Cement Prices Nationwide Were Down for The Third Consecutive Week Last Week

Cement prices nationwide were down for the third consecutive week last week, dragged down by price declines in Sichuan and Qinghai provinces, falling 1.12 percent from the previous week, reports Shanghai Securities News, citing the China Cement Association and industry portal Digital Cement. Industry experts predict a rebound in the cement market will only take place in the second half of 2012 at the earliest due to the expected slowdown in economic growth. At present, the prices of P. 0 42.5 cement and P. C 32.5 cement in Xining were 290 yuan per ton and 260 yuan per ton, respectively. Cement prices in Chengdu, Sichuan province fell 30 yuan per ton last week, further dampening market sentiment. Industry insiders attributed the fall in prices to insufficient demand, a lack of coordination between cement producers and inventory pressure. The market is concerned about the state of the cement market in 2012 should there be no easing of the property curbs and the continued inability to eliminate the inventory of property developers. However, Lei Qianzhi, chairman of the China Cement Association, said cement demand will not drop sharply next year. Cement demand will continue to increase at 3-4 percent even if gross domestic product and fixed-asset investment growth fall to seven and 15 percent over the next five years, said Lei. Lei forecasts cement demand will peak at two billion tons during the period of the 12th Five-Year Plan. Industrial Securities (601377) said the low point of cement demand growth may be reached during the second quarter of 2012. According to the National Bureau of Statistics, the cement industry earned total profits of 84.6 billion yuan during the first 10 months of 2011, exceeding the 71.2 billion yuan recorded for the whole of 2010. The cement industry, capitalizing on increases in both selling prices and sales volume, is expected to post total profits of more than 100 billion yuan in 2011. The upcoming draft of the Five-Year Plan for the cement industry will plan for average annual value-added growth of more than 10 percent, said Kong Xiangzhong, vice chairman of the China Cement Association. Eliminating outdated production capacity and conducting mergers and acquisitions are the major tasks for the sector in 2012, said Kong. According to the draft, the top 10 companies from the sector are required to have a concentration ratio of more than 35 percent over the next five years. Major cement producers such as Tangshan Jidong Cement (000401) will be able to achieve a concentration ratio of more than 50 percent based on their current acquisition strategies, added Kong. The plan would help to realize the creation of major cement makers with average capacity of 120 million tons. At present, only Anhui Conch Cement (600585) and China National Building Material (3323. HK) are able to produce more than 100 million tons. Source: uaecement.com