China cement industry to face higher market access

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 1,000 kilogram 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 percent of clinker capacity and 67 percent of cement capacity was used by the industry.

China's cement investment has kept a fast growth of more than 40 percent 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 percent in the first half of 2009.

Statistics by China Cement Association show that there are two provinces, Anhui and Zhejiang, with more than 1,000 kilogram per capita of cement clinker in 2008.

However, Jiangxi and Fujian will join that "1,000 kilogram per capita club" by 2010 if they implement their 2,000 tons 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".

From www.cementchina.net [2009-8-25]