China’s cement prices rise as coal demand recovers

March 25, 2020, 5:04 pm | Admin

Rising cement prices in several Chinese regions signal that the recovery in the sector is picking up pace, which could boost coal demand with the industry being a large-scale consumer.

An increase in economic activity has also pushed the combined daily coal consumption at key Chinese coastal utilities to its highest level in over two months as the country recovers slowly from the coronavirus outbreak.

More than 10 cement producers in northwest and east China have raised cement prices by 20-65 yuan/t ($2.80-9.15/t), with other regions expected to follow as infrastructure projects restart after the coronavirus outbreak. China's government is pushing for over 15,000 infrastructure projects to be restarted nationwide, which is expected to increase cement demand significantly by mid-April.

China's construction industry consumed 490mn t of coal in 2019, according to data from coal industry association CCTD, with the cement industry accounting for much of it. The cement sector revival could lift demand for Australian high-ash coal, which has faced sluggish Chinese demand in recent weeks because of reduced heating requirements and subdued economic activity. Chinese cement producers are seen as slightly less price sensitive than Chinese utilities when it comes to buying Australian coal.

Combined daily coal consumption from China's six key coastal utilities reached a fresh high at 616,700 t/d yesterday, the highest since 19 January and the first time it has risen above 600,000 t/d in more than two months after a few weeks of volatility at the start of March.

The easing of coronavirus emergency alert levels in China has paved the way for economic activity to resume and has helped to boost coal consumption. Residents in Hubei province's Wuhan, the city at the epicentre of the coronavirus outbreak, will be released from a lockdown by 8 April.

But the recent pick-up in demand may take time to be reflected in China's domestic spot prices of thermal coal given current high stocks, with inventories at the key coal transshipment port of Qinhuangdao at 6.4mn t yesterday. Yesterday's bids for NAR 5,500 kcal/kg coal were around Yn541-545/t fob north China ports, with offers at Yn546-548/t. Argus last assessed this market at Yn549.50/t fob Qinhuangdao on 20 March.

https://www.argusmedia.com/en/news/2090261-chinas-cement-prices-rise-as-coal-demand-recovers

Last modified on March 26, 2020, 5:05 pm | 190