Post-quake reconstruction in Sichuan province, expected to top 1 trillion yuan in the next few years, is set to give a much-needed lift to the building materials industry, threatened by rising costs and dwindling investment.
Latest official estimates indicate that demand for cement and steel will amount to 370 million tons and 37 million tons, respectively, to rebuild infrastructure, housing and other public facilities. Huge demand is expected for other building materials such as piping, tiles and bricks. Literally trillions of standard bricks will be needed.
"A huge increase in demand for all kinds of building materials will benefit not only the producers in that region but also many others around the nation," Luo Guo, a building materials analyst at Orient Securities in Shanghai, said.
Before the earthquake, Sichuan was largely self-sufficient in cement. Provincial cement sales amounted to 62.14 million tons in 2007, or 4.5 percent of the nation's total.
Transport costs make it unprofitable for outside cement producers to sell in Sichuan. It costs an extra 50 yuan to transport the cement 100 km.
But all this is about to change. Cement production in Sichuan will not be able to meet projected demand when reconstruction work shifts into high gear in the coming months. For this reason, there will be no alternative but to buy cement from manufacturers in other provinces at prices that will cover transport costs.
"The tightening supply and demand relationship is likely to drive up cement and other building material prices not only in Sichuan province but also throughout the nation, helping to boost the industry's profit margins as a whole," Hong Liang, a building materials analyst at China Galaxy Research in Beijing, said.
In the first half of this year, the average profit margin of listed cement makers located in or near Sichuan rose by 5 percentage points from the previous year, Hong said. Much of that increase was attributed to the price jump after the May 12 earthquake.
In the first five months, total domestic cement output rose by 9 percent to 514 million tons. From January to May, cement sales climbed by 23.6 percent to 160.7 billion yuan, while cement prices rose 10.1 percent year-on-year. In the same period, the cement industry posted profit of 8.4 billion yuan, up 65.4 percent from a year earlier on higher sales and prices.
Those results are due to strong demand from the building boom, which had fizzled out by the middle of the year. The credit tightening policy introduced to combat escalating inflation sent the building industry into a tailspin and demand for cement and other building materials plummeted. At that time, the industry faced an overcapacity threat that could have severely damaged producer earnings, analysts said.
But expected demand from Sichuan is brightening the industry outlook. "Increased demand for cement and other building materials in Sichuan is expected to last for at least three years until the reconstruction work is finished," Hong at China Galaxy said.
Source: China Daily
Wednesday, September 10, 2008
Norwegian paper maker upbeat on China
In the past months, some in China may have found that the price of their newspapers have increased a little. Meanwhile, some small and uncompetitive newspapers can no longer be found on the newsstands. What's going on in China's newspaper industry?
One reason is that newspapers have been hit by frequent newsprint price rises. As of Aug 1, newsprint cost 6,100 yuan per ton, up about 26 percent over January, its highest price in five years.
But newsprint producers have benefited little from the price hikes and are still struggling with low profits. In an exclusive interview with China Daily reporter Bi Xiaoning, Terje Engevik, head of Norske Skog in China, provides some insightsway-based Norske Skog is the second largest newsprint maker in the world.
Q: Why have newsprint prices in China shot up in recent months?
A: Mainly because of the rising raw material and energy costs caused by soaring domestic demand. A large portion of recycled fibers from Old Newspapers in China relies on imports and there was a tremendous expansion in new paper capacity in China over the past years.
In 2000, about 2 million tons of old newspaper was imported by China, and the number is likely to double in 2008. About two-thirds of this comes from North America. However, over the same period, the newspaper consumption there sharply declined. The annual consumption of newspapers in North America fell from about 13 million tons in 2000 to less than 8 million tons this year.
So the fall in supply of recycled old newspapers in North America and the increasing demand in China and other emerging markets like India have resulted in rising fiber prices.
Q: In August, the price of newsprint was raised from 5,800 yuan per ton to 6,100 yuan per ton. Was this price increase triggered by the Olympics? What will be the trend post-Olympics?
A: Until the end of July, newsprint demand in China rose about 9 percent over the corresponding period last year. The reason may be that local newspapers were trying to build up enough stock to ensure good coverage of the Olympics and more daily supplements were published as a result of the event.
Paper makers have been forced to increase prices to meet the increasing raw material and energy costs. Reviewing the financial statements of paper makers, you will find the profitability improved a little in the second quarter of this year, but is still down compared with previous years.
As for the future trend, it's hard to predict what the demand for newsprint will be in China post-Games. In 1988, newsprint demand in Olympic host South Korea continued to rise sharply even after the Games.
Q: If the price hike of ONP and newsprint in China partly came from shrinking newspaper consumption in North America, as you say, what led to the decrease of US newspapers' circulation and volumes?
A: To some extent, free distribution of news - also by some free newspapers - has made things difficult for traditional newspapers.
I believe Chinese publishers can learn from their overseas counterparts. Publishers must pay more attention to quality. It's quality that will help publishers to retain their market share, not low cover prices.
For example, in Norway, the retail price of a Saturday edition of a financial daily is equivalent to 33 yuan. So it baffles me that some thick newspapers in China sell for as low as 50 fen.
Q: Is it possible to find some alternative to recycled fibers from North America to make newsprint in China?
A: The alternative would be to produce virgin fibers from wood, in a process that requires substantially more electricity. But China is short on suitable wood fibers and electricity costs are high here. So we prefer to use recycled fiber in China.
With stable supply and good quality, American old newspapers are the favorite material for us and other Chinese paper makers.
The price pressure can be somewhat alleviated if we can get enough quality raw materials from the domestic market. Unfortunately, there isn't a very efficient newspaper recycling system here in China yet and the quality is not satisfactory.
Q: Norske Skog entered the Chinese market in 1998. What progress has it seen in China's paper industry in the past 10 years?
A: Ten years ago, there were many paper factories in China, but most were small companies that were low on efficiency and high on pollution. With the reshuffle in the past years, the Chinese government has closed down uncompetitive small paper mills and optimized the market.
Now Huatai Paper Group and Shandong Chenming Paper are all listed paper giants.
As a multinational paper maker, Norske Skog has brought advanced technology and management systems to China, especially in the quality and environment protection aspects. To some extent, we may be a benchmark for the Chinese paper sector and have helped improve performance and efficiency.
Q: What's the difference between China's newsprint industry and those overseas?
A: China is still a promising and growing market. From 1998 to 2005, the newsprint demand in China saw double-digit annual growth. In 2007, the demand was still high, with an 8 percent year-on-year increase. It reached 9 percent in July. I believe the trend will last for many years to come.
Source: China Daily
One reason is that newspapers have been hit by frequent newsprint price rises. As of Aug 1, newsprint cost 6,100 yuan per ton, up about 26 percent over January, its highest price in five years.
But newsprint producers have benefited little from the price hikes and are still struggling with low profits. In an exclusive interview with China Daily reporter Bi Xiaoning, Terje Engevik, head of Norske Skog in China, provides some insightsway-based Norske Skog is the second largest newsprint maker in the world.
Q: Why have newsprint prices in China shot up in recent months?
A: Mainly because of the rising raw material and energy costs caused by soaring domestic demand. A large portion of recycled fibers from Old Newspapers in China relies on imports and there was a tremendous expansion in new paper capacity in China over the past years.
In 2000, about 2 million tons of old newspaper was imported by China, and the number is likely to double in 2008. About two-thirds of this comes from North America. However, over the same period, the newspaper consumption there sharply declined. The annual consumption of newspapers in North America fell from about 13 million tons in 2000 to less than 8 million tons this year.
So the fall in supply of recycled old newspapers in North America and the increasing demand in China and other emerging markets like India have resulted in rising fiber prices.
Q: In August, the price of newsprint was raised from 5,800 yuan per ton to 6,100 yuan per ton. Was this price increase triggered by the Olympics? What will be the trend post-Olympics?
A: Until the end of July, newsprint demand in China rose about 9 percent over the corresponding period last year. The reason may be that local newspapers were trying to build up enough stock to ensure good coverage of the Olympics and more daily supplements were published as a result of the event.
Paper makers have been forced to increase prices to meet the increasing raw material and energy costs. Reviewing the financial statements of paper makers, you will find the profitability improved a little in the second quarter of this year, but is still down compared with previous years.
As for the future trend, it's hard to predict what the demand for newsprint will be in China post-Games. In 1988, newsprint demand in Olympic host South Korea continued to rise sharply even after the Games.
Q: If the price hike of ONP and newsprint in China partly came from shrinking newspaper consumption in North America, as you say, what led to the decrease of US newspapers' circulation and volumes?
A: To some extent, free distribution of news - also by some free newspapers - has made things difficult for traditional newspapers.
I believe Chinese publishers can learn from their overseas counterparts. Publishers must pay more attention to quality. It's quality that will help publishers to retain their market share, not low cover prices.
For example, in Norway, the retail price of a Saturday edition of a financial daily is equivalent to 33 yuan. So it baffles me that some thick newspapers in China sell for as low as 50 fen.
Q: Is it possible to find some alternative to recycled fibers from North America to make newsprint in China?
A: The alternative would be to produce virgin fibers from wood, in a process that requires substantially more electricity. But China is short on suitable wood fibers and electricity costs are high here. So we prefer to use recycled fiber in China.
With stable supply and good quality, American old newspapers are the favorite material for us and other Chinese paper makers.
The price pressure can be somewhat alleviated if we can get enough quality raw materials from the domestic market. Unfortunately, there isn't a very efficient newspaper recycling system here in China yet and the quality is not satisfactory.
Q: Norske Skog entered the Chinese market in 1998. What progress has it seen in China's paper industry in the past 10 years?
A: Ten years ago, there were many paper factories in China, but most were small companies that were low on efficiency and high on pollution. With the reshuffle in the past years, the Chinese government has closed down uncompetitive small paper mills and optimized the market.
Now Huatai Paper Group and Shandong Chenming Paper are all listed paper giants.
As a multinational paper maker, Norske Skog has brought advanced technology and management systems to China, especially in the quality and environment protection aspects. To some extent, we may be a benchmark for the Chinese paper sector and have helped improve performance and efficiency.
Q: What's the difference between China's newsprint industry and those overseas?
A: China is still a promising and growing market. From 1998 to 2005, the newsprint demand in China saw double-digit annual growth. In 2007, the demand was still high, with an 8 percent year-on-year increase. It reached 9 percent in July. I believe the trend will last for many years to come.
Source: China Daily
Shanghai World Expo launches "one-stop" services
The exhibiter service hall set up by the organizer of the World Exposition Shanghai China 2010 has been put into use recently.
Meanwhile, the first batch of 22 one-stop management and services were launched. Sixteen related departments including Shanghai Customs will provide "one-stop" services on visa, residence permit, policy consultation on customs and entry-exit inspection and quarantine, construction project permit and guest room booking etc.
By People's Daily Online
Meanwhile, the first batch of 22 one-stop management and services were launched. Sixteen related departments including Shanghai Customs will provide "one-stop" services on visa, residence permit, policy consultation on customs and entry-exit inspection and quarantine, construction project permit and guest room booking etc.
By People's Daily Online
China trade surplus jumps 15% in August
China's trade surplus in August rose 14.9 percent from a year earlier, as imports growth decelerated sharply on lower commodities prices
The surplus last month was 28.69 billion U.S. dollars, posting gains for the second month in a row. The figure was 25.28 billion U.S. dollars in July and 24.97 billion dollars last August.
Exports in August jumped 21.1 percent to 134.87 billion dollars, compared with 26.9 percent in July. Imports climbed 23.1 to 106.18 billion dollars, down from 33.7 percent in July, the General Administration of Customs said on Wednesday.
"Exports growth decelerated, but imports posted much bigger slow-down as commodities prices and shipping rates slumped," an official with the Ministry of Commerce told Xinhua on the condition of anonymity. "This is the main reason why the surplus jumped."
The slower advance in the Chinese currency against the dollar also contributed to the surge.
"The yuan remained almost steady against the U.S. dollar since July. This can help exports while giving no further incentives to imports."
The trade gap narrowed 6.2 percent annually to 151.99 billion dollars in the first eight months of the year.
Exports increased 22.4 percent to 937.69 billion dollars during the Jan.-Aug. period and imports were up 30 percent to 785.69 billion dollars.
Source:Xinhua
The surplus last month was 28.69 billion U.S. dollars, posting gains for the second month in a row. The figure was 25.28 billion U.S. dollars in July and 24.97 billion dollars last August.
Exports in August jumped 21.1 percent to 134.87 billion dollars, compared with 26.9 percent in July. Imports climbed 23.1 to 106.18 billion dollars, down from 33.7 percent in July, the General Administration of Customs said on Wednesday.
"Exports growth decelerated, but imports posted much bigger slow-down as commodities prices and shipping rates slumped," an official with the Ministry of Commerce told Xinhua on the condition of anonymity. "This is the main reason why the surplus jumped."
The slower advance in the Chinese currency against the dollar also contributed to the surge.
"The yuan remained almost steady against the U.S. dollar since July. This can help exports while giving no further incentives to imports."
The trade gap narrowed 6.2 percent annually to 151.99 billion dollars in the first eight months of the year.
Exports increased 22.4 percent to 937.69 billion dollars during the Jan.-Aug. period and imports were up 30 percent to 785.69 billion dollars.
Source:Xinhua
Digital waterway built for Yangtze River
China's first digital waterway, the digital waterway in Nanliu section of Yangtze River, has been built successfully.
It will lead Yangtze River waterway management and its external services into a digitization and information era.
Starting at the river mouth of Cihu River on the boundary of Jiangsu Province and Anhui Province and ending at the river mouth of Liuhe River in Taicang, a city of Jiangsu Province, the digital waterway in Nanliu section of Yangtze River has a total length of 369.5 kilometers.
Moreover, the digital waterway project on the 2,688 kilometers main navigation channel of Yangtze River will be built in three phases.
By People's Daily Online
It will lead Yangtze River waterway management and its external services into a digitization and information era.
Starting at the river mouth of Cihu River on the boundary of Jiangsu Province and Anhui Province and ending at the river mouth of Liuhe River in Taicang, a city of Jiangsu Province, the digital waterway in Nanliu section of Yangtze River has a total length of 369.5 kilometers.
Moreover, the digital waterway project on the 2,688 kilometers main navigation channel of Yangtze River will be built in three phases.
By People's Daily Online
Chinese shares close 0.23% higher on favorable economic data
Chinese shares on Wednesday regained some ground in the morning session after the release of favorable economic data, but went lower in the afternoon on sell-offs.
The benchmark Shanghai Composite Index closed the day 0.23 percent higher at 2150.76 points, compared to a 1.06 percent gain in the morning.
The Shenzhen Component Index gained 0.62 percent to 7065.47 points.
Gainers outnumbered losers by 583-248 in Shanghai and 447-244 in Shenzhen.
Source:Xinhua
The benchmark Shanghai Composite Index closed the day 0.23 percent higher at 2150.76 points, compared to a 1.06 percent gain in the morning.
The Shenzhen Component Index gained 0.62 percent to 7065.47 points.
Gainers outnumbered losers by 583-248 in Shanghai and 447-244 in Shenzhen.
Source:Xinhua
European companies expect more business in China
European companies are generally optimistic about their business in China thanks to the strong economic growth and positive progresses on the business environment. Trade imbalance, albeit still continuing, is not a big problem. But wider market access and more transparency is top on their wish list now. And they are seeking for more opportunity of engagement in the environmental protection industry.
European Chamber of Commerce in China, which represents more than 1,400 member companies, published its annual Position Paper Tuesday Sept. 9 in Beijing. It is the eighth edition and also the biggest one since the first was released in 2001 when China joined WTO. Joerg Wuttke, President of the Chamber, believed that the growing size of the book reflected the expanding trade and investment between China and EU.
The Position Paper will be presented to Chinese authorities and the European Commission and EU member states after it was published. EU trade commissioner Peter Mandelson will visit Beijing at the end of the month and the China-EU Summit will be held in December.
Mr. Wuttke highlighted significant developments on regulatory environment, economic relations and business environment since the launch of their 7th report was announced the same month last year. Government restructuring reduces overlapping responsibilities. New laws and regulations, such as the Labor Contract Law, the Anti-Monopoly Law and new Foreign Investment Catalogue, have been promulgated and put into effect. The Chamber had actively involved in the legislation of many of those laws and regarded the development of the legal framework as an advantage to European businesses.
The two way trade between China and EU has been growing. The figure from China's Ministry of Commerce showed that China-EU trade rose 27 percent in 2007. From January to July, the trade increased by 27.9 percent, with China's imports from EU up by 29.8 percent and exports to EU by 27.1 percent.
Trade imbalance was one of the top concerns of the Chamber in China and the Commission in Brussels last year. It is not this year although the EU's trade deficit with China continues to widen. According to the Paper, the share of imports from Asia remains stable. Europeans benefit from Chinese products which help restrain inflation in the EU, reduce households' cost, and increase disposable income to purchase high-end locally produced goods and services. Mr. Wuttke added that a perfect balance of trade is nor desirable nor normal in the era of globalization.
Several issues raised in the Position Paper last year have been resolved or got remarkable progress. The Chamber noticed most positive development in banking, energy and petrochemical. In the IT and telecommunication sector, for the first time, an European telecom equipment manufacturer reached a tech transfer agreement with its Chinese partner.
The central and western parts of China represent new dynamics. Mr. Wuttke said he had been kept telling Chamber members about how diversified China was in terms of economic development model. The Chamber will host a forum at the end of October in Chengdu, Sichuan province which was hard hit by the strong earthquake in May.
Market access was the top concern of European businesses in China. That happened against the backdrop that the investment issue was increasing important on the agenda of the economic relations.
European suppliers claimed that non-tariff barriers cost them more than 21 billion euro business opportunities a year. And they hope that they could participate more in public procurement projects and standard setting.
Transparency and administrative coordination have improved as the legislation process is more open to the public comments. However, European companies require more time before they can respond.
Chinese government has adopted numerous policies to address the pressure of natural resources and energy supply. European companies believe they can be a part of if they are given more access to the bidding of infrastructure updating projects.
The paper includes more than 300 proposals for business environment. Marianne Friese, Secretary General of the Chamber, said: "The Chinese leadership's affirmation of the importance of innovation, openness and competition is encouraging. We firmly support China's efforts to ensure a sustainable balanced growth."
By People's Daily Online
European Chamber of Commerce in China, which represents more than 1,400 member companies, published its annual Position Paper Tuesday Sept. 9 in Beijing. It is the eighth edition and also the biggest one since the first was released in 2001 when China joined WTO. Joerg Wuttke, President of the Chamber, believed that the growing size of the book reflected the expanding trade and investment between China and EU.
The Position Paper will be presented to Chinese authorities and the European Commission and EU member states after it was published. EU trade commissioner Peter Mandelson will visit Beijing at the end of the month and the China-EU Summit will be held in December.
Mr. Wuttke highlighted significant developments on regulatory environment, economic relations and business environment since the launch of their 7th report was announced the same month last year. Government restructuring reduces overlapping responsibilities. New laws and regulations, such as the Labor Contract Law, the Anti-Monopoly Law and new Foreign Investment Catalogue, have been promulgated and put into effect. The Chamber had actively involved in the legislation of many of those laws and regarded the development of the legal framework as an advantage to European businesses.
The two way trade between China and EU has been growing. The figure from China's Ministry of Commerce showed that China-EU trade rose 27 percent in 2007. From January to July, the trade increased by 27.9 percent, with China's imports from EU up by 29.8 percent and exports to EU by 27.1 percent.
Trade imbalance was one of the top concerns of the Chamber in China and the Commission in Brussels last year. It is not this year although the EU's trade deficit with China continues to widen. According to the Paper, the share of imports from Asia remains stable. Europeans benefit from Chinese products which help restrain inflation in the EU, reduce households' cost, and increase disposable income to purchase high-end locally produced goods and services. Mr. Wuttke added that a perfect balance of trade is nor desirable nor normal in the era of globalization.
Several issues raised in the Position Paper last year have been resolved or got remarkable progress. The Chamber noticed most positive development in banking, energy and petrochemical. In the IT and telecommunication sector, for the first time, an European telecom equipment manufacturer reached a tech transfer agreement with its Chinese partner.
The central and western parts of China represent new dynamics. Mr. Wuttke said he had been kept telling Chamber members about how diversified China was in terms of economic development model. The Chamber will host a forum at the end of October in Chengdu, Sichuan province which was hard hit by the strong earthquake in May.
Market access was the top concern of European businesses in China. That happened against the backdrop that the investment issue was increasing important on the agenda of the economic relations.
European suppliers claimed that non-tariff barriers cost them more than 21 billion euro business opportunities a year. And they hope that they could participate more in public procurement projects and standard setting.
Transparency and administrative coordination have improved as the legislation process is more open to the public comments. However, European companies require more time before they can respond.
Chinese government has adopted numerous policies to address the pressure of natural resources and energy supply. European companies believe they can be a part of if they are given more access to the bidding of infrastructure updating projects.
The paper includes more than 300 proposals for business environment. Marianne Friese, Secretary General of the Chamber, said: "The Chinese leadership's affirmation of the importance of innovation, openness and competition is encouraging. We firmly support China's efforts to ensure a sustainable balanced growth."
By People's Daily Online
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