China's cement and clinker production totaled 1.1 billion tons and 647 million tons in the first half of 2013, up 9.7% and 4.2% respectively from the same period of a year earlier, according to the China Cement Association. The southwestern and northwestern regions saw the fastest growth rates of 15.7% 13.6%, while the northeastern and northern regions recorded a 6% and a 0.9% decline respectively.

Investment in the cement industry fell 9.5% year on year to 56 billion yuan in 1H 2013, with the fastest decline of 27.6% seen in the northwest while the northeast seeing a strong growth of 24.7%. A total of 32 production lines became operational in 1H 2013, with a total annual capacity of 38.84 million tons of clinker. More than half of the new lines were in the western region, particularly in Guizhou and Xinjiang. New capacity is expected to increase by120 million tons of clinker for the whole of 2013.

The cement industry's revenue rose 5.3% year on year to 340 billion yuan in the first 5 months of 2013. Northern China was the only region that saw a decline in revenue, due to falling output and prices. The southwestern and northwester regions recorded double-digit growth in revenue buoyed by rising output and prices.

The cement industry's revenue rose 1% year on year to 15.28 billion yuan in the first 5 months of 2013. Although the growth went back to the positive territory compared with the first 4 months combined, it was much weaker than the growth of production due to lower prices. The eastern and central regions, which posted 7.2 billion yuan and 5.2 billion yuan respectively in profits, contributed over 80% of nationwide profit thanks to larger output and stable prices. The southwestern region turned around from losses a year earlier, posting a 2.42 billion yuan profit, while the northern region was the only region posting a loss to the tune of 581 million yuan.

Cement prices were overall low but gradually recovering in 1H 2013. Nationwide average cement price was 319.16 yuan per ton in 1H 2013, down 8.6% from the same period of a year earlier. The price – 75 yuan cheaper than the highest in 2011 and slightly higher than 2008 – remained at a medium level during the past 7 years. Quarterly average price was 1.5% higher in Q2 than in Q1 as construction began on some infrastructure and housing projects in Q2, but ensuing demand was not strong enough to give the price a boost.

Cement demand will not likely see a strong rebound in 2H 2013 as the odds of fiscal stimulus are low. The industry as whole will continue to suffer excess capacity, strained capital and tougher environmental standards. Full-year industry performance is expected to remain flat or slightly improve compared with last year, with the eastern, southern and southwestern regions expected to fare better in 2H than in 1H.

Top 10 Provinces by Cement Output, Million Tons, 1H 2013
1. Jiangsu: 88.19, +9.4%
2. Henan: 77.76, +5.3%
3. Shandong: 75.4, +3.3%
4. Sichuan: 71.74, +6.3%
5. Hebei: 60.59, -5.4%
6. Zhejiang: 56.12, +9.3%
7. Guangdong: 55.77, +11.3%
8. Anhui: 55.55, +16.7%
9. Hubei: 50.71, +9.7%
10. Guangxi: 48.61, +17.4%

Top 10 Provinces by Cement Profits, Billion Yuan, 1H 2013
1. Shandong: 2.66, -3.3%
2. Henan: 2.03, -10.8%
3. Anhui: 1.63, -20.2%
4. Jiangsu: 1.45, +4.9%
5. Sichuan: 1.39, +236.4%
6. Hubei: 1.23, +16.8%
7. Guangxi: 1.05, +165.2%
8. Jiangxi: 0.89, +28.8%
9. Jilin: 0.76, -11.8%
10. Hunan: 0.56, +15.9%

Regional Cement Average Prices, Yuan Per Ton, 1H 2013
Northeast: 410
East: 320
Mid-south: 309
Southwest: 309
Northwest: 305
North: 299


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