Anhui Conch still outperforming rivals, claims Fitch

Fitch Ratings claims that Anhui Conch Cement Company Ltd has maintained its financial strength and improved its market share in 2015, despite seeing a sharp decline in its domestic Chinese cement market.

Sales volume in China's cement industry fell 4.9 per cent and average selling prices (ASPs) decreased 15 per cent in 2015, driven by the weakness in fixed-asset investments and industry oversupply.

Conch has outperformed its peers by increasing its sales volume by three per cent, although its cement and clinker ASP declined 18.3 per cent. As a result, Conch's nationwide market share increased to 11 per cent in 2015 from 10 per cent a year ago, and it extended its lead in its core markets of eastern and central China.

Conch is taking advantage of the industry downturn to selectively acquire smaller competitors – including taking a controlling stake in West China Cement Ltd – to extend its market share in its core markets.

Fitch expects the Chinese cement market to continue to be oversupplied in 2016 because elimination of obsolete capacity has been slow.