Research Report on China Cement Industry, 2017-2021

Cement is an important building material, which is closely related to construction industry and fixed asset investment. The demand for cement rises with the development of construction industry, which drives the cement price. In 2016, fixed asset investment in China reached CNY 59,650.10 billion, up by 8.1% YOY. In 2016, the gross output value of construction industry in China reached CNY 19,356.70 billion, up by 7.1% YOY. Housing construction area was 7,589.75 million square meters, up by 3.2% YOY.

Cement industry in China develops rapidly after China’s reform and opening-up. From 1986 to 2016, the annual output volume of cement in China increased from 166 million tons to 2,403 million tons, and the CAGR in this period reached 9.3%. China’s gross output volume of cement has been the largest globally for many years. In 2016, the output volume of cement was about 2,403 million tons in China, up by 2.3% YOY. The growth rate of China’s economy slightly decreased in recent years, but it still remained the world’s first. Therefore, the demand for cement remains huge.

The barriers to entry in China’s cement industry are relatively high. Cement product is featured with energy dependence, high transport cost and limited sales radius, which determines the characteristics of China’s cement production industry being highly fragmented and having numerous enterprises. According to CRI, by the end of 2016, the total number of cement producers was over 3,000 in China. Cement industry is featured with a low market concentration rate and intense market competition in China.

It is predicted that the development prospect of China’s cement industry will be better in the next few years. The Chinese government proposed the “Three-Year Action Plan” on Jun. 17, 2015, which aimed to reconstruct 18 million suites including dangerous buildings and villages in urban areas and 10.6 million dangerous suites in rural areas. This plan will bring steady demand to cement industry.

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