China Cement Survey:Entering 2015 with headwinds

Event

    As we enter 2015, our January 15 Cement Survey showed sentiment bouncing back to 53 after dipping to 43 in Dec 2014. However, property construction is yet to pick up despite the interest rate cut and property relaxation, and cement producers continue to feel the pain. With heavy rain and snow coming in, coupled with a slowdown in construction demand as workers gradually head home for CNY, we see more headwinds for cement demand in the coming month. However, not all are bearish as we see sentiment holding up well in the North and North West, likely due to production cuts for the heating season and strong infrastructure demand driven by stimulus policies. We continue to favour BBMG in our cement coverage.

    Impact

    Sentiment bounced back to 53: Sentiment remained low in most regions as expected but North China saw a 30ppt recovery from a low base, likely due to strong infrastructure demand and supply cut during the heating season.

    Northern China catching up