China: Demand for cement in China will increase amid tightening supply in 2013, according to the vice-president of China Resources Cement. Yu Zhongliang, the vice-chairman of China Resources Cement, said that mainland China would not suffer from overcapacity because obsolete production capacity will be eliminated, in an article in the South China Morning Post.
An estimated 150Mt of new production capacity of cement will be added in 2013, but 100Mt of obsolete capacity will be eliminated, leaving a net increase in production capacity of 50Mt. Yu predicts that production will rise by 8% at most, but demand will grow by 8% to 10%.
"Over the past year, lots of metro railway and airport projects were approved in China. This will drive cement demand," said Pan Yonghong, the chief executive of China Resources Cement.
Government-led investment in infrastructure and urbanisation will support growth of 5% to 8% annually until 2015, according to a Macquarie Group report. Macquarie expects cement prices to jump 13% by 2015 due to tighter supply and increased demand, giving the sector a surge of 60% to 80% in earnings.
In January 2013, the central government stipulated that the country's ten largest cement producers should increase their national market share to 35% by 2015 from 30% currently. "We are in the top five by production capacity. We hope to rise in rank by 2015," Yu said. Beijing aims to create three or four mega-sized cement companies each with a production capacity exceeding 100Mt/yr by 2015.
