NEWS CENTER

Cement surplus forces policy to take action, local run, NDRC plea


Release time:

Jul 11,2013

With the growing voice of overcapacity in the cement industry, the relevant government departments have made a heavy blow. In May, the national development and Reform Commission and the Ministry of industry and information technology issued the notice on resolutely curbing the blind expansion of industries with serious overcapacity, pointing out that the two ministries and commissions are studying and formulating the overall plan for resolving the contradiction of overcapacity (hereinafter referred to as the plan), requiring all localities to inspect and clean up the illegal production capacity of excess industries such as steel, cement, flat glass and ships, and report and summarize them before the end of June. Recently, people familiar with the matter revealed that "one size fits all" banning new production capacity, increasing the elimination of backward production capacity, and supporting the merger and reorganization of large enterprises will be two

With the growing voice of overcapacity in the cement industry, the relevant government departments have made a heavy blow.

In May, the national development and Reform Commission and the Ministry of industry and information technology issued the notice on resolutely curbing the blind expansion of industries with serious overcapacity, pointing out that the two ministries and commissions are studying and formulating the overall plan for resolving the contradiction of overcapacity (hereinafter referred to as the plan), requiring all localities to inspect and clean up the illegal production capacity of excess industries such as steel, cement, flat glass and ships, and report and summarize them before the end of June.

Recently, people familiar with the matter revealed that "one size fits all" banning new production capacity, increasing the elimination of backward production capacity, and supporting the merger and reorganization of large enterprises will be important contents of the "combined fist" of the two ministries.

It is reported that the relevant situation of the cement industry in various places has been summarized to the two ministries and commissions. At present, the two ministries and commissions are discussing and studying. It was once rumored in the industry that the "plan" would be issued in July.

However, according to the reporter's understanding, due to the interests of local governments, industries, enterprises and other parties involved, the above-mentioned "plan" has been subject to a lot of interference in the process of refinement. An authoritative person revealed that many local government officials went to the Development and Reform Commission to "intercede", hoping to treat them differently.

Capacity utilization rate is too low

"Overcapacity exists in most countries around the world." Lei Qiazhi, the former president of the China Cement Association and the current honorary president of the China Cement Association, said in an interview that the domestic cement overcapacity has greatly exceeded the global normal level.

Countries such as Europe and the United States generally use capacity utilization or equipment utilization as an indicator of whether there is excess capacity. The normal value of equipment utilization is between 79% and 83%, that is, it is reasonable to have a surplus of about 20%.

According to Lei's analysis, the utilization rate of equipment in more than half of China's cement market has dropped to 70% or less. For example, the utilization rate of equipment in some large enterprises in Guangdong is only 67%. "If the average utilization rate is below 70%, the market in this region will be damaged."

According to data from China Cement Association, China's cement clinker output in 2012 was 1.279 billion tons, with the actual clinker production capacity rich by 37.6 and the actual cement production capacity rich by 32.3, exceeding the reasonable range of 20%. In fact, this set of data is not the output of the cement industry at full capacity, because many areas are currently shutting down kilns to limit production.

According to the data of China Cement Association, by the end of 2012, the actual production capacity had exceeded the cement demand of that year by 0.8 billion tons. It is estimated that the capacity growth rate of the cement industry will be around 7.5 this year, which is still faster than the demand growth rate of 6%.

Industry profits continue to decline

In addition to capacity utilization, market prices and corporate efficiency levels are also important references for overcapacity.

"The main reason for the suspension of kiln production is the intensification of overcapacity, resulting in a decline in the market efficiency of enterprises." Digital cement network CEO Chen Berlin told reporters.

Data show that the total profit of the national cement industry in 2012 was 65.7 billion billion yuan, lower than that in 2011 and 2010, with a year-on-year decrease of 32.81. Cement prices have been falling since the second half of 2011, and by April this year have fallen back to the level of 270 yuan/ton 10 years ago. In the past 10 years, the cost of production factors such as coal, electricity, raw materials, and labor has continued to rise, and enterprises' investment in energy conservation and environmental protection has continued to increase.

"Although the production and sales volume of (cement) increased by more than 8% in the first half of the year, the industry efficiency has not improved significantly compared with last year." Chen Berlin said. According to data from 31 provinces and cities across the country monitored by the Digital Cement Network, 12 regions suffered losses in the first half of the year. North China suffered more serious losses. The Northeast region, which performed prominently last year, also experienced a sharp decline in profits in the first half of this year.