First, the cost of sand and gravel surged by as much as 200%. Then, even when purchasing with cash, it became impossible to secure sand and gravel. As a result, CEOs of concrete companies have been rushing to other regions to source these materials. Yet despite all this effort, more than 90% of concrete companies are still unable to meet their concrete supply commitments on time and in the required quantities. This is the current state of the Nanjing concrete industry—a severe “food shortage.”

It is understood that on May 26, 2017, the Nanjing Concrete Association issued a document titled “Notification and Recommendations Regarding the Severe Shortage of Construction Sand and Gravel in Our City Recently.” The document stated that there are now only two stone quarries remaining on the south and north banks of the Yangtze River in Nanjing, plus a few scattered large-scale processing facilities. As a result, Nanjing’s total annual output of sand and gravel is approximately 10 million tons—far short of the city’s massive demand for sand and gravel, which approaches 100 million tons per year. Consequently, Nanjing relies heavily on external procurement to meet its construction needs for sand and gravel.

After the 2017 Spring Festival, as provincial and municipal governments stepped up efforts to clean up the environment along the middle and lower reaches of the Yangtze River, many regions completely shut down sand and gravel quarries, plunging the ready-mixed concrete industry in Nanjing City into a severe supply crisis. Prices soared dramatically—just the costs of sand and gravel alone have risen from 85 yuan per cubic meter in 2015 to 170 yuan per cubic meter today, representing an increase of as much as 200%.

Even so, the situation has continued to deteriorate. By May of this year, it had reached a point where even cash purchases could no longer secure sand and gravel. It has become increasingly common for companies to have to prepay millions to upstream stone-mining enterprises only to find that their ships are not scheduled for weeks at a time. Recently, the heads of various concrete companies in Nanjing have been rushing to Jiangxi, Hunan, Hubei, Chongqing, and other regions to procure sand and gravel in order to ensure the smooth progress of construction projects in Nanjing. Yet despite these efforts, they still cannot meet market demand. Currently, more than 90% of concrete companies in Nanjing are unable to fulfill their concrete supply commitments on time and in the required quantities. If this trend continues to worsen, construction projects across Nanjing will be forced to halt altogether, with consequences that are simply unimaginable.

According to calculations, from the end of March to the end of April 2017, the rise in raw material prices alone led to a 55-yuan increase per cubic meter in concrete costs. In May, the sharp surge in sand and gravel prices further pushed up concrete production costs by another 43 yuan per cubic meter. In just two months, the increase in raw material prices has driven up concrete production costs by nearly 100 yuan per cubic meter—and the trend shows no sign of abating. Moreover, since 2016, due to continuously rising costs—including labor, transportation weight limits, taxes, and environmental regulations—the entire concrete industry has been on the verge of entering a phase of comprehensive losses.

In response, the Nanjing Concrete Association recommends that all concrete enterprises in the industry strengthen their sense of social responsibility, do everything possible to ensure a stable supply of concrete for construction projects, strictly adhere to quality standards, and firmly put an end to practices such as cutting corners, using substandard materials, and passing off inferior products as superior ones. They should also resolutely resist any unfair terms and illegal behaviors by concrete users—including failure to settle payments according to contractual agreements, malicious delays in payment, supplying goods without signing contracts (agreements) first, providing unconditional supplies, and filing lawsuits outside the project’s location. Furthermore, they should adopt innovative approaches and actively explore strategies such as strategic partnerships and joint bidding for raw materials.

Meanwhile, it is recommended that concrete users respect market realities and, on the basis of thorough consultation with concrete manufacturers, reasonably adjust concrete sales prices and pay for goods in accordance with contractual agreements. In terms of concrete supply, it is important to prepare procurement budgets and plans well in advance.