Cement industry to face higher market access in China

Cement industry to face higher market access in China
Published: 25 August 2009

China will ease the serious overcapacity in its cement industry by setting "stricter than expected" threshold for approval of new production lines, according to a report by China Securities Journal.

A draft by the Ministry of Industry and Information Technology (MIIT) says that provinces with more than 1000kg per capita of cement clinker will not be allowed to build any new cement projects during the 12th Five-year Plan starting from 2011.

Other standards will also be imposed, including a self-funded project ratio and the scale of the project.

Zhu Hongren, spokesperson of MIIT, has ever described the overcapacity in the cement industry as "serious". In 2008, only 69 per cent of clinker capacity and 67 per cent of cement capacity was used by the industry.

China’s cement investment has kept a fast growth of more than 40 per cent on a monthly basis year on year since 2008. The investment in the cement industry soared by 61 percent for the whole year of 2008 and 67 per cent in the first half of 2009.

Statistics by Digital Cement under China Cement Association show that there are two provinces, Anhui and Zhejiang, with more than 1000kg per capita of cement clinker in 2008.

However, Jiangxi and Fujian will join that "1000kg per capita club" by 2010 if they implement their 2000t of new capacity plans.

Some industry insiders do not agree with the idea of overcapacity. They argue that the problem is unbalanced structure, which, they believe, can only be solved by phasing out outmoded capacity and building new lines.

But some enterprises welcome the new policy. They hope the restriction will be implemented "immediately".