Eastern is the weakest market in Jan&Feb
􀂄 YoY volume growth largely due to the snowstorm last year
In the first two months of 09, the output reached 159m tonnes, and app
consumption reached 157m tonnes, up 11.6% and 14.2% yoy respectively. The
growth is mainly in Feb, during which the app consumption is up 43.7% yoy. The
aggressive yoy growth is mainly due to the snowstorm in Feb08, which caused the
weak output and consumption of cement early last year. We expect to see a much
more moderate volume growth rate in Mar09.
􀂄 Price strong in Western but weak in Eastern
Up till 15 Mar, the cement price is strong in the western area (Ningxia, Xinjiang
and Inner Mongolia) but weak in the eastern (Shanghai, Zhejiang, Jiangsu and
Anhui). And due to the long raining season this year after the spring festival, the
cement price failed to pick up in Mar this year. In Mar09 Eastern cement price was
down Rmb6/t MoM while in Mar08, Eastern cement price was up by Rmb5/t MoM
􀂄 Cement price in Eastern is to gradually recover soon
With the ceasing of the unusual raining season, the sales volume of the major
cement producers in Eastern China has picked up again and accordingly, we are
expecting to see gradually price recovery soon in Apr, which could be a positive
catalyst for the cement companies in the region.
􀂄 Seasonal weakness might provide some entry point
Due to the market weakness in Q1 and dim Q109 earnings outlook, the stock price
has softened recently, which we believe potentially could provide some entry
points before the cement price recovery.

Contents page
Industry data 3
— Cement industry operation data ...........................................................................3
— Capacity additions................................................................................................4
Cement price 6
— Macro data...........................................................................................................8
— Regional analysis...............................................................................................10
— Output vs price of selected provinces.................................................................13
Appendix 16
— Price map...........................................................................................................16
— Share price performance....................................................................................17