Cement industry sees investment drop amid govt curbing measures
By Zhao Qian Source:Global Times Published: 2012-2-28 0:55:04
The country's cement industry saw a drop in investment last year for the first time in five years, according to the Ministry of Industry and Information Technology (MIIT) yesterday, following government efforts to curb overcapacity in the sector.
Investment in the cement industry totaled 143.9 billion yuan ($22.88 billion) last year, a decline of 8.3 percent year-on-year, the MIIT said on its website yesterday.
The central government has introduced measures to curb overcapacity in the cement industry over the last few years, and "problems of over-production and blind expansion in the sector have eased somewhat," Gao Zhi, director of the cement department at the China Society of Building Materials Industry Economy, told the Global Times yesterday.
Investment in the cement sector may decline further this year, since "it is a high energy-consuming and polluting industry, and the government will strictly limit its expansion," Zou Mingxiao, a researcher at CIC Industry Research Center, told the Global Times yesterday.
The MIIT issued a draft regulation in 2009 to set up an entry threshold to the cement industry, after the overcapacity issue emerged in 2008.
China's cement output was 1.87 billion tons in 2008, whereas the demand was only for 1.6 billion tons, according to the National Development and Reform Commission (NDRC).
Total cement output still reached 2.06 billion tons in 2011, up 16.1 percent year-on-year, the NDRC said.
The overcapacity situation "is still serious," because some cement production lines launched before the curbs are still running, Zou Mingxiao of CIC Industry Research Center said.
Profitability is a key driver of expansion in the industry, despite the pollution problems associated with it. The cement industry saw profits of 93.3 billion yuan in the first 11 months last year, rising by 92.6 percent year-on-year, according to the NDRC.
"In the first half of last year, the cement companies enjoyed rapid profit growth, especially the big enterprises, thanks to construction of large projects," said Gao.
"But the small-sized companies may have troubles this year, since construction of some big infrastructure projects were completed last year," Gao noted.