- Anhui Conch Cement is eager to begin another round of acquisitions of cement makers in Shaanxi province after it paid 448 million yuan to buy four cement factories belonging to Baoji Zhongxi, with total annual clinker capacity of 7.2 million tons and nine million tons of cement, on August 27, reports nbd.com, citing a source with knowledge of the matter.
According to the source, Conch Cement is currently in talks with with local cement makers, including Shenwei Cement.
Industry experts regard the planned acquisitions as an attempt to buy cement assets at low prices due to the excess cement production capacity in Shaanxi province.
Cement makers from Shaanxi province are the least profitable in China, and the price of 42.5 grade bulk cement fell from 380 yuan per ton in the same period last year, to 275 yuan per ton, down 27.63 percent.
The ex-factory price of 42.5 grade bulk cement had recently dropped to 210 yuan per ton in some parts of Shaanxi, resulting in 40 percent of cement makers in Shaanxi Province incurring losses.
Luo Wei, an analyst at CICC, said cement prices and the profitability of cement makers in Shaanxi province had reached a bottom, and a rebound is expected in the late 2012 due to the reduction of new capacity and increased industry concentration.
According to the report, Baoji Zhongxi was ranked fourth in the clinker market in Shaanxi province, while Shenwei Cement was ranked inside the top three.
Following the acquisition of Baoji Zhongxi, Conch Cement will have total annual production capacity of 15 million tons in 2012.
Conch Cement aims to be able to produce 300 million tons of clinker over the next five years, becoming the world’s largest maker of clinker.
Shares of Conch Cement fell 1.31 percent to close at HK$21.90 today.
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