The cement industry of China - ‘A new normal’

The People's Republic of China (PRC), which spans 9,596,961km², is the world's second-largest country by land area, behind Russia. With an estimated population of 1.40bn in 2015, China is the most highly-populated country in the world. China is divided into 22 Provinces, five Autonomous Regions, four Municipalities and two Special Administrative Zones. Taiwan is China's '23rd Province,' although its status is contested and the region is governed by the Republic of China (ROC). China is home to a strong manufacturing industry and the world's largest cement market. Here Global Cement Magazine gives an overview of the Chinese cement industry and an update on developments since July 2014.

Economy

China is one of the world's BRIC economies, which also includes Brazil, Russia and India. The BRIC countries are characterised by newly advanced economic development. China has the world's largest economy with a GDP (Purchasing Power Parity - PPP) of US$17.63tn or US$10.36tn (using the official exchange rate) in 2014.¹ GDP comparisons are complicated as China's exchange rate is fixed rather than determined by market forces; to prevent underestimating China's output, GDP (PPP) is usually used for country comparisons. China's GDP has grown rapidly since 2006 (Figure 2) and its 2014 GDP/capita was US$12,900.

The Chinese economy is guided by the government's five year plans, which contain guidelines to promote economic growth. The current 2011 - 2015 plan targets 51.5% urbanisation, an 8%/yr GDP growth rate, a 7%/yr GDP/capita growth rate, keeping the population below 1.39bn and the construction of 36 million houses for low-income families. Planned infrastructure projects include a new airport in Beijing, the extension of high-speed railways to 45,000km and the extension of highway networks to 83,000km. China is increasing its focus on large scale hydropower and nuclear power plants, with new research being performed in the field of uranium-free nuclear power using thorium.

China is an industrial market world-leader with a massive output from the agricultural and manufacturing industries, particularly materials, chemicals, consumer products and luxury goods. It is the world's largest exporter and in 2014 it exported US$2.25tn of goods, up from US$2.21tn in 2013.

The PRC also has the world's largest labour force. In 2014 this was 801.6 million, of which 33.6% worked in agriculture, 30.3% in industry and 36.1% in the service sector. Unemployment rates are low at 4.1%. China's population grew at a rate of 0.44% in 2014.

Cement industry overview

At the start of the PRC in 1949, the Chinese cement industry was relatively small with many small cement kilns spread throughout towns and villages.³ In the 1980s a trend towards large integrated cement plants emerged and several government-owned cement producers were established to raise production. In 2000 the government began to reduce the number of small cement plants on the basis of their inefficiency and high levels of emissions. These efforts are ongoing.

According to the Global Cement Directory 2015, the Chinese cement industry consists of 803 integrated cement plants with a combined production capacity of 1.48Bnt/yr (Table 1, Figure 3). There are also 15 cement plants and 28Mt/yr of cement production capacity in Taiwan. Given the large number of remote cement plants and the lack of independent verification regarding the information supplied by Chinese producers, the data regarding plant numbers and production capacity is incomplete.

Official Chinese cement production statistics reported a 2.3% year-on-year increase to 2.48Bnt in cement production volumes in 2014.⁴ This followed a 9.5% increase in 2013. Clinker production capacity was 2Bnt/yr in 2014, up from 1.9Bnt/yr in 2013.⁵ In comparison, global cement production in 2014 was 4.18Bt, while global clinker capacity was 3.57Bnt/yr. China apparently possessed 59.3% of the world's cement capacity and 56% of its clinker capacity in 2014.

Suggestions that China has over-reported its cement production volumes have previously been made. However, evidence of unnecessary construction projects has been highlighted in local media, as has low capacity utilisation. The difference in construction industries suggests that China may be accurate in its production statistics:⁶ For example, wood is scarce in China, but commonly used in the USA for house-building, so cement consumption will be higher in China even when construction rates are the same.

Above - Table 1: The cement production capacity and number of plants in Chinese Provinces, Municipalities, Autonomous Regions and Special Administrative Zones in 2015. Source: Global Cement Directory 2015.

Above - Table 2: The most highly populated Chinese regions in 2013. Source: Statista, the statistics portal.

Cement companies

The top 20 cement producers in China and Taiwan operate 270 integrated cement plants with a combined production capacity of 861.48Mt/yr (Table 3). Discounting Taiwan, the top 20 producers have 265 cement plants and 845.1Mt/yr of production capacity. All of the companies are Chinese, with the exception of minority shareholders and Taiwan Cement.

The top 20 cement producers in China and Taiwan account for 56.9% of cement production capacity and 33% of cement plants. The disparity in percentages suggests that the top producers operate fewer plants with greater production capacities, in line with China's trend for consolidation. The remaining 43.1% of cement capacity in China and Taiwan is owned by hundreds of small cement companies, some with capacities as low as 50,000t/yr.

Above - Table 3: The top 20 cement producers in China in 2015 by installed production capacity. Source: Global Cement Directory 2015. Note: Includes 5.78Mt/yr (two plants) Asia Cement capacity in Taiwan and 10.6Mt/yr (three plants) Taiwan Cement capacity in Taiwan.

Anhui Conch is China's largest cement producer in 2015, with 219.13Mt/yr of cement production capacity from 34 plants. In its 2014 annual report the company cited a cement production capacity of 264Mt/yr, including its operations in other countries. Of its total production capacity, 70Mt/yr is from one cement plant with 36 dry-process kiln lines in Wuhu City, Anhui. In 2014, state-owned Anhui Conch acquired the following cement companies: Hunan Yunfeng, Shaoyang Yunfeng, Shuichyeng Conch, Kunming Hongxi and Goldsun Cement. It also completed 11 lines and 29 grinding units in China, as well as one line in Indonesia and several upgrades in Myanmar. In the near future, Anhui Conch plans to expand through further acquisitions and projects overseas.

China National Building Materials (CNBM/Sinoma) is China's second-largest cement producer, with an installed cement production capacity of 173.06Mt/yr at 92 cement plants. However, CNBM claimed a cement production capacity of 399Mt/yr in its 2014 financial report via the following subsidiaries, each of which owns a number of companies:

• China United: 100% stake - 101Mt/yr;
• South Cement: 80% stake - 148Mt/yr;
• North Cement: 70% stake - 33Mt/yr;
• Southwest Cement: 70% stake - 117Mt/yr.

Some 90% of state-owned CNBM's cement operations are in China. In 2014, it increased its stake in what it described as its most profitable other companies, including Conch Venture, Yatai Group and Shanshui Cement. It also announced plans to expand in India.

Taiwan Cement is China's third-largest cement company with 63.72Mt/yr of cement production capacity at six plants in China and Taiwan. Discounting the three cement plants and 10.6Mt/yr of production capacity in Taiwan, the company has three cement plants and 53.12Mt/yr of capacity in China, which would make it the country's fifth-largest producer. It claimed to have a production capacity of 65.3Mt/yr in China from 20 cement plants (plus 10.4Mt/yr from three cement plants in Taiwan) on its website. Taiwan Cement was established by the Taiwan provincial government in 1946 and was privatised in 1954. In 2014, it bought Sichuan Railway Group Cement, which has 2Mt/yr of production capacity. It aims to increase its production capacity in China to 100Mt/yr by 2016 via acquisitions.

China Resources Cement (CRC), part of China Resources Holdings, is the country's number four cement producer and was incorporated in 2003. Like Anhui Conch and Taiwan Cement, CRC operates a relatively small number (16) of cement plants, many of which have a larger than usual production capacity. CRC has a cement production capacity of 63.12Mt/yr in China. In its 2014 annual report, it said that it had 24 cement plants and 78.3Mt/yr of production capacity and, through equity interests and joint ventures, an additional 10.9Mt/yr of cement capacity. In 2014, CRC acquired Hainan Wuzhshan Dajiangnan Cement, completed two clinker lines, four grinding lines and started two 300t/day refuse-derived fuel (RDF) plants, in Guangxi and Guangdong. During the year, its capacity utilisation rate was '99.6%.'

Jidong Development Group is China's fifth-largest cement producer. It has nine cement plants and 36.07Mt/yr of cement production capacity in China. On its website, Jidong Development claimed that it has 49 production lines and 90Mt/yr of production capacity, although this data has not been updated since 2010. It also aims to have 150Mt/yr of cement capacity by 2016, including overseas capacity.

Financial trends

China's housing market is worth around 15% of its economy and its sluggish performance subdued construction in 2014. Infrastructure investments grew by 21.5% year-on-year while real estate investments were up by 10.5%, both significantly slower than in recent years. Cement production growth fell from 9.5% in 2013 to 2.3% in 2014.

China's cement industry has entered a 'new normal,' according to the country's larger producers. In its 2014 annual report, CNBM reported a 19.4% fall in cement industry investments. During the year, 81Mt/yr of cement capacity was removed and 70.3Mt/yr was added, while China's top 10 cement producers increased their market share to 52%.

China's monthly production volumes also show subdued growth. Cement production volumes fell notably between April 2014 and April 2015, with a significant drop in the first four months of 2015 (Table 4). Indeed, 2015 brought signs that China's construction market was slowing down at a faster rate. In March 2015, China offered tax breaks to home buyers and reduced deposit requirements for the second time in six months to halt a slide in house prices, which fell at a record rate in February 2015. In April 2015 China's national housing bank said that it might offer low interest rate housing loans to help middle and low income home buyers. Profits made by the Chinese cement industry fell by 67.6% year-on-year to US$521m for the first quarter of 2015, according to National Development and Reform Commission (NDRC) statistics. Cement output fell slightly by 3.4% year-on-year to 428Mt in the same period.

Above - Table 4: China's cement production volumes by month from April 2014 to April 2015. Source: Statista.

Despite the changing economic environment, most of China's major cement producers reported strong results in 2014, with sales, profits and sales volumes all growing, albeit at a slower rate than in recent years. The story has been different in 2015, however, with producers reporting poor results.

In 2014, Anhui Conch's revenue grew by 99.5% year-on-year to US$9.95bn, its net profit grew by 16.9% to US$1.77bn, its cement production was up by 18% to 219Mt and its cement and clinker sales grew by 9.29% to US$9.49bn. These results followed record highs for its major subsidiaries in September 2014. Its Foshan subsidiary saw sales exceed 10,000t/day for five consecutive days in September 2014, with average sales stabilising at 8000t/day. However, Anhui Conch's revenue fell by 11.1% year-on-year to US$1.81bn in the first quarter of 2015 and its net profit fell by 30.7% to US$276m. It attributed the fall in profit to a drop in product prices.

CNBM reported a 3.7% year-on-year increase in revenue to US$19.7bn in 2014, a 4.3% increase in post-tax profit to US$1.39bn, a 2.1% increase in clinker and cement sales volumes to 291Mt and a 6.2% increase in cement production to 251Mt. Like Anhui Conch, in the first quarter of 2015 CNBM's revenue fell by 4.63% to US$3.40bn and its net profit fell by 45.8% to US$69.2m.

CRC reported that its 2014 turnover grew by 11.3% year-on-year to US$4.21bn and its profit grew by 26% to US$425m. During the year, CRC sold 72Mt of cement, some 7.3% more than in 2013. This afforded a 12.9% year-on-year increase in cement sales to US$3.14bn in 2014. However, in the first quarter of 2015, CRC's turnover fell by 8.7% to US$800m and its profit fell by 14% to US$85.1m. The falls were again attributed to lower prices.

Taiwan Cement reported that its net sales grew by 1.9% year-on-year to US$3.89bn in 2014 while its gross profit grew by 9% to US$817m. Its cement sales volumes were flat at 54Mt, although its Chinese sales were up from 45.5Mt in 2013 to 47.7Mt, while sales in Taiwan fell from 8.5Mt in 2013 to 6.3Mt in 2014. Taiwan Cement has not reported on its 2015 results.

In its 2014 annual report, Shanshui said that its 2014 revenues were US$2.51bn and that its net profit fell to US$539m, 'due to the slowdown in China's economic growth and deceleration in the growth rate of fixed assets investment.' Its 'high grade' cement sales grew by 12.5% year-on-year to 39.9Mt and its 'low grade' cement sales fell by 26.4% year-on-year to 13.2Mt. Shanshui's clinker sales grew by 6.5% year-on-year to 9.82Mt.

Developments at China Resources

In August 2013 questions about corruption at China Resources were posed by local media.7 Issues around several coal mines and 'money squandering' at China Resources Power were raised. Then in April 2014 Chinese authorities detained Wang Hongkun, an executive director of China Resources Land.8 Several others, including China Resources' chief executive Wu Ding and chairman Song Lin were investigated for corruption. China Resources has since appointed Fu Yuning as its new chairman. In June 2014 China's National Audit Office said that it had found irregularities in China Resources' operations, including the misuse of funds, the use of an improper bidding procedure and failure to seek government approval for a merger.

An audit of China Resources' 2012 financial statements showed that China Resources Power didn't conduct public bidding for 586 projects it awarded that were valued at US$1.9bn. Instead, it had invited specific bidders to decide on contractors and service providers. Moreover, five of China Resources Power's power plants were allegedly constructed or put into operation in 2012 without government approval. The plants had power sales of US$45.4m in 2012. Similarly, a US$28.1m merger involving CRC was made in 2012 without government assessment or approval. The audit also found that US$209m raised by two trust products, intended to boost liquidity at the trust company, was instead invested in property development by the borrowers. A resolution remains to be reported.

Environmental concerns

Concerns regarding China's air quality have been well-publicised due to severe health problems, including an increased incidence of cancers. Cement plants, power plants and the steel industry are all major contributors to China's pollution. In April 2015, Luoding City in Guangdong cancelled a plan to build a waste incinerator after it prompted a protest of around 10,000 people, during which three police cars were flipped over and a duty office was vandalised. "People are angry with the site selection of the incinerator as it is within 1km of their homes," said one resident. "The nearby (CRC) cement plant is producing enough pollution, we don't need another polluter." This incident reflects the sentiment of the general population towards polluters.

Emissions

Direct cement plant emissions are a significant problem in China. According to the Ministry of Environmental Protection (MEP), China's cement industry contributes 15 - 20% of PM2.5 (particulate matter smaller than 2.5μm), 3 - 4% of SO₂ and 8 - 10% of NOx to the country's total emissions.

In July 2013 China's State Council approved a five-year plan spanning 2013 - 2017 to invest US$277bn to fight air pollution.⁹ The plan targets 25% emissions reductions and has cut the emissions limits on cement plants via the new 'Emission Standard of Air Pollutants for the Cement Industry.' These have applied to newly-constructed cement plants since 1 March 2014 and to existing plants from 1 July 2015:¹⁰

• NOx = 400mg/Nm³
• SO₂ = 200mg/Nm³
• PM at the kiln = 30mg/Nm³
• PM at the grinder = 20mg/Nm³
• Dust = 20mg/Nm³

Cement producers anticipate that the new emissions limits will increase their operating costs. The installation of new emissions reduction technology like selective non-catalytic reduction (SNCR) systems has been a priority for all of the major producers.

Coal consumption

Coal is a major contributor to China's pollution. Cement plants in China consume coal as a raw fuel and via coal-fired power production. China's apparent coal consumption is declining as policy makers encourage the use of hydroelectric, solar and wind energy.¹¹ It is also pushing to restart its nuclear power programme. China's electricity consumption grew at its slowest pace in 16 years in 2014, according to data from the China Electricity Council. Its 2014 coal consumption fell by 2.9%, while CO₂ emissions fell by 2%, the first decline since 2001.

The 2013 - 2017 five-year pollution plan includes a ban on the construction of new power plants in three major regions in order to cap coal consumption to <65% of China's total primary energy use. The regions, Beijing-Hebei-Tianjin, the Yangtze River Delta region, which centres on Shanghai, and the Pearl River Delta region in Guangdong, are encouraged to replace coal with power purchased from other areas or with power from natural gas or nuclear power plants.

In March 2015 Beijing announced plans to close the last of its four major coal-fired power plants, China Huaneng Group Corp's 845MW plant, in 2016.⁸ The plants will be replaced by four gas-fired stations with the capacity to supply 2.6 times more electricity than the coal plants. Beijing plans to cut its coal consumption by 13Mt/yr by 2017 from the 2012 level to slash pollutants. Shutting all of the major coal power plants in the city will reduce coal use by 9.2Mt/yr and avoid 30Mt/yr of CO₂ emissions.

Despite the apparent positive changes, questions regarding the accuracy of China's coal and CO₂ statistics have been raised.¹¹ China said that it would close 1725 'small-scale' coal mines in 2014, namely those with less than 900,000t/yr of production capacity,¹² but internal data inconsistencies, the large number of new coal mines being opened and news articles featuring the discovery of illegal and undocumented coal mines raise doubts about China's intentions. In 2014, China opened 47.3GW of new coal-fired power plants. Further, China's coal production is expected to grow from 3.7Bnt in 2013 to 4.1Bnt in 2015.¹³

Carbon trading schemes

Since 2011, seven regional pilot emission trading schemes (ETS) have been developed; in Shenzhen City, Beijing Municipality, Shanghai Municipality, Guangdong Province, Tianjin Municipality, Chongqing Municipality and Hubei Province. The ETS have faced criticism as historic emissions data are unknown, as are the names of many of the companies taking part.¹⁴ However, Xie Zhenhua, vice chairman of the NDRC, said that the schemes will help China to create a low carbon economy.

In 2014, some 24Mt of CO₂ equivalents were traded via China's ETS,¹⁵ valued at US$138m. This is expected to increase to 40Mt in 2015. Analysts have estimated that China's emissions will peak around 2030, although recent estimates have said that it may come as early as 2025, at 12.5 - 14Bnt of CO₂.¹⁶

In June 2015, cement producers participating in China's newest ETS in Hubei said that they could not afford to buy the permits to cover mitigation obligations for 2014 and may default. The 138 companies were due to provide the permits in June 2015 to settle their obligations for 2014. Around 25% are cement producers, which have complained that they were not allocated enough credits. "They are in talks with the government to gain immunity from non-compliance penalties and are asking to borrow some permits from the 2015 quota," said an unnamed broker. Huaxin Cement, the biggest local producer, is 1.15 million permits short of meeting its mitigation targets, according to Reuters. Carbon permits in Hubei are trading at US$4.43, so it could cost the company US$5.1m to cover its shortfall. "Most of the power sector is over-allocated on permits, but the cement and chemical sectors are short," said another unnamed broker. "Those facing a big gap are not attempting to buy from the market. They are pushing the government for a compromise." Penalties for non-compliance could include a deduction in permits for 2015 plus a fine of up to three times the value of the obligations in default, capped at US$24,176.

The pilot schemes have prompted China to develop a national ETS as part of its next five-year plan, which spans 2016 - 2020.¹⁷ China's ETS will overtake Europe's to become the largest in the world. The scheme will be managed 'bottom-up,' so each region will receive an absolute emissions cap and will be responsible for distributing permits.¹⁸ Each plant will initially receive free allocations, before moving to an auction system as the market matures. The regional and total caps are yet to be revealed.

Tackling overcapacity

Signs of overcapacity in the Chinese cement market were noted back as far as 2003.¹⁹ In 2012 the NDRC warned that China was producing too much cement and that the country's capacity utilisation was just 69%.³ In October 2013 China's State Council issued the 'Guideline to tackle serious production overcapacity,' while the Chinese Cement Association (CCA) drafted a plan to promote mergers and acquisitions to eliminate out-dated capacity and increase the industry's concentration ratio.

Several Chinese regions have now banned the construction of new cement plants, including Beijing in March 2014 and Tianjin in April 2014. Beijing also banned the expansion of existing cement plants. In April 2014 the NDRC announced a nationwide ban on 32.5 grade cement production from December 2015. This alone would reduce China's total cement production capacity by 340Mt/yr or 11%.

In December 2014 the CCA and the provincial governments jointly ordered 103 cement lines in the northeastern provinces of Heilongjiang, Liaoning and Jilin to close for four months from 1 December 2014 to reduce overcapacity and curb air pollution. The CCA said that the winter stoppage would reduce pollution as fuel consumption increases markedly when temperatures drop. Total cement output in northern China (including inner Mongolia), where capacity utilisation is around 50%, is around 120Mt in the winter and requires about 20Mt of coal. Fuel consumption falls to around 16Mt in the summer.

In September 2014 Japan's Taiheiyo Cement dissolved a 1.2Mt/yr joint venture cement plant with Xinjiang Tianye in Xinjiang. Taiheiyo Cement had signed the agreement with Xinjiang Tianye in December 2012. With the business environment for the region's cement industry worsening, Taiheiyo and Xinjiang Tianye opted to end the agreement.

Industry consolidation

Although according to China's major cement producers many acquisitions occurred in 2014 - 2015, leading to China's top 10 cement producers having 52% of the market share, only a small number of the acquisitions were reported by local media.

In November 2014 Gezhouba Group Cement, a subsidiary of China Gezhouba Group, signed an agreement with Hubei Zhongxia Cement to set up a joint venture to restructure the assets and businesses of Zhongxia Cement. The joint venture, with a registered capital of US$190m, will engage in the production and sales of cement, clinker, fine slag powder and opencast mining of limestone for cement uses. Gezhouba Cement holds 51% of the venture and Zhongxia Cement holds the remaining 49%. The venture acquired the entire cement assets of Zhongxia Cement after establishment.

In February 2015 Dongwu Cement acquired Shanghai Biofit Environmental Technology for US$5.11m. Shanghai Biofit is engaged in organic wastewater treatment, sludge treatment and disposal, comprehensive treatment of urban organic waste and other integrated environment services. The acquisition is in line with China's developing alternative fuels for cement production sector.

In March 2015 SOCAM agreed to sell its entire 45% stake in Lafarge Shui On Cement to Lafarge for US$329m. The joint venture company has 23 integrated cement plants and a cement production capacity of 27.7Mt/yr. The sale will make Lafarge Shui On Cement a wholly-owned subsidiary of Lafarge.

Overseas investments

The Chinese government's encouragement for its cement producers to expand abroad instead of at home prompted many overseas investments in 2014  - 2015.

A ground-breaking ceremony was held on 29 August 2014 at the site of a US$70m cement plant in Kemin, Chui, Kyrgyzstan. China's ZETH-Cement's general manager Zhu Rongjun said that the new plant would be put into production within 15 months.

State Development and Investment Corp (SDIC) and Anhui Conch signed an agreement on 25 September 2014 to invest in a 3Mt/yr cement plant in West Papau, Indonesia as part of investment cooperation measures that were agreed by China and Indonesia in 2013. The plant will serve Indonesia and neighbouring countries like Papua New Guinea. SDIC and Anhui Conch will have stakes of 51% and 49% respectively.

In November 2014 Hebei authorities revealed a plan to transfer excess capacity from its heavy industries, including cement, abroad by 2023. Hebei intends to move 5Mt/yr of cement capacity overseas by 2017 and 30Mt/yr by 2023. In February 2015 the Ministry of Industry and Information Technology (MIIT) released a similar plan to transfer the production capacity of six cement plant projects with 6Mt/yr of total production capacity from Sichuan to an undisclosed overseas location.

In January 2015 Jidong Development said that it would finalise discussions regarding the takeover of Peru's Cementos Interoceanicos. Cementos
Interoceanicos has an under-construction plant in Puno, Peru and holds mining rights to 54km² of land in Puno and other areas. Also in January 2015, the governments of China and Venezuela agreed to jointly build three 2500t/day capacity cement plants in Venezuela.

In February 2015 plans to build a cement plant in Zvishavane, Zimbabwe by Chinese investors were challenged as it emerged that the mining rights in the area belong to Shabanie Mashaba Mines (SMM). The project may be delayed as SMM is still the subject of an ownership dispute between the government and South African-based businessman Mutumwa Mawere. The project was part of deals made with China in 2014.

In March 2015 China's Hongshi Holdings and Nepal's Shiva Cement signed a US$300m joint venture agreement to build a cement plant in Nepal. The investment, one of the biggest in Nepal's cement sector, has a 7:3 equity structure between Hongshi Holdings and Shiva Cement. The dry-process plant will use 95% domestic raw materials.

In April 2015 Chinese cement producers planned to accelerate their investment in Zambia under agreements valued at US$800m. The deal was signed by the Zambia-China Economic and Trade Cooperation Zone and 11 companies in Beijing. One of the Chinese companies is West China Cement, which will set up a cement plant in the zone. "Zambia hopes to attract more Chinese investors and tourists to improve economic development," said Zambian president Edgar Lungu, adding that his government would provide 'strong support' to Chinese companies.

Also in April 2015, the government of Chelyabinsk, Russia and Anhui Conch were negotiating a cement plant project. Anhui Conch was provided several sites to assess for the project. According to general manager Wang Jianchao, a project scheme will be determined in the near future and will either consist of the modernisation of existing facilities or the construction of a new cement plant at undeveloped limestone deposits.

Outlook

The IMF has predicted that China's GDP will grow by 6.8% in 2015 and 6.3% in 2016, down from 7.4% growth in 2014 (Table 5).²⁰ This is faster than the world average and that of emerging and developing economies and around the same as the rest of emerging and developing Asia. While in world norms the Chinese market remains healthy, by China's norms the economy has slowed significantly. As GDP growth falls, new private investments will likely slow.

Above - Table 5: GDP growth rate forecasts for China, emerging economies, emerging Asia and the world (%). Source: IMF World Economic Outlook April 2015.

China's major cement producers have said that increased government infrastructure investment is expected to boost cement demand in 2015, although how far this will go towards negating the falling property market, which comprises 15% of China's economy, is arguable.

More stringent emission standards, the rise in environmental compliance costs and the elimination of 32.5 grade OPC should speed up the closure of out-dated cement plants, facilitating industry consolidation and further reductions in overcapacity. Although the majority of China's cement plants are fitted with waste heat recovery (WHR) and other energy-efficiency technologies as standard, the use of alternative fuels is set to grow significantly in the near future as cheaper and more environmentally-friendly coal alternatives are sought.

The near future will herald major changes for China's cement sector, with a slowed economy and new technology all contributing to a 'new normal.'

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