Taiwan Cement plans China price hike

Taiwan Cement plans China price hike

RECOVERING DEMAND:This year, China is expected to produce more than 2.4 billion tonnes of cement, an increase of at least 4 percent from last year’s figure, the firm said

Taiwan Cement Corp (台灣水泥), the nation’s largest cement maker, said that by the end of the year it would raise prices of its cement products in China by as much as 7 percent, on the back of recovering demand.

The company’s latest price adjustments for its Chinese customers are scheduled to be announced early this week.

“We are planning to increase cement prices in southern China by 20 yuan [US$2.97] per tonne,” company senior vice president Edward Huang (黃健強) said by telephone on Friday last week.

The 70-year-old company said it is seeing a gradual recovery this year, supported by improving demand from China’s infrastructure and residential property sectors.

Infrastructure spending in China is expected to grow by a double-digit percentage this year from last year, Huang said, adding that demand for residential housing is also improving.

Beijing’s efforts to balance supply and demand in China’s cement industry to curb overcapacity are expected to help lift cement prices next quarter, Huang said.

This year, China is expected to produce more than 2.4 billion tonnes of cement, representing an increase of at least 4 percent from last year’s 2.3 billion tonnes, Taiwan Cement said.

“With the optimistic outlook for the industry, we predict Taiwan Cement’s whole-year shipments [to China] will increase 10 percent annually to 54 million tonnes this year, compared with last year’s 49 million tonnes,” he said.

During the first three quarters of this year, the company shipped 39 million tonnes of cement to China, representing a 10 percent increase compared with the same period last year, the company said.

This quarter, shipments to China are forecast to rise 7 percent annually to 15 million tonnes, due to high seasonal demand from Chinese customers, the company said.

Taiwan Cement, the sixth-largest cement maker operating in China by capacity, runs 22 plants in southern China with a total annual capacity of 65.3 million tonnes, company data showed.

The company said it plans to reach its target capacity of 100 million tonnes per year by merging local companies in China, without giving a time schedule.

In the first half, Taiwan Cement’s net profit dropped 27.2 percent year-on-year to NT$2.22 billion (US$70.01 million), with revenue down 12.4 percent annually to NT$40.6 billion during the same period.

Last year as a whole, Taiwan Cement’s net income plunged 46.7 percent year-on-year to NT$5.78 billion, while sales shrank 20.8 percent to NT$93.68 billion from 2014’s NT$118.33 billion.

The company attributed the declines to falling prices and lower demand in China.

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