Growing overcapacity in China cement sector

Growing overcapacity in China cement sector
Published: 29 December 2009

China’s Central Economic Work Conference (CEWC), the annual economic planning meeting, held in early December, agreed at its conclusion to advance economic structure adjustment and focus on overcapacity elimination with strictly controlled lending to industries that were energy-intensive, polluting and had overcapacity.
Li Yizhong, Minister of Industry and Information Technology, said China would stop approving new projects in some industries involving excessive production capacities and duplicate constructions in the coming three years so as to guide healthy industrial development in the country. Li noted that the government will raise the access thresholds for steel, cement, flat glass, and coal chemical industries for the purposes of efficient energy consumption, environmental protection, and integrated utilization of resources.

On Dec. 23, China had again asked its financial institutions to help curb overcapacity in some industries with credit control last week, according to a joint statement issued by the People’s Bank of China, China Banking Regulatory Commission, China Securities Regulatory Commission and China Insurance Regulatory Commission.
The cement sector has seen huge excess capacity building up. Total capacity in the sector was 1.87 billion tonnes by the end of last year, but only 1.4 billion tonnes of cement was produced in 2008. By the end of September this year, another 600Mt of capacity were put to use or under construction, official figures show.