China will continue to adjust its cement industry's structure to ease overcapacity and achieve industry centralization, said the National Development and Reform Commission (NDRC).

The commission, the nation's leading industrial watchdog, will speed up the elimination of cement production lines with small capacity and outdated technology, Wednesday's China Daily reported.

It will also order any new project with less than 2,000 tons of daily capacity to apply to the State Council for approval rather than to provincial authorities.

NDRC said China's cement industry experienced healthy growth in 2005, with sales of 260.8 billion yuan (32.3 billion U.S. dollars) and profits of 8.05 billion yuan (1 billion dollars) last year.

China produced 1.06 billion tons of cement last year, 9.3 percent more than 2004. The growth rate, however, was 3.2 percent points lower than in 2004.

Overcapacity has become a pressing issue due to active investment in China's cement industry over the past few years. As the growth rate slowed down, many cement enterprises suffered losses.

NDRC said fixed-asset investment in the sector fell 5.1 percent last year. In addition, there were 116 less projects under-construction and 125 less new projects compared with 2004.

However, the number of loss-making cement companies increased. Last year nearly 36 percent of the nation's cement producers reported losses, compared to 28 percent in 2004.

"In order to ease the overcapacity, industrial centralization should be heightened," said an official with China Cement Association.

According to a NDRC report, by the year of 2010 the number of cement enterprises is expected to decrease to 3,500 with annual scales of 400,000 tons.

Low industrial centralization is another problem. In 2004, the output of the four largest cement manufacturers in China amounted to 12.24 percent of the nation's total output. The 10 biggest international cement companies contribute one-third of the world's output.

Centralization is to be achieved mainly by mergers and acquisitions, said the official, and some of China's big cement makers have already started their expansion. Last December, China's largest cement maker, Anhui Conch Cement Co Ltd reached

an agreement with two foreign strategic investors, who took stakes in the firm.

The nation's largest building materials manufacturer, China National Building Material Group Corporation, plans to raise 150 million dollars in the initial public offering (IPO) on the Hong Kong Stock Exchange at the end of March.

Source: Xinhua