In a major development in Asia's cement industry, China National Building Material (CNBM) merged with China National Materials (Sinoma) to form the world’s largest cement maker and cement plant builder. Together they aim to manage 100 plants in countries covered by the Belt and Road Initiative in 3-5 years.
In recent years, CNBM and Sinoma have developed cement and clinker plants globally with 520 million tonnes of annual capacity. They are already operating 35 plants in countries along the ancient Silk Road.
China is eyeing more trade and investment along this trade route.
China has a huge cement production capacity of about four billion tonnes. However, China’s cement production growth rates have fallen and become stagnant in the last few years. The country’s cement output fell 0.2 percent year on year to 2.32 billion tonnes in 2017, according to the Ministry of Industry and Information Technology (MIIT).
There is a huge problem of overcapacity in the market, following which the Ministry of Industry and Information Technology (MIIT) has prohibited the expansion of cement production capacity in 2018. The China Cement Association said in December that 392.7 million tonnes of capacity, or one-tenth of the total, would be eliminated by 2020.
The new M&A with Sinoma is expected to help CNBM to lower its debt leverage, reap operational cost savings and reduce earnings volatility.
More about cement markets in China will be discussed at CMT’s 20th Asia CemenTrade Summit on 13-14 November, 2018 in Bangkok.
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