China: Taiwan Cement expects 2H16 pick up in demand

Cement sales in China will pick up in the second half of the year, on the back of a recovering demand from infrastructure projects and residential building in the country, according to Taiwan Cement Corp.

“We saw strong infrastructure spending in China supported cement demand in the first half, which is expected to continue growing for the rest of the year,” Taiwan Cement Senior Vice President, Edward Huang, told an investors’ conference in Taipei.

In the first half of this year, the company’s total sales volume from plants in Taiwan and China came to 28.6Mt. Sales volume for the whole of this year is expected to reach between 55Mt and 60Mt, compared with last year’s 56.3Mt, Mr Huang said.

As land purchases in China picked up after 16 months of decline in March, demand for residential property is improving and expected to be the catalyst for sales in the second half, Mr Huang said.

“Despite an unstable economic environment, we have seen some indications of positive trends,” Chairman Leslie Koo told investors.

Taiwan Cement is predicting sales growth in the 4Q16, as it is usually a high season for the company’s clients in southern China, which in turn would trigger increased demand for the company’s products.

In the first six months of the year Taiwan Cement’s net profit dropped 27.6 percent to TWD2.23bn (US$0.7bn) from a year earlier due to foreign exchange losses of TWD520m in the second quarter.

Gross margin rose from 14.6 per cent to 16.34 per cent in the second quarter on improving cement business in China and higher profitability of Hoping Power Co and Taiwan Prosperity Chemical Corp.