China Cement Output Rises at Fastest Pace in 11 Years

China, the world's largest maker and consumer of cement, produced 19 percent more of the building material in 2006, spurred by spending on housing, ports and factories.

Kilns turned out a record 1.2 billion tons of cement, Mainland Marketing Research Co., which releases monthly data on behalf of the National Bureau of Statistics, said today in an e- mailed statement from its head office in Beijing. The increase is the biggest since 1995, according to Bloomberg data.

Demand for cement is rising in the world's fastest-growing major economy even after policymakers raised interest rates and restricted lending to cool growth. China's government last month announced plans to close small, inefficient producers and ease approval of loans, mergers and acquisitions by 60 of the biggest cement makers.

Lafarge SA (LG) of France and Holcim Ltd. (HOLN) of Switzerland, the world's two biggest makers of the material, are leading their Chinese competitors in expanding production lines to meet rising demand in a country that uses about half the world's cement.

Sales of the adhesive powder in China may rise by an annual average of 8.4 percent in the five years through 2010 to $36 billion, Cleveland, Ohio-based Freedonia Group said in an August 2006 report.

Lafarge's joint venture in China, Lafarge Shui On Cement, plans to more than double production in three years, Vincent Lo, chairman of Hong Kong-based Shui On Construction and Materials Ltd., said in a Jan. 25 interview.

Holcim is in the midst of paying about $125 million to take control of Huaxin Cement Co. (900933), China's second-biggest cement maker by sales.

Urban investment in fixed assets such as buildings and infrastructure climbed 25 percent in 2006, slowing from 27 percent a year earlier, the government said on Jan. 25.

Anhui Conch Cement Co. (914), the largest domestic producer, said on Jan. 29 its 2006 profit more than doubled from 406.9 million yuan ($52.5 million) a year earlier.

To contact the reporter on this story: Lee Spears in Beijing at lspears2@bloomberg.net.

To contact the editor responsible for this story: Nicolas Johnson at nicojohnson@bloomberg.net.

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