Chinese cement producers welcome construction boost

Manufacturing activity in China has returned to growth with the country’s purchasing managers’ index for the manufacturing sector coming in at 50.1 in September, compared to 49.4 in the previous month, according to the National Bureau of Statistics. Any reading above 50 indicates expansion. The growth comes on the back of an easing of COVID-19 restrictions, recovering domestic demand and a package of macroeconomic stimulus policies. 

The government's recent steps to stabilise prices, ease enterprises' burdens and enhance financial support are conducive to alleviating the pressure of high costs on manufacturers, and the sector will likely expand at a faster pace in the following months, according to Zhou Maohua, analyst at China Everbright Bank.

China’s construction sector has also continued to expand with the subindex for business activities in the construction sector coming in at 60.2 in September, up by 3.7 points compared to the previous month. Growth in infrastructure investment has sped up for two consecutive months, and the country has accelerated the push to promote the construction of key projects through offering financial guarantees, which will play a vital role in boosting effective demand, reported Maohua Zhou.

This will come as welcome news to China’s cement producers who saw a 15 per cent YoY fall in production to 977Mt in the opening half of 2022, the largest decline in over 20 years, according to the World Cement Association. The impact has been felt by some of the country’s leading cement producers with Anhui Conch Cement and China Resources Cement both seeing their shares drop by more than a third so far this year.