Demand for Cement in China to Increase

Demand for cement in China will rise 5.1 percent per year to 1.3 billion metric tons in 2010, according to a study by Cleveland-based market research firm the Freedonia Group.

The Chinese cement industry went through a volatile period between 1995 and 2005. Demand for cement recorded double-digit gains in the early 2000s as large, cement-intensive construction projects, such as the Three Gorges Dam, the West-East gas pipeline and the national highway system, were in full progress. In addition, cement producers benefited from the government’s ban on the use of clay brick in building construction. High demand spurred capital investment and the industry was quickly faced with overcapacity, which caused prices to fall to very low levels. Looking forward, demand will moderate somewhat after several of the aforementioned projects have essentially been completed.

Growth through 2010 will be driven by healthy construction activity and the use of cement in large projects such as the South-North Water Diversion, the national highway system and regional development efforts, according to the Freedonia Group study. Average prices are expected to recover as the overcapacity situation moderates and the product mix shifts to include greater amounts of higher quality (and higher priced) portland, specialty and blended cement.