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Robust demand and construction scandals in China

World Cement,

West China Cement plans to slow capacity expansion projects as it attempts to reduce its debt. The cement company is lowering its capacity target from 30 million t by 2015 to 28 million t in order to improve debt and cash flow. The company’s cement production capacity rose 43% last year, reaching 23.7 million t.

This action is taken despite continued strong demand from infrastructure projects in Shaanxi province, an important market for the company. Railway construction and increased urbanisation – encouraged by the government – will be important demand drivers in the region.

Meanwhile, a construction scandal in Shenzhen has rocked the cement industry after work was suspended on several property projects – including the 660 m Ping An International Finance Centre – after reports that cheap concrete being used for the projects was made with untreated sea sand, compromising its strength. Shenzhen’s Housing and Construction Bureau penalised 31 concrete companies, including two subsidiaries of China Resources Cement. The company said in a statement: “On March 14, the Housing and Construction Bureau of Shenzhen performed tests on the sand used by Wenwei, and we regret the punishment order was published without the results of the tests being released”.

Further scandal threatens, as Anhui Conch Cement confirms that the National Development and Reform Commission has made enquiries into its pricing practices, with suggestions of cartel allegations reported.

Edited from various sources by Katherine Guenioui.

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