Oversupply in China?

Cement prices in China kept a moderate decline trend throughout the first half of this year, and the trend is expected to continue into the second half of the year for quick capacity expansion and inadequate demand, according to a report recently released by the Price Monitoring Center of the State Development and Reform Commission.  In a breakdown, the price of ordinary portland cement slid all the way, while that of blended portland cement rose first before decline throughout the first six months.   The report attributed the price fall mainly to three factors:higher capacity and output expansion that led to oversupply, slower demand growth and price war.  

The country’s monthly cement output averaged 83.88 million tons from May to December 2004, but it increased to 87.62Mt and 92.85Mt respectively in April and May this year. Plus the stockpiles left over from 2004, China’s cement supply increased by 32.17 per cent in the first half of this year.  Meanwhile, as the second half of a year is a peak season of cement production in China, oversupply may increase further.