NEWS CENTER

The trend of cement industry integration and acceleration is worthy of attention.


Release time:

Aug 11,2011

In the week of August 21-27, cement prices in Hunan and Hubei fell, which we still believe is a seasonal adjustment. However, the sharp drop in cement prices in Chongqing by 40-50 yuan/ton is largely due to the increase in new capacity. According to media reports, the central bank plans to include bank margin deposits in the deposit reserve deposit scope. According to media reports, the central bank may require banks (from September) to include margin deposits in the deposit reserve deposit scope, which may become a negative catalyst affecting the short-term performance of cement stocks. However, we think potential downside may be limited due to lower cement stock valuations.

In the week of August 21-27, cement prices in Hunan and Hubei fell, which we still believe is a seasonal adjustment. However, the sharp drop in cement prices in Chongqing by 40-50 yuan/ton is largely due to the increase in new capacity.

Media reports say the central bank plans to include bank margin deposits in reserve deposits

According to media reports, the central bank may require banks (from September) to include margin deposits in the deposit reserve, which may become a negative catalyst affecting the short-term performance of cement stocks. However, we think potential downside may be limited due to lower cement stock valuations.

The acceleration of industry consolidation is a trend worthy of attention.

Last week, Conch, Taili and China Resources Cement announced some large-scale acquisitions in different regions. We believe that this not only shows the trend of accelerating industry integration, but also demonstrates the confidence of industry leaders in the prospects of the cement industry. Industry consolidation is the biggest difference at this stage compared to previous cycles of slowing demand growth.

The risk of short-term stock price volatility does not prevent us from maintaining a positive view.

Due to the increasingly pessimistic market confidence, cement stocks may inevitably appear some larger fluctuations. However, we still maintain our positive view on the sector, as we believe that industry consolidation can effectively support cement prices in the second half of the year.