China: Asia Cement’s revenue has fallen by 22% year-on-year to US$986m in 2015 from US$1.26bn in 2014. Its gross profit fell by 50% to US$148m from US$295m. It blamed the result on falling demand and ‘intense’ market competition leading to a 10-year market low price of cement in August 2015.
The Chinese cement producer reported sales volumes of 28Mt of cement in 2015, a similar figure to 2014. Clinker sales volumes rose slightly to 1.76Mt. By region sale volumes of cement fell in the group’s Southeastern, Central and Eastern regions but rose in the Southwestern region. The biggest fall was noted in the Eastern region, where sales volumes fell by 11% to 2.34Mt.
Measures the cement producer has taken to cope with the market include cutting costs, pushing efficiency drives and focusing on overseas markets. In May 2015, the Group's silo in Taizhou commenced operation and started exporting products. A total of 230,000t of different cement products were exported to Singapore, the US and other overseas markets during 2015.
Asia Cement noted in its outlook that China has entered an ‘adjustment’ phase in 2016 as market demand continues to decline and production capacity continues to rise. It expects the industry to ‘first fall and then rise’ in 2016 with demand picking up on the back of new infrastructure projects including the Yangtze River Economic Belt development strategy. In the medium term the group has pinned its hopes on continued government-implemented structural reform in the cement industry to eliminate overcapacity.