China's cement output hits record low for July amid construction slowdown

China's cement output fell 5% year over year to approximately 146 million mt in July, the lowest level recorded for the month since 2009, according to the latest data from the National Bureau of Statistics of China.

This significant drop highlights the ongoing slowdown in China's construction sector, driven by a persistent real estate crisis, weak infrastructure development, and adverse weather conditions, including heatwaves and storms that disrupted numerous projects, market sources said. The situation in the cement sector, a key indicator of domestic construction demand, is particularly telling as it is largely consumed locally and difficult to export.

After the rapid growth period between 1990 and 2014, when cement production soared to support urbanization and infrastructure expansion, the industry has now entered a contraction phase. The "peak cement" milestone was reached in May 2020 following Beijing's pandemic stimulus package, before the real estate sector began its downturn.

Year-to-date production through July totaled around 958 million mt, down about 4.5% from the previous year. The industry also faces regulatory pressures, with government mandates to reduce excess capacity to better match supply with demand and address environmental concerns. Market sources noted that cement output may continue to decline in the coming months amid these challenges.

A trader based in Asia said, "I am hearing that China is cutting down on cement production, and this is linked broadly to decarbonization efforts, as production of cement and clinker is a carbon-heavy industry."

Platts, part of S&P Global Energy, assessed cement (ASTM type I) FOB Vietnam at $38/mt Aug. 21, unchanged from the previous week. Platts also assessed cement clinker FOB Vietnam at $32/mt Aug. 21, slightly down from $32.50/mt FOB a week earlier.