Chinese cement stocks rise on expectations of price increases as construction activity picks up

Analysts see prices rising from the fourth quarter as supply remains constrained. Top maker Anhui Conch’s shares rise over 5 per cent and Huaxin jumps 10 per cent

PUBLISHED : Thursday, 14 September, 2017, 11:59am
UPDATED : Thursday, 14 September, 2017, 10:20pm

Stocks in Chinese cement makers surged on Thursday on expectations that strained supply and a pickup in construction activity will drive up product prices in the coming months.

Anhui Conch Cement, the nation’s biggest maker, surged 5.3 per cent to 26.06 yuan in morning trading in Shanghai, poised for the highest close since June 2015. Trading volumes were more than four times the 100-day average, according to Bloomberg data. Its Hong Kong-traded stock rose 3.6 per cent to HK$33.50, heading for the highest level since April 2014.

Huaxin Cement jumped by the 10 per cent daily allowed limit to 14.87 yuan in Shanghai. Gansu Qilianshan Cement Group advanced 6 per cent to 11.49 yuan and Jiangxi Wannianqing Cement added 5.3 per cent to 8.80 yuan in Shenzhen.

Cement prices are likely to increase significantly in the fourth quarter as inventories are low and manufacturers have been limiting capacity to meet energy saving and environmental protection requirements, according to Zhongtai Securities.

“We will probably see three rounds of price increases in the fourth quarter, with each of about 30 yuan per ton,” said Huang Shishi, an analyst at the brokerage. “Cement prices in many parts of the nation in the fourth quarter will surpass the high in the second quarter.”

With construction activity picking up after summer, China’s average cement prices rose 0.3 per cent last week from a week earlier, with increases mainly in Shanghai and the provinces of Jiangsu, Yunnan and Guizhou, according to Huarong Securities. Inventories dropped by 0.31 percentage point, it said.