Despite sharp declines in the prices of cement and premixed concrete in mainland China, Taiwanese cement makers operating production facilities there are ambitiously expanding production capacity in a bid to boost profitability. The decline in the prices of cement and premixed concrete in the mainland has reportedly pushed the average gross profit margin of domestic cement firms down to between 25 per cent and 30 per cent at the end of last year from 40 per cent.
Due to the implementation of the strict macroeconomic control policy in the mainland, the cement price in the Yangtze River Delta area has reportedly slipped to below US$30 per tonne in the first quarter of this year from over US$40 a year ago. Despite the decline in profit margin, Taiwanese makers of cement and premixed concrete are still expanding production capacity there.
Kuo Chan, Taiwan’s largest producer of premixed concrete operating seven concrete plants in the mainland, will launch mass production of its Fuzhou cement plant in Fujian Province by the end of this year. The company’s Fuzhou plant is designed to have an annual production capacity of 2.5 million metric tons of cement. Kuo Chan said its mainland subsidiaries would contribute more than NT$160 million (US$5.11m) in earnings to Taiwan parent this year, double that of last year.
Chia Hsin noted its Jingyang cement plant is capable of rolling out 2.8Mt to 3.3Mt of cement a year. The company will see mainland production capacity amount to more than 5.5Mt as it will kick off production at the Union plant in Jiangsu Province, which has an annual production capacity of 2.2Mt, this year.
At present Universal is building a wholly-owned Huizhou cement plant in Guangdong Province. Requiring total investment of NT$3 billion (US$95.84m), the Huizhou plant with two kilns is expected to be completed in October this year for mass production at an annual capacity of 3Mta. Universal estimated it would be able to see earnings generated from the mainland grow three-fold from last year’s level.
With 11 production facilities in the mainland, Chien Kuo reported total annual output of two million cubic meters of premixed concrete there. But the company will see the annual output reach over three million cubic meters this year as it will soon add two production facilities in the mainland.