Property rebound to drive up concrete prices

Cement prices in southern and eastern China will be stable this year, but the recovery in Hong Kong’s property market will help drive up the price of concrete here, according to executives at China Resources Cement.   High coal prices, electricity shortages, macro-economic controls and tough land curbs would restrain prices on the mainland, said Shi Shanbo, the company’s vice-chairman.  

"In the Pearl River Delta, our main market, cement prices will be stable this year, judging from our orders and market feedback," he added. Director Zheng Yi said prices fluctuated sharply in the Yangtze Delta last year because of a construction boom and new cement production.  The average cement price in the Pearl River Delta rose 8 per cent last year, helping push China Resources Cement’s net profit up 80 per cent to HK$88.66m last year, said Mr Shi.   Another reason for the profit surge was that the company concentrated production in the Guangxi autonomous region to take advantage of lower costs.  

The firm’s turnover rose 34.4 per cent to HK$1.43bn last year and it aimed to increase sales of cement by 35 per cent and concrete by 30 per cent this year in volume terms, said Mr Shi. "As coal and electricity prices may remain high this year, we’d rather not predict profit margins," he said. The company is spending HK$1.5bn to expand production of cement and concrete over the next two years. Its annual cement capacity will nearly double to 9.5Mt from 5.2Mt