Conch Paces Gains in China Cement Makers After Quake
Anhui Conch Cement Co. (600585) paced gains in Chinese cement makers in Shanghai trading after the nation's strongest earthquake in 58 years in western Sichuan province raised expectations demand will increase to rebuild damaged areas.
Anhui Conch, China's biggest cement producer, added 5.5 percent to close at 64.19 yuan in Shanghai. Its Hong Kong-listed stock rose 5.3 percent. Huaxin Cement Co. (600801), controlled by Holcim Ltd. (HOLN), the world's second-biggest cement maker, gained 10 percent to 25.56 yuan in Shanghai trading.
``The rally today will be driven by the earthquake, or potential expectation of reconstruction demand in western China,'' Nick Lai, a Taipei-based analyst at JPMorgan Chase & Co., said in a telephone interview today. ``It's more sentiment-driven rather than fundamental.''
The 7.9-magnitude earthquake struck 90 kilometers (56 miles) from the central city of Chengdu, capital of Sichuan yesterday, killing more than 11,000 people. Sichuan and surrounding areas are among the most populous in the country, and the province has 40 percent of China's gas deposits.
Tangshan Jidong Cement Co. (000401), based in the northern Hebei province, rose by the daily 10 percent limit to 18.81 yuan in Shenzhen. Beijing-based China National Building Material Co. (3323), a maker of cement in southern, central and northern China, gained 7.1 percent to HK$18.70 in Hong Kong. China National Materials Co. (1893), the Beijing-based maker of cement-producing equipment, gained 10 percent to HK$7.95 in Hong Kong.
Cement demand in Sichuan last year rose to 62 million tons, about 5 percent of the nation's total, according to Lai. Paris- based Lafarge SA (LG), the world's biggest cement maker, has about 23 million tons of capacity in western China, Lai said.
``Lafarge is definitely the largest player,'' the analyst said. ``If there's any demand pickup after the earthquake for reconstruction, Lafarge should benefit more from that.''
Conch, based in eastern China's Anhui province, operates mainly in southern China, while Huaxin is in central China. Sichuan Shuangma Cement Co. (000935), controlled by Lafarge, was suspended in Shenzhen.
Shares of 66 companies have been halted on the Shanghai and Shenzhen exchanges until the companies provide investors with updates on the impact of the earthquake, the China Securities Journal reported today.
Asia Cement Corp. (1102), Taiwan's second-biggest maker of the construction material, said it shut a factory in Sichuan province after the tremor caused ``slight'' damage to equipment. The shares increased 7 percent to NT$55.3.
The company plans to restart the factory within two days, Taipei-based Asia Cement said in a filing to the Taiwan Stock Exchange today. The factory in Chengdu city had an annual capacity of more than 2 million tons of cement products as of 2007, according to its Web site.
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