Stimulus Plan to Boost Cement Demand in West China


Chinese Premier Wen Jiabao is spending 4 trillion yuan in an attempt to secure 8 percent economic growth this year after exports collapsed. Both the central and local governments are building pipelines, housing, railways, roads and airports to help create jobs for at least 20 million rural workers who were forced to return home from factories located in coastal cities.

"All these are expected to significantly boost the demand for cement product and sustain the price," Asia Cement said in a company statement.

Cement demand in western China, a region bound by the Mongolian plains, the Tibetan plateau and southwestern mountain ranges, may grow 10 percent this year, Macquarie Group Ltd. said.

"The stimulus package is wonderfully at work," Asia Cement's Chairman Hsu said in an April 15 interview. Small 50- kilogram bags, which last year made up 10 percent of sales, now account for almost 30 percent, indicating that demand from smaller, rural-works projects funded by the stimulus is on the rise, he said.

Still, the government's investment will take years to roll out, and there's room for bigger producers to grab market share in a country with more than 5,000 operators, analysts said.

Anhui Conch will open as many as nine factories in Sichuan this year and in 2010, and China National Building Material Co., the country's second-biggest producer, also plans to expand into the province, according to Jay Zhou, a Shanghai-based analyst at Sinopac Securities Asia Ltd.
Source: cementchina
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