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New Challenges and Opportunities to China’s Cement Industry

CRI-report: In 2012, cement enterprises will be faced with comprehensive trials and multiple constraints from the aspects of policies, the environment, the production capacity and market, etc. The industry strategy development direction made by the "11th Five-Year Planning" and "12th Five-Year Planning" of the cement industry points out that, for cement enterprises, to develop the concrete industry is the inevitable measure to improve the industry chain and reduce the market risks, achieving the sustainable development, and it is also the only way for the development of cement enterprises towards internationalization.

The period of "12th Five-Year Planning" is a critical time for the overall construction of the moderately prosperous society and the national economy will maintain a rapid growth. The cement market is moving to maturity, and the cement industry is faced with not only the development opportunities but also great challenges. The substantial investments in the subsidized housing projects and high-speed railways and the infrastructure construction of the railway transportation, water conservancy, agriculture and rural areas, on one hand, will inevitably bring about the continuous growth demand for the cement industry; on the other hand, it also exacerbates the cement industry to eliminate the backward production capacity and accelerate the pace of upgrading and restructuring.

The data of China Cement Association shows that the cement production in 2011 was 2.09 billion tons, with an increase of 11% YOY, and the cement consumption was 2.07 billion tons, with an increase of 11.2% and the annual sales revenue of CNY 919.78 billion. Overcapacity pressure was further exacerbated.

Under the background of the national regulatory capacity, the cement is an intermediate industry. By the joint of the upstream and downstream industry and the construction of a complete industry chain, it becomes one of the effective ways for the development of the cement enterprises. It not only can save costs, but also can change the current confusion situation of the concrete market. Moreover, in the development of the concrete, the cement enterprises have the advantage of a stable supply of raw materials and the cost advantage. Therefore, the development prospects are very promising.

In 2011, the fixed asset investment of the cement industry was CNY 143.9 billion, with a decrease of 8.3% YOY, which was 40% lower than the average growth rate of that of the building materials industry, and the total investment amount was relegated to the second place in various sub-sectors of the building materials industry. The total volume of the fixed asset investment in the concrete and cement product industry in 2011 amounted to CNY 151.59 billion, with an increase of 49.3% YOY. The investment scale of the concrete industry has surpassed the cement manufacturing industry to be the largest investment sector of the building materials industry. It is easy to see the concrete and cement product industry in 2011 has been booming, and it also forces the cement enterprises to develop concrete industry.

Related reports: http://www.cri-report.com/industry-manufacturing/187-research-report-on-chinese-cement-industry-2010-2011.html