East China Cement Leading Enterprises Strengthen Competitive Position

The strengthening of the competitive position of leading enterprises to strengthen synergies will obviously benefit the performance of cement prices in East China. This year, the price of East China Cement experienced a sharp decline in the first three quarters, and fell to a record low of 291 yuan per ton in the third quarter. The overall profit of the industry dropped sharply. However, after the advent of the peak season in the fourth quarter and the expected price of synergies in the industry, cement prices have rebounded significantly. At present, although the rise in cement prices in East China in 2012 has come to an end, the market is expecting a rise in cement prices next year.

The two cement giants signing the contract, CNBM and Conch Cement are the mainstream companies in the East China market. Both parties control the 60% share of the East China market and are the de facto price makers. In particular, Southern Cement, a subsidiary of CNBM, actively participated in this year and promoted regional collaborative production control and insured prices in enterprises in East China. In the fourth quarter, cement prices in East China began to rebound rapidly, which is not unrelated to South Cement's control of production capacity and shipment volume. In contrast, Conch's production capacity has been consistently high. If the coordinated form of East China is improved next year, the cement price performance in East China is likely to exceed expectations.

In addition to this, the two largest cement companies in East China signed a cooperation agreement, both in terms of technical exchanges, information sharing, and other factors, which will increase their competitiveness. In particular, Conch, which has consistently followed the low-cost expansion route, has relatively more obvious benefits. Under the general expectation that the market will benefit from the recovery of infrastructure and the need for new urbanization construction in East China next year, the competitive position of regional leading stocks will undoubtedly be strengthened.