Concerns over China cement sector overdone - GS

Concerns over China cement sector overdone - GS
Published: 31 August 2011

Goldman Sachs believes the recent market concerns regarding larger-than-expected new capacity additions in China’s cement industries are overdone.

It says the government’s capacity control policy, capex inflation, the difficulty in financing projects and a lack of viable limestone resources raise the entry barrier considerably for new players.

"We remain convinced that 2012 has the potential to be even better for the Chinese cement market as we estimate supply growth will continue to lag demand growth, altering the supply/demand dynamic, and suggesting higher cement prices and profitability in 2012."