Encourage Merging and Reorganization to Solve the Problem of Cement Overcapacity

Cement overcapacity is a major problem in the cement industry to be solved at present. Our country banned blind investment impulse in cement industry in 2013 and also launched several centralized control of overcapacity of the iron and steel, cement and electrolytic aluminum. However, centralized control is still hard to ease the situation of cement overcapacity. In September this year, after the release of Air Pollution Prevention and Control Action Plan, the backward capacity elimination task of 21 key enterprises such as steel and cement by Twelfth Five Year Plan should be accomplished 1 year ahead of time. This may worsen the present situation. Government has long been focusing on elimination of backward production overcapacity to solve overcapacity. There are two main ways to eliminate backward production capacity that is market competition and natural selection and government interference. Every year, MIIT issue elimination of backward production capacity index. Over the past three years, cement industry, the total number of elimination of backward production has reached tens of million tons. The backward production capacity accounted for less than 5% of the industry as a whole production. The elimination of backward production capacity has been unable to continue to influence on the formation of the current situation of production overcapacity. In 2013 January, the State Council issued “guidance on accelerating the key industry merger and reorganization of enterprises” regarding massive production overcapacity at the same time put forward our target ---by 2015, the ten cement enterprises concentration reached 35%. The new policy is now promoting the industry mergers and restructuring. The restructuring and integration of domestic enterprises is now speeding up. By the end of 2012, the 10 largest group of cement clinker production capacity has accounted for 48.93% of the country and cement production accounts for 31% of the country.