China prohibits glass, cement capacity expansion in 2018

BEIJING (Reuters) - Expansion of cement and glass production capacity will be strictly off-limits in China in 2018, the country’s Ministry of Industry and Information Technology (MIIT) said on Monday.

The MIIT notice comes just over a month before winter restrictions on construction activity in 28 cities in northern China, imposed as part of a sweeping environmental protection campaign, are due to be lifted in the middle of March.

New cement- and glass-making projects that are “absolutely necessary” must follow replacement capacity rules, “so as to ensure that the total production capacity will only decrease and not rise,” the MIIT said in a statement on its website.

China has been cracking down on excess capacity in a range of industries as part of supply-side reforms, but allows some shuttered capacity to be replaced with more modern and efficient facilities.

The China Cement Association said in December that 392.7 million tonnes of capacity, or one-tenth of the total, would be eliminated by 2020.

The country’s cement output fell 0.2 percent year on year to 2.32 billion tonnes in 2017, according to the MIIT in an annual review of the building materials sector on Monday. Flat glass production rose 3.5 percent to 790 million weight cases.

The Chinese building materials industry achieved revenues of 7.5 trillion yuan ($1.19 trillion) in 2017, up 8 percent year on year, as average material prices rose by 8.2 percent after falling for two straight years previously, the MIIT said.

Flat glass prices have been steadily rising since September, it added.

Reporting by Tom Daly; editing by Richard Pullin