Chinese cement stocks gain as new government spending on infrastructure seen lifting demand
Plants have also begun to cut output to meet environmental regulations, meaning that prices of the material could rise
Shares in mainland Chinese cement makers rose on Monday on expectations demand and prices will rise after the government pledged more investment in infrastructure, just as plants began to cut capacity to meet environmental rules.
A gauge of 26 cement stocks on the Shanghai and Shenzhen exchanges rose 2.2 per cent, the second-best performer among all industry groups, according to data provider Shanghai DZH. The benchmark Shanghai Composite Index dropped 0.2 per cent.
Anhui Conch, China’s biggest cement maker, rose 3.7 per cent to 39.09 yuan, closing at a record. Gansu Qilianshan Cement Group surged 6.4 per cent to 8.28 yuan and Huaxin Cement jumped 4.5 per cent to 20.63 yuan.
Last week the government said it would speed up spending on infrastructure investment in a policy shift towards the domestic economy amid a trade spat with the US escalated.
Meanwhile, cement plants in the city of Changzhou in eastern Jiangsu province have started to implement plans to cut output of clinker, the raw material used to make cement, by about 50 per cent to meet environmental protection requirements, according to China International Capital Corp. This will affect about 900,000 tonnes of clinker output per month, the brokerage said.
The cut will continue to drive up cement prices in the second half, normally the peak season for construction activities in China, CICC analysts Li Keyue and Chen Yan wrote in a note on Monday.
Smaller players in the cement industry also rose. Ningxia Building Materials Group climbed 4 per cent to 9.16 yuan and Xinjiang Tianshan Cement added 2.7 per cent to 8.50 yuan.