On August 20, the General Office of the Ministry of Industry and Information Technology issued the Notice on Suspension of Replacement of Iron and Steel Production Capacity (hereinafter referred to as the Notice). The circular requires all regions to suspend the announcement of new steel capacity replacement plans from August 23, 2024. Those who fail to continue to publicize and announce the replacement plan of iron and steel production capacity in accordance with the requirements of this circular will be regarded as new iron and steel production capacity in violation of regulations and will be notified as a negative example.
"Notice" points out that since the implementation of "Measures for the Implementation of Capacity Replacement in the Iron and Steel Industry" (Ministry of Industry and Information Technology No.46, 2021), the iron and steel industry has effectively promoted the transformation and upgrading of the industry, structural adjustment, layout optimization and merger and reorganization through the replacement of iron and steel capacity. However, there are still some problems, such as inadequate policy implementation, imperfect supervision and implementation mechanism, and incompatibility with the development situation and needs of the industry. The issuance of
the Notice means that the capacity replacement in the iron and steel industry, which has been implemented for many years, has temporarily withdrawn from the historical stage, which has further triggered discussions in the industry on whether the implementation of capacity replacement in the cement industry should be suspended. Similar
to the iron and steel industry, there are some problems that can not be ignored in the implementation of the cement industry capacity replacement method, so that in recent years, people in the industry have been calling for the suspension or modification of the cement industry capacity replacement method. Dr. Ma Weiping, former chairman and president
of Yaobai Cement Group, pointed out again recently that the cement industry should keep pace with the times and revise the capacity replacement policy.
To sum up, the existing problems of capacity replacement measures in the cement industry are mainly concentrated in the following aspects:
1. Many zombie production capacity and backward production capacity that should have been shut down are transformed into advanced production capacity with the help of capacity replacement, which may aggravate the problem of overcapacity. Relevant data show that from 2018-2023, a total of 41.3621 million tons of zombie production capacity participated in capacity replacement, and more than 30 million tons of "resurrection" production capacity.
2. Most of the cement clinker production lines in China have the phenomenon of overproduction. The overproduction capacity of the original old production lines is weak, and the overproduction capacity of the new large-scale production lines is stronger. The actual capacity after replacement has limited effect on reducing the scale of production capacity.
3. There are some problems in the implementation of the capacity replacement method, such as inadequate supervision and implementation mechanism. In the actual implementation, there are some problems, such as small construction, fraud and so on. Since the beginning of this year, many places have successively reported a number of problems of approving small construction or illegal approval. For example, the relevant counties and cities in Xinxiang, Henan issued documents to avoid capacity replacement in violation of regulations, weakening the requirement of capacity reduction substitution of the new cement clinker production line of Huanshan Environmental Protection Technology Company to equivalent substitution.
4. The mismatch between supply and demand in the cement industry has been very serious, and the development trend of the industry is no longer suitable for new cement clinker production lines. Continuing to implement capacity replacement may aggravate market involution.
There is no doubt that since the implementation of the cement industry capacity replacement measures, it has effectively promoted the transformation and upgrading of the industry, structural adjustment, layout optimization and merger and reorganization, but in the actual implementation process, it has also caused problems such as the revival of zombie capacity. In the current situation of serious mismatch between supply and demand in the cement industry and the downturn of the market situation, the replacement of cement production capacity may also be suspended.
