TCC and Asia Cement to Gain from China's Urbanization in 2013

Byyyp

Updated Fri, 28 Dec 2012 00:00:00 GMT

Taiwan Cement Co. (TCC) and Asia Cement, two leading cement makers in Taiwan, will likely profit from urbanization policies in China, said institutional investors. A representative of TCC indicated that the urbanization policy will generate demand for 100 tonnes of cement annually.

Cement demand in China has reached 2 billion tonnes in 2012, and is estimated to grow more than 5% year on year (YoY) to 2.1 billion tonnes next year.

Besides, 70~80 million tonnes of cement capacity are expected to be eliminated in 2013, offsetting oversupply in the industry, said TCC.

Being optimistic about the cement market in China in 2013, a representative of TCC said its subsidiary Taiwan Cement International Holdings Ltd. will raise shipment from 41 million tonnes in 2012 to 45~48 million tonnes in 2013, with such added capacity to come mainly from its plants in Chongqing (Sichuan Province) and Anshun (Guizhou Province).

A representative of Asia Cement also predicts that cement demand in China will recover thanks to stable politics and acceleration of infrastructural construction.

Institutional investors pointed out that due to rapid urbanization in the east coastal region, China’s urbanization policy will focus on the west, regarded as a market with high potential for cement makers.

An industrial source said that TCC has started to engage in mergers in Guizhou and Yunnan in recent years; while Asia Cement has established a cement plant in Sichuan, but is still aggressively trying to tap the Qinghai market. Managers of TCC and Asia Cement both noted the two firms will keep tapping the western China market by mergers.

Institutional investors stated that as the cement industry is domestic demand driven, cement makers inevitably are at the mercy of governmental policies. So cement makers who tap urbanization opportunities in the west are expected to profit.