Cement prices in east China saw the biggest drop within an overall 0.7 per cent decline in the Chinese cement market compared to previous week, said Digital Cement, a consulting firm run by the China Cement Association.

Jiangsu and Zhejiang provinces, in particular, saw prices fall by CNY20 to 40/t while Shanghai and Fujian also witnessed a CNY10 to 30/t decline.

The sudden decrease in prices was unexpected right before peak season, and weak demand from downstream projects up to late August forced cement companies to cut back production in order to balance the supply-demand relationship.

Leading companies, however, are still optimistic about cement market later this year. The cement industry has strong inelastic demand due to China’s continuing policy of maintaining growth, developing urbanization, revitalization of rural areas and development of irrigation and conservancy projects, as well as the increasing infrastructure construction across the country, according to a senior manager from China National Building Materials Group Co.

Efforts to close down obsolete production facilities in the cement industry will be intensified in the second half of 2011 and strict access threshold will be implemented, according to the MIIT. Meanwhile, re-organization and mergers among cement companies will continue to be encouraged. This will benefit large-size cement companies, industrial experts said.