News Feed

China Plans to Slash Cement Capacity

Posted on : 03 Oct, 2016

 

China – the world’s largest cement producer – needs to make huge cuts in its cement capacity as it faces massive overcapacity. It’s estimated that the country needs to slash as much as 500 million tonnes of cement-making capacity in a 3 year period. While this might seem like a small number given China’s whopping total cement capacity of 3.2 billion tonnes. It’s still significant when compared to cement production in the USA or Canada. It is an amount equivalent to more than four times the total U.S. cement production.

 

However, out of the massive cement production capacity in China, only 67 percent of it is utilized – leaving 850 million tonnes of slack. Cement production has been decreasing. In Q4 of last year alone, production plummeted 5.7 percent. Cement is the third major industry that is forced to cut back production following the Chinese slowdown.

 

However, China has been talking about cement production cuts since 2003. But this hasn’t happened in reality – partly as the country has found old patterns used to stimulate growth hard to abandon. Despite the slowdown, China witnessed a jump of fixed-asset infrastructure investments by 21 percent in April on a month-on-month basis. Interestingly, its loans to industries that are already ‘running at overcapacity’ actually rose in Q1 – although at a mere 0.1 percent (China’s Xinhua news agency reported).

 

As reported in The Globe and Mail, “When the market is poor, people will stop producing,” said Gao Zhi, dean of the cement industry consultancy at the China Development Strategy Institute for Building Materials Industry. But owners prefer a “zombie” factory – particularly one they can revive when conditions improve – over a dead one. “It will be difficult to really demolish the kilns or uninstall the grinders,” she said.

 

What does the cement cutbacks mean for other Asian producers such as India, Indonesia and Bangladesh? Find out more at CMT’s 18th Asia CemenTrade on 25-26 October in Bangkok.

 

For more information about the event, email grace@cmtp.com.sg or call +65 6346 9147.

 

Read more>>>