China prices decline on capacity expansion

China prices decline on capacity expansion
Published: 22 November 2004

Average cement prices in China have declined sharply over the  past several months due to capacity expansions, the China Business Post  reported, citing government and company officials. "The price of P.0 42.5  type cement was 310 yuan per ton in the July-August period, but dropped to  265 yuan in September-October and 245 yuan at present," an unidentified  sales official at Nantong Conch Cement Co Ltd was quoted as saying. "Cement prices in eastern China and Beijing fell the most as production capacity  expanded there extensively," said Zhang Zuoyi, an official with the China Cement Association. "In eastern areas, production capacity on this year’s  newly added cement production lines reached 50-60Mt, bringing overall  cement capacity in these areas to 100Mt," Zhang added.

The capacity expansion is a result of large-scale merger and acquisition  activity in the cement sector, according to the report. Anhui Conch Cement Co  Ltd, China’s largest cement producer, merged took over or with more  than 60 small cement makers, including clinker grinding operations. Mergers  and acquisitions also led to a more than doubling of capacity at Huaxin Cement Co Ltd, the country’s third largest cement producer, the report said. In the third quarter this year, of China’s listed.

Of the tope 22 cement companies, only 10 saw core revenue increase quarter-on-quarter, with the remaining 12 reporting quarter-on-quarter decreases in core revenue, according to the report. By the end of July this year, China had a total of 4960 cement companies. However, only five had annual output of  over 10Mt, according to statistics from the cement association.