Learning the new version of the implementation measures
of the capacity replacement plan, the new version of the "Cement Glass Industry Capacity Replacement Implementation Measures (2024 edition)" should consider the capacity utilization rate in the inter-provincial capacity replacement. The Measures stipulate that cement clinker production lines in provinces where the average capacity utilization rate of cement clinker is less than 50% in the first three years shall not replace capacity from outside the province in principle. The 50% capacity utilization rate seems to be a fence, and of course, after having "in principle", the fence has a living mouth.
The Measures stipulate that the number of days of annual production capacity shall be calculated as 300 days. According to this calculation, if the production line starts effectively and reaches 150 days a year, the capacity utilization rate will reach 50%. The same is true of the calculation of capacity utilization rate in the province.
Recently, Mr. Shen Li of Hunan Province published an article entitled " Some Thoughts on How to Break the Cement Industry". The article mentions that the operation rate of enterprise kilns has been cut in half. According to the requirements of provinces and cities for off-peak production, it is estimated that the operation rate of large kilns in enterprises may still be maintained at about 50%, but in some provinces it is actually less than 30% (for example, some provinces require enterprises to open kilns for only 25 days per quarter). Even with such a low requirement for the number of days to open kilns, quite a number of enterprises (mostly dry kilns with a capacity of less than 3200 tons) have been forced to stop production or change to grinding stations. If these enterprises forced to stop production are taken into account, the average operation rate of large kilns in cement enterprises across the country is only about 40%.
Assuming that the kiln opening is considered according to the production level, 40% of the kiln operation rate is equivalent to 49% of the capacity utilization rate, almost reaching 50%. In this way, the fence of capacity utilization is not too tight, and the restriction of replacement is not too strong, let alone the average calculation of the previous three years. Official statistics
involving the utilization rate of cement clinker production capacity are not easy to find. Some (two) provinces added the column of "clinker output" when publishing the list of clinker production lines in 2023, so that the utilization rate of production capacity in the province can be calculated. According to the published data, the overproduction of the production line in the production state is very serious, which offsets the impact of a considerable number of actual days of kiln shutdown. That is to say, the impact of shutdown on the operation rate is lower than that on the utilization rate of production capacity. Therefore, it can be speculated that the provinces whose current capacity utilization rate is less than 50% should be very few.
Even so, the rules have to be followed. According to the Measures, the capacity replacement plan mainly includes but is not limited to the following contents: (1) The name of the enterprise to which the construction project belongs, the design capacity, the construction site, the specification, model and quantity of the main equipment, the total energy consumption and emission, and the planned time of ignition and production. (2) The name of the enterprise whose production capacity is transferred out, the unified social credit code, the specifications, models and quantities of the main equipment, the address, the filing or approval documents, the planned shutdown time and the planned dismantling and withdrawal time, the production license, etc. The capacity replacement scheme
for supplementing the cement clinker capacity of the completed project shall not be limited to the above necessary contents, and these contents have been listed in the standard format table attached to the Measures. What does "not limited to" mean? Of course, it should also be the content stipulated in the Measures. For example The average capacity utilization rate of cement clinker in the first three years of the provinces transferred to production capacity, whether the energy efficiency of the production line transferred to production capacity meets the requirements of the benchmark level in the current edition of the Benchmark Level and Benchmark Level of Energy Efficiency in Key Industrial Areas, the operation status of the production line (whether there has been a continuous shutdown for two years or more since 2013), and whether the production line has debt disputes. Whether the capacity split transfer is more than two projects, etc. Starting from 2026, in terms of the operation status of the production line, whether there are less than 90 days of operation per year for two consecutive years from 2024 will be added.
Since the implementation of the new regulations this month, two capacity replacement schemes (involving three production lines) have been announced, all of which are capacity replacement schemes (replacing capacity from outside the province) to supplement the cement clinker capacity of completed projects. The implementation of these two capacity replacement schemes is indeed in place for the new regulations to simplify cross-regional capacity transfer procedures, but it seems that the "not limited" content required by the replacement scheme has also been simplified!
