Since December 2025, cement prices have been on a steady decline, hitting a low of 328 yuan per ton on March 11 of this year. Recently, however, several cement manufacturers have issued price increase notices one after another.

Multiple Cement Manufacturers Issue Price Increase Notices: Demand Rebounds and Inventory Turnover Accelerates

I. Demand Side: Seasonal Surge Creates Short-Term Supply-Demand Gap

1. Accelerated Post-Holiday Resumption of Work and the Arrival of the Traditional Peak Season

- Timing: Mid-to-late March marks the start of the traditional construction peak season known as “Golden March and Silver April,” coupled with warmer weather, creating excellent conditions for outdoor construction.

- Resumption Data: After the Lantern Festival, worker return rates exceeded 90%, and the nationwide rate of construction site resumption rose rapidly. In mid-March, cement shipments surged by over 70% month-over-month, and direct supply to infrastructure projects doubled.

- Demand Structure: Infrastructure projects (railways, highways, water conservancy) serve as the primary driver, with procurement volumes for key projects increasing by over 30% month-over-month.

2. Previous Price Slump and Historically Low Inventories

- From December 2025 to March 2026, cement prices continued to decline, bottoming out at 328 yuan/ton on March 11.

- During the price trough, cement plants proactively reduced inventories and operated at low capacity, causing the industry’s overall inventory (clinker storage capacity ratio) to drop to a low of below 50%.

- Result: When demand suddenly surged, the market **lacked sufficient inventory buffers**, and the supply-demand mismatch directly drove up ex-factory prices.

II. Supply Side: Off-peak Production + Industry Self-Regulation, Proactive Capacity Contraction

1. Normalized off-peak production, strictly controlling capacity release

- Northern Regions: Strict enforcement of off-peak production during the winter heating season; kilns in Northeast China and Henan were shut down for over 60 days, resulting in a significant decline in inventory.

- South: Spring environmental production restrictions and voluntary kiln shutdowns; regions such as Zhejiang implemented voluntary capacity controls.

- Nationwide: The Ministry of Industry and Information Technology strictly prohibited new capacity additions; kilns were shut down for an average of 46 days, exceeding 80 days in key regions, thereby curbing supply at the source.

2. Industry-Wide Price Support and Regional Price Hikes

- Led by industry leaders, core production regions in Northeast China, East China, and Southwest China simultaneously issued price increase notices, creating a regional synergy effect.

- Northeast China showed the strongest performance: Three consecutive rounds of price adjustments in February and March, with a cumulative increase of 100 yuan/ton.

- Yangtze River Delta (Jiangsu, Zhejiang, Anhui): Intensive price adjustments starting March 10, with **price increases of RMB20–40 per ton**.

III. Cost Side: Dual increases in energy and transportation costs drive rigid cost inflation (the most direct driver)

1. Coal (accounting for over 50% of production costs): Prices Remain at High Levels

- As the core fuel for cement production, coal prices have continued to rise, directly driving up clinker production costs.

- Regional Differences: Cost pressures are greater in coal-scarce regions such as Henan and Qinghai, where price increases (30 RMB/ton) exceed those in East China (20 RMB/ton).

2. Diesel/Oil Prices: Significant Increase in Transportation Costs

- In March, international oil prices surpassed $100 per barrel, leading to an increase in domestic refined oil prices.

- Impact: Cement is a bulk, low-value commodity with a high proportion of freight costs. The rise in diesel prices has increased transportation costs by 5%–8%, adding RMB3–5 per ton to freight expenses.

3. Cumulative Impact of Other Costs

- Prices for raw materials such as sand and gravel, as well as admixtures, have risen in tandem.

- Policy-related costs: Increased environmental protection and operational maintenance expenses, coupled with the implementation of the new 13% VAT policy on concrete, have heightened the tax burden on enterprises.

IV. Policies and Expectations: Medium-to-Long-Term Infrastructure Dividends Boost Market Confidence

1. Major Projects Under the 14th Five-Year Plan Provide a Safety Net

- The plan identifies 23 major infrastructure projects (railways, highways, ports, water conservancy), with a total investment exceeding RMB trillion.

- Strong medium- to long-term demand expectations have emboldened companies to raise prices and encouraged distributors to stock up.

2. Support from Economic Stabilization Policies

- The issuance of ultra-long-term special treasury bonds and accelerated issuance of local government bonds ensure infrastructure funding is secured, guaranteeing project implementation.

- The industry is moving away from vicious low-price competition and entering a phase of orderly profit recovery.

Clearly, this round of cement price increases is the result of the convergence of four key factors: short-term supply-demand mismatch (the trigger) + rigid cost increases (the core driver) + proactive supply-side regulation (the key support) + expectations of infrastructure policies (long-term confidence).

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