choosing to produce first and then halt production, but ultimately the production halt days were insufficient, resulting in a poor staggered production effect. After the "price war" in the cement industry, industry profits hit bottom in May 2024, and the industry reached a new consensus on profits, evolving into a more effective "precision staggered production" mechanism. Therefore, the overall price and profit center in 2025 will move up. However, staggered production is still seen as a transitional solution, and solving overcapacity in the long term is fundamental. Furthermore, in 2025, the weather in southern regions such as the Yangtze River Delta, Hubei, and Fujian is good, and there have been no "endless rains" yet. Looking back at the entire month of March, in Nanjing, for example, there were 7 rainy days, but only 4 days affected construction (such as light rain and thunderstorms). Cement stocks in the first quarter report are expected to show price elasticity and cost contributions (coal prices). In terms of costs, the average price of Qinhuangdao Port-produced power coal (Q5500) from January to March was 722.19 yuan/ton, a year-on-year decrease of 179.55 yuan/ton, corresponding to a decrease of 19.91%. The coal price in March was 678.10 yuan/ton, continuing to drop by 7.10% monthly. In terms of prices, cement prices in East China rose year-on-year from January to March, according to the Digital Cement Network, the average price of high-grade cement in East China from January to March was 394 yuan/ton, an increase of 43 yuan/ton year-on-year. However, to interpret this realistically, we need to pay attention to the actual landing extent and the price differences between companies with a nationwide presence and those in the Yangtze River Delta. Risk warning Price hikes fall short of expectations; policy progress falls short of expectations; continuous decline in market demand risks, etc.