China Likely to Tighten Control over New Cement Projects

BEIJING, July 22 -- China's National Development and Reform Commission (NDRC), the country's top economic planner, has conducted on-the-spot studies on cement enterprises, and is likely to command strict control over the approval of new cement projects, according to information from the China Cement Association.

    Related regulations may be unveiled within one month.

    China's cement industry has been challenged by oversupplies this year. Liu Zuoyi, a Chinese senior cement expert, said that China's cement prices remained low despite a booming market this year, which was a consequence of the overcapacity.

    "As we understand it, China's cement industry faces a problematic overcapacity. About 40 percent backward production capacity needs to be eliminated," Liu Ming, an official from the Industry Coordination Department under NDRC, told the press. "Besides, some sectors in the industry still suffer from overinvestment. All these problems can only be solved through structural adjustment."

    China's cement output hit 158 million tons in June, up 20.95 percent from one year earlier and 5.9 percent from the previous month. However, the average cement price was only 320.85 yuan per ton, down 0.18 percent from a year earlier and down 0.11 yuan per ton from May.

    Besides, China's regional cement markets were featured by an imbalance between the southeastern and northwestern areas.

    So far this year, the cement prices in northwest China, north China and northeast China each respectively grew 18.01 percent, 13.3 percent and 9.18 percent from one year prior. Meanwhile, prices in southwest China, east China, mid-south China and southeast China each respectively fell 1 percent, 3.9 percent, 7.6 percent and 11.27 percent, according to a research report released by Everbright Securities.

    It is worth noting that investments are increasing in the above-mentioned overgrown regional markets, reenacting the same mistakes made by the southeastern market, said an official from the China Cement Association.

    Statistics show that China completed a total investment of 74.56 billion yuan in the cement industry during the first half of this year, up 67 percent from a year earlier.

    Liu said that the NDRC has conducted surveys on investment and the capacity of cement enterprises in six provinces including Shandong, Anhui and Zhejiang.

    Liu Changfa, president of the China Strategy Institute of Building Materials who joined the survey, disclosed that the government is making overall review of investment and layout of the cement industry and may impose restrictions on cement project investments.

    (Source: chinamining.org)