Rising cement prices signal economic growth in China

Rising cement prices signal economic growth in China
24 January 2017

Rising cement prices were providing a clear signal that China's economic growth will remain stable for the year ahead, said Mo Ji, chief economist for Asia ex-Japan at Amundi in an interview with CNBC.

Cement offers a more accurate gauge of China's economic activity given its short shelf life.
"It can only be stored one month. If there is no on-the-ground activity, how can the cement prices go up? It's really demand," she said, adding that meant infrastructure and other construction was continuing.

China's spot cement price was around CNY272/t (US$39.61/t) by mid-January, compared with an average regional price of as low as CNY206/t in the 1Q16, according to data from Credit Suisse.

Moreover, Ms Ji refuted the idea that China's construction market might be heating up. In December average new home prices in 70 major cities on the mainland rose 12.4 per cent YoY, after tacking on 12.6 per cent in November, Reuters reported. Prices in Shenzhen, Shanghai and Beijing all rose more than 23 per cent YoY in December, the report said.

While she noted that China's property market might be in bubble territory, she didn't think it would burst this year, although she couldn not exclude 2018 yet.

But currently, the government appeared to be tightening property policy, potentially staving off financial turmoil, at least ahead of the leadership transition later this year, she noted. "The political transition means they have to make everything stable," Ms Ji said.

Published under Cement News

Tagged Under: cement prices China