China’s output of cement rises 21.3 per cent

China’s output of cement rises 21.3 per cent
Published: 02 October 2006

China produced 109.537Mt of cement in August this year, up 21.3 per cent YoY. This is the fifth month running for the country’s monthly cement output exceeding 100Mt.

According to statistics published by the National Bureau of Statistics, total cement output reached 762.2877Mt in the first eight months of this year, up 21 per cent YoY.

China Cement Industry Association predicts that the domestic cement output will hit a historic high and is set to exceed 1.2bn tonnes for the whole year.

Entering the peak season, brisk cement production and sales will continue, and the profit of cement industry as whole is likely to grow over 50 per cent this year.

Meanwhile, the utilization rate of production capacity of cement industry is expected to reach 90.1 per cent this year.

Rapid growth of demand has forcefully propped up rapid growth of the output.

But as growth of domestic fixed assets investment slows down in 2007, China’s market demand for cement can no longer enjoy high-speed growth.

Thanks to brisk market demand, listed cement companies have bottomed out. According to statistics of Galaxy Securities, the main operating turnover of the 10 listed cement enterprises totaled 15.235bn yuan in the first half of 2006, up 26.73 per cent YoY; their gross profit hit 1.075bn yuan, an increase of 859m yuan or up 398.5 per cent YoY; and their net profit, 509.0663m yuan, an increase of 470.1237m yuan.

By September 29, five listed cement companies have announced their anticipation for over 50 per cent profit increase for the third quarter of this year.

They are Tianshan (Ticker code: 000877), Qingsong (ticker code: 600425), Huaxin (ticker code: 600801), Jiangxi Cement (ticker code: 000789) and Jidong (ticker code: 000401).

As September-October is the major construction period for most projects in China, cement price may rise slightly in the period and then fall in November-December.

But profit of the industry as a whole may still grow sharply, and is expected to be over 12bn yuan this year, up over 50 per cent YoY.