M & A's by foreign investors have been seen frequently in the cement market lately. French cement giant Lafarge, the world leader in building materials, now own three cement plants in Guizhou Province in Southwest China with a combined annual output capacity of two million tons. German cement producer Heidelberf last year purchased two cement plants in North China's Hebei Province . Swiss Holcim formed a strategic alliance with the Huaxin Cement in Hunbei Province.
Demand for cement in China will rise 5.1 percent annually through 2010 to reach 1.3 billion metric tons, driven by moderating but healthy growth in construction expenditures. China will remain the largest national consumer of cement in the world, accounting for close to half of global cement consumption in 2010.
China has ranked first in terms of cement production for 17 consecutive years, with that of 2005 accounting for 39.7% of the world's total. The cement industry is cyclical, and the country is in the initial stages of the next round of growth. In recent years, China 's proactive fiscal policy has contributed to the expedited growth in fixed capital investment, which has in turn fuelled demand for cement. In 2002, sales revenue from cement totalled RMB144 billion, 14.6% more than that of the previous year; profits from cement sales, at RMB4.65 billion, was RMB1.65 billon, or 55%, more than the year before. Following two years in the red in 1998 and 1999, China's cement industry rebounded to making a profit, with registered output growth rates of 10.7% and 9.7% in 2001 and 2002, while sales revenues surged 9% and 14.6% and profits jumped 2.9 times and 55%. The pace of expansion in sales revenue and profits far exceeded that of output growth.
Bulk cement production capacity rose 11.17% in 2005, while bulk cement growth continued to outpace the sector, rising 21.6% to 380 million tons. It accounted for 36.61% of all cement produced, up 3.14 points over 2004.
Bulk cement has a significant price advantage over packaged cement, and for large-scale building projects, it is more convenient to use. Shandong , Zhejiang , and Jiangsu currently lead the country in bulk cement production, accounting for 44.42% of the nation's total. In Shandong, several major cement producers have turned over more than 50% of their capacity to bulk cement, a trend that the central government is encouraging.