UBS remains positive on China cement sector
The decline in cement prices in some regions of China over the past week is due mainly to pressure from newly added capacity, UBS says in a report.
It notes the government’s announcement it will extend property-sector tightening further, to some Tier-two and Tier-three cities has hurt sentiment for the cement industry, especially in the H-share market.
But the house expects the impact of the extended restrictions is likely to be weaker than in Tier-one cities as the real living condition, not investment, is the demand driver in Tier-two and Tier-three cities.
In addition, UBS notes the government is determined to enhance hydro/irrigation investment and plans a large-scale inspection of progress on social housing, which it tips could boost cement demand in 4Q. UBS is still positive on the 2H11 demand outlook and doesn’t expect a sharp demand shortfall in the period.
Published under Cement News
