China’s production of steel and cement will increase next year, weighing on prices, as power supplies are restored, China International Capital Corp has said. “Some capacity that has been idled because of power limits will resume operation in January,” and may cause a drop in prices of the building materials, Luo Wei, an analyst with China International Capital Corp, said.

Provinces including Hebei, Shandong and Zhejiang restricted power to plants from September to meet energy-usage targets. The cuts may trim steel supply through the end of the year by 9.6 per cent, Mysteel Research Institute said. Local governments have yet to say when supplies will return to normal.

Cement prices may fall 15 per cent in the first quarter next year from the current quarter. Cement production capacity is gradually being restored this month in Zhejiang and other eastern Chinese provinces, Luo said.
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