Goldman positive on Eastern China markets

Goldman Sachs said it remains positive on China's cement sector but continues to be regionally and stock selective. The investment bank expects further upside to cement prices in Eastern China, given its current lowest inventory across the regions, and least new capacity additions in the year, benefiting Anhui Conch and CNBM.

However, Northern/Southern China's cement prices are already under pressure from high inventory/overcapacity. Goldman estimated NSP capacity to increase by 11 and 10 per cent in Northern/Southern China in 2013, respectively, weighing on any cement price rebound, thus impacting companies like BBMG and China Resources Cement.

Yesterday BBMG warned that it expects to post a first quarter loss of about CNY60m (US$9.7m) for the first quarter of 2013 compared to CNY294m profit in the same period of last year. The loss is attributed to lower selling prices in the areas in which BBMG’s subsidiaries operate due to lower demand. (Source:
ET Net News)