Fly Ash Demand Plummets in China as Heavy Rains Stall Construction Projects

In June, the Fly Ash market in China was facing significant challenges due to a marked decline in the downstream construction sector. Despite a sufficient supply of Fly Ash, demand has weakened considerably, particularly in June, as continued heavy rains in South China have disrupted construction projects. The ongoing property crisis continues to drag on domestic demand. Additionally, new orders for Fly Ash from the downstream cement industry also decreased.

The National Bureau of Statistics (NBS) recently reported a business activity index of 52.3 percent for the construction sector in June, reflecting a decline of 2.1 percentage points from May and non-manufacturing activity expanded in June, with its purchasing managers' index (PMI) at 50.5. The figure for June is only 0.6 percentage points below that of May. This decline has been attributed to the adverse weather conditions that have severely impacted construction activities, especially in the southern regions of the country.

The construction sector, a major consumer of Fly Ash, has been one of the hardest hit by the recent climatic conditions. The heavy rains have not only delayed ongoing projects but also deterred the initiation of new ones. The resulting slowdown has led to a significant decrease in the demand for Fly Ash, a key material used in cement and concrete production, as well as in the manufacturing of bricks and blocks. The weather's impact on the construction sector is evident in the decreased business activity index, an indicator of the industry's overall performance, which has consequently led to reduced consumption of Fly Ash.

China’s economic growth target for the year is around 5%, a goal that appears increasingly challenging given the current conditions. The ongoing contraction in the factory activities poses a significant threat to achieving this target.

The uneven performance of the economy, with manufacturing showing intermittent strength and consumption remaining weak, underscores the complexity of the current economic landscape. The prolonged issues in the real estate sector, coupled with disruptions in the construction industry, are significant headwinds that need to be addressed to stabilize and stimulate growth.

According to ChemAnalyst, the weather conditions and the current economic challenges, the Fly Ash market in China is expected to see a further decline in July. The weather bureau expected two typhoons projected to make landfall will likely disrupt construction activities across multiple regions, leading to reduced demand for Fly Ash. This decline is expected to be more pronounced in the southern and coastal regions, where the impact of the typhoons will be most severe. Construction projects are likely to face delays and potential damage, further dampening the demand for construction materials, including Fly Ash.