The sharp fall in both Chinese cement imports and domestic production are further evidence of the concerns surrounding the construction sector in China. After a steady start to the year, domestic cement production fell by 18% y-o-y in Q2 and the 1.35 BMT in the eight months to August represents the lowest figure at this stage in a year since 2011. Present forecasts predict annual domestic cement production to barely top 2 BMT, in which case that would be around 335 MMT less than annual production in 2021.

With a change in government policy in 2017 China rapidly moved from being the world’s largest exporter of cement to the biggest importer, peaking at just over 30 MMT last year. This development caused a dramatic change in trading patterns for Supramax trade in Southeast Asia as traditional markets for cement sales from Indonesia, Thailand and Vietnam to Bangladesh and Taiwan rapidly evolved into a China trade leaving Bangladesh needing to source most of its cement clinker from the Middle East and Pakistan.

By 2021 China was importing nearly two thirds of its cement from Vietnam (18.3 MMT) but there has been a major reversal this year with imports from Vietnam down 5 MMT y-o-y (-48%); Thailand at 4.3 MMT to date is in fact up 1 MMT y-o-y whilst China’s imports from Indonesia which totaled 2.5 MMT last year are only 0.6 MMT to date. Elsewhere imports from other local suppliers are also significantly reduced with Japan halved at 0.4 MMT and South Korea down by two thirds at 0.3 MMT.

Traditionally, most China’s cement imports have been carried by supra/ultramax tonnage but with firmer freight markets in the supra/ultramax sectors coupled with a greater proportion of cement sourced from Thailand, Panamax tonnage is now carrying about 50% of this year’s trade. Even Capesize vessels are loading occasional cement cargo mostly from Indonesia.