Taiwan Cement Corp (台灣水泥) yesterday said that production capacity at its facilities in China is currently fully utilized on the back of increasing market demand.
Demand for cement has increased as workers return to construction sites across China following the Lunar New Year holiday, the company said.
Taiwan Cement said that judging from past market records, construction projects in China usually pick up speed in March after the Lunar New Year holiday, which usually falls in late January or early February.
A recent product price recovery also shows a tighter supply of cement in China, Taiwan Cement said, adding that the price rebound is expected to continue.
Currently, the company operates a broad production base in several Chinese provinces, including Guangdong, Guangxi, Anhui, Fujian and Jiangsu.
Although China has introduced a 20 percent capital gains tax and higher down payments for second-home buyers to curb skyrocketing housing prices, its policy of continuing to supply housing to mid and low-income households is expected to lend support to the domestic property market and lead to higher cement demand, the company said.
In addition, the Chinese government is expected to launch more infrastructure projects later this year to further lift the economy and pave the way for increased cement purchases, Taiwan Cement said.
The company said cement consumption in China is expected to rise by between 5.6 percent and 6.0 percent this year from a year earlier to between 2.28 billion tonnes and 2.3 billion tonnes.
Market analysts said that due to rising demand in China, Taiwan Cement’s China-based subsidiary, TCC International Holdings Ltd (台泥國際集團), would see an improvement in its bottom line this year.
Last month, TCC International, which is listed on the Hong Kong stock exchange, issued a profit warning, saying that it could have suffered a profit drop of about 60 percent last year following a glut in supply and falling product prices.