Resources and energy supply hold key

Resources and energy supply hold key
Published: 02 May 2006

Resources and energy sustainability will be the keys to healthy development in the housing market, says the China Cement Association. "Insufficient [land] and energy could pose problems for the housing sector as the area is as equally resource intensive as the steel and cement industries," Liu Zuoyi, director of the association’s information department, said.  
 
The mainland’s cement industry reported a decline in profits of more than 38 per cent to 8.05 billion yuan in 2005, partially due to price rises in raw materials and over-supply.   But Mr Liu said this was all part of the business cycle, as new opportunities attracted more players and more players led to an over-capacity and then smaller players were driven out of the market before another cycle began. He said he would not advise the government to alter the business cycle for the sake of healthy development. 
 
 "The government has tried to cool the housing market since 2000, but look at the market now and no one can tell for sure if the curbs are working or not," Mr Liu said.   He agreed that development of the real estate sector would have some bearing on the performance of the cement industry, but he did not know how the government could introduce a correction into the housing market.   However he did hope cement producers would become collectively stronger so they bargain for a better price with developers in the future.