The National Development and Reform Commission of mainland China predicted the prices for cement would continue to rise in the second half of this year, which is expected to benefit such Taiwanese cement investors as Taiwan Cement Corp. and Asia Cement Corp.
Because of the promising prospect for mainland’s cement market, Taiwan Cement will see earnings from mainland investment reach RMB100 million (US$13.33 million) and Asia Cement RMB250 million (US$7.62 million).
In the meantime, foreign capital investor Morgan Chase targeted the share prices for Taiwan Cement and Asia Cement at NT$48 (US$1.46 at US$1:NT$32.8) and NT$45 (US$1.37) each share, respectively.
According to an analysis made by Liu Gang, a specialist at the price monitoring center of the National Development and Reform Commission, mainland China’s cement prices will continue its upswing following an average 5% year-on-year hike in the second quarter of this year.
Liu attributed the cement price hikes to the slow increase of additional output, the consistent growth in demand for cement in the wake of increased investments in fixed assets, increase in production costs for cement as the coal prices are on the rise, and the difficulty in cement transportation because of the flooding occurred in northern China and the possible threat of typhoons in southern coastal region in the summer.
Liu said the elimination of export tax rebate wouldn’t have an impact on domestic demand for cement. He predicted domestic demand for cement will grow substantially in the fourth quarter of this year.
Taiwan Cement encountered an operating loss of one million renminbi last year. But the company began making profits in that market in the first half of this year. Thanks to the anticipated price hikes for cement in September, the company is expected to score RMB100 million (US$13.33 million) in the mainland this year.
Asia Cement posted earnings of over RMB100 million (US$13.33 million) in the mainland last year. Thanks to the increase in production capacity and the steady prices in central China market, the company is expected to post over RMB250 million (US$33.33 million) this year.