China's concrete producers face more costly raw materials and also keen competition pushing prices lower

China’s concrete producers are facing a quandary of more expensive raw materials amid tighter environmental rules and  intense competition which is pushing prices lower, experts said at the World of Concrete Asia 2017 exhibition in Shanghai today.

Prices of cement, sand and gravel – raw materials in concrete – have surged over the year so that one ton of cement now sells at over 500 yuan (US$76) in China, up from around 340 yuan one year ago, said Kevin Gan, president of Ambuild Innovative Road Materials Inc, a domestic concrete and coatings producer.

Meanwhile the aggregate price of sand and gravel is  between 130 yuan and 140 yuan per ton in Shanghai, “jumping over 90 percent from the beginning of the year,” said Li Hua, chairman of caggregate.com, a domestic sand and gravel market consultancy.

“Their supply has been cut amid China’s tightening environmental rules, which shut high-polluted producers, especially inefficient cement producers and gravel miners,” Li said.

But the prices for the finished goods didn’t go up accordingly, Gan said. Producers are paid 800 yuan for paving one square meter of pervious concrete — which allows water to flow underground directly from roads — while two years ago the price was 1,500 yuan per square meter. 

“Producers rushed into the industry following China’s call for infrastructure expansion, squeezing profit alongside the raw materials price rise,” he explained.

But Li said that “opportunities remain huge for domestic producers bolstered by China’s continuing infrastructure and real estate expansion, especially in the west. These policies will boost the demand for basic industrial materials such as concrete.”