China’s cement slump signals end of 21st-century building boom

[BEIJING] Few commodities tell the story of China’s 21st-century economy better than humble cement, and its current output slump illustrates the depth of the nation’s building slowdown after the frenzy of the previous decade.

Cement production posted its weakest July for any year since 2009, as an unresolved real estate crisis and tepid infrastructure activity weigh on construction. The cement figure was just one among a bundle of data points released on Friday (Aug 15) showing a sharp deceleration in the world’s No 2 economy.

In some ways, cement is a better proxy for China’s “old economy” than more closely-watched sectors such as steel, because it’s more keyed to the domestic market and to construction alone. Cement itself is not exported in massive volumes, and – to state the obvious – a surplus of concrete buildings cannot be shipped overseas like, say, a glut of solar panels or cars.

Annual output rose every year from 1990 to 2014 to build the skyscrapers, transport networks and sprawling real estate that define modern China’s urban landscape. But “peak cement” can be pinned to the month of May 2020, when Beijing was rolling out pandemic-era stimulus and the property crisis was yet to unfold.

China’s economy slowed across the board in July as industrial activity, investment and retail sales all fell short of expectations. Steel output posted the weakest July since 2017, while property investment shrank the most since 2020 and yuan-denominated loans contracted for the first time in two decades.

Cement output in July fell more than 5 per cent from a year earlier to about 146 million tonnes. The weather played its part, as heatwaves and intense storms affected construction activity. The industry is also exposed to the government’s supply-side reforms, and further declines are likely as producers are required to shrink capacity to better align with demand. BLOOMBERG