China’s attempts to dampen investment in the cement industry may foreshadow a shake-out in the sector, industry observers say. As supercharged economic growth boosts cement production to record levels, the government has targeted the sector, with stiff curbs on credit, an unwritten ban on stock-market listings and increasingly stern admonishments against frivolous investment.
Cement producers have mixed opinions on the measures, with large players generally supporting them and smaller companies protesting their bias against local producers. However, all agree that they will weed out weak suppliers rather than contribute significantly to short-term economic goals.
"China faces an undersupply of high-grade cement and an oversupply of low-grade cement," said Edward Fung, an analyst with Kim Eng Securities. In the long run, these cooling measures will be good for the bigger players, as they will eat up market share."
Elizabeth Wang, an executive director of Chia Hsin Cement Greater China Holding Corp, a Hong Kong-listed company, was upbeat. "Many people say I should be worrying about the impact of the macroeconomic policies but we are excited because we see many acquisition opportunities," she said.
