NationalcementASPwasup0.5%WoWtoRMB320/tonne.WesawcementpricesincreaseRMB10-40/tonneinZhejiang,Fujian,JiangxiandGuizhou.PricesinGuiyangwentupthemost,risingRMB40/tonnelastweek.WeexpectcementASPtopickupinSeptemberatthebeginningofhighseason.
Nationalinventorylevelremainedstablelastweekat68%afterfallingfortwoconsecutiveweeks.
Inventoryimprovedby1%ineasternChinato63%,thelowestlevelamongallregions.Highinventorylevelsremainaconcern,especiallyinnortheastern,central,southernandnorthernChinawhereinventorylevelsarestillabove70%.
CCBISview
Improvingsupply-demandoutlookin2H13.Weforecastdemandwillrise8%in2013whichwillexceedsupplygrowthof7.6%forthefirsttimeinfiveyears.Weexpectsomeofthenewcapacitytobepushedbackto1H14,whichmaybringsupplybelow7%YoY.Weforecast2013Fcementdemandgrowthwillexceed8%followinga9.7%risein1H13withtheadventofhighseasonandpotentiallystrongerinfrastructureinvestmentin2H13F.
Wepreferthesouthernandeasterncementmarketsin2H13F.Thesouthernandeasternregionshaveaddedrelativelylittleadditionalcapacity,whereasChinassouthwesternandnorthwesternregionshaveaddedalot.WebelieveCRCement(1313HK,Neutral)andAnhuiConch(914HK,NotRated)willbenefitfromtheirexposuretosouthernandeasternChina.
Marketsentimenttowardsthesectorislikelytoturnpositiveasdemandoutpacessupply.Only32%ofplanned122mclinkercapacitywasreleasedin1H13,whichindicatesthatmorecapacitymaybereleasedin2H13.CementASPmaynotrecoverasmuchasexpecteddespitehigherdemand.
Nevertheless,weareturningmorepositiveontheimprovingsupply-demandoutlookthoughweremaincautiouslyoptimistic.