China development body bans new cement and glass sheet projects

China development body bans new cement and glass sheet projects
Published: 20 November 2009

China’s National Development and Reform Commission (NDRC) has issued a document to ban the construction of new cement and glass sheet projects, a serious step to curb production overcapacity in the two industries.

The document of the NDRC, the country’s top economic planner, issued on Wednesday, orders all projects that had not started construction by September 30 to stop immediately. As for certain key construction projects, their applications should be submitted to the NDRC, not local governments, for approval. Related works are expected to be done before the end of this year.

As for those projects already under construction but not entering into operation prior to September 30, the regulator will verify that they comply with the country’s industrial policies. Cement projects should provide their limestone mining license for examination, while glass sheet projects should meet the industry access threshold and other requirements set by the country’s six ministries including the NDRC.

"The ban includes not only cement projects, but also clinker and grinding plant projects, which reflects the government’s firm decision in curbing overcapacity," said Liu Zuoyi, a senior cement expert in China.

China’s cement and glass sheet sectors are facing serious overcapacity problem. In September, the State Council identified them as two industries among others facing overcapacity risks.

According to the State Council, China has 418 cement production lines in construction, with a total production capacity of 620Mt. There are still another 147 production lines, with a combined capacity of 210Mt, which have gained approval and are waiting to begin construction. Upon their completions, China’s cement production capacity is expected to hit 2.7bnt, while its demand will only reach 1.6bn.

China also has over 30 glass sheet production lines under construction or in planning. The glass sheet capacity is estimated to surpass 800m weight boxes, leading to a huge capacity surplus.