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A New Round of Adjustment in Chinese Cement Industry

www.shcri.com - In 2009, driven by the CNY 4-trillion stimulus plan, Chinese sectors of railway, highway, etc successively expanded the investment scale, including the infrastructure investment. Consequently, the demand for cement was greatly boosted.   

In 2009, China’s cement production totaled 1.63 billion tons, 16.43% increase over 2008. The entire cement industry assumed high prosperity. However, as a series of policies have been released to curb China’s real estate industry and the infrastructure investment sustains decline, it is forecast that the cement market cannot continue the demand growth in 2010. Additionally, the accelerated release of production capacity will further aggravate the imbalance between supply and demand of cement. Fortunately, the Chinese government has put forward the policy “building material going to the countryside”, which is expected to mitigate the contradiction between supply and demand of cement.       

Aiming at compensating the urban investment decline, the “building materials going to the countryside” policy will support the rural house construction and encourage the renovation and construction of rural roads and water conservancy system. This will boost the demand for cement, thereby alleviating the disparity between cement supply and demand.

In November 2009, Chinese Ministry of Industry and Information Technology issued the Opinions on Restraining Overcapacity and Redundant Project to Lead the Healthy Development of Cement Industry. It encourages large enterprises to merge and reorganize backward enterprises, thus promoting the industrial structure adjustment. In the situation of oversupply, cement enterprises are recommended to expand the scale by M&A and perfect their regional business layout. In addition, they should also set foot in the upstream and downstream industries to reduce the operation risks and win more survival space. 

In the 2010 China Cement Market Forum hosted by China Cement Association (NYSEMKT:CCA) and Digital Cement Net, it is reported that the national policies on China’s cement industry begin to encourage the improvement of industrial concentration, the adjustment of scale structure and the maintenance of benign competition. It is recommended that cement enterprises should transfer from sales competition to cooperation. The industrial policies focus on the support of strategic reorganization to improve the concentration of the whole cement industry. 

In general, as the compulsory elimination of backward capacity is strengthened, the M&A within the industry will be accelerated. It is forecast that the concentration of China’s cement industry will be further raised. This will generate high scale effectiveness and growing profit margin for this industry.

The Research Report on Chinese Cement Industry, 2010-2011 focuses on China’s cement industry. It offers references for cement enterprises, investors and those concerning this industry to better understand the current situation, policy environment, investment and so on of China’s cement industry.  

The report mainly focuses on

- Status quo of Chinese cement industry

- Competition in Chinese cement industry

- Investment in Chinese cement industry

- Policy environment of Chinese cement industry

- Major events in Chinese cement industry

- Prediction on the development of Chinese cement industry

 

For more details of the report: http://www.shcri.com/reportdetail.asp?id=423

 

If you are interested in sample reading or purchase of the report, please do not hesitate to contact Eileen: Eileen@shcri.com, Tel: 86-21-6150-9706, www.shcri.com