After years of government coaxing, the reluctance to shake up the mainland's fragmented and inefficient cement industry may finally be coming to an end, thanks to the nation's accelerated environmental protection drive to rid the country of polluting factories.
The national push for a clean and green environment has compelled the government to pinpoint the culprits - 5,000 small cement firms with polluting production facilities - and force them to shut or be gobbled up by bigger players.
China Cement Association vice-secretary general Zhuang Chunlai estimates that only 30 of the 5,000 'unqualified' companies are eligible to remain by upgrading their technology and management skills.
This means a mere 0.6 per cent of the small and medium-sized cement companies would eventually survive the market under Beijing's stricter directives, according to the association's figures.
'Overcapacity means too many cement producers are scattered throughout one region. The industry is not centralised, with a few big companies,' said Guo Jingbin, executive director of Anhui Conch Cement.
Excess capacity has also hurt prices and made it difficult for producers to raise rates.
Cement prices last year rose 7 per cent to about 600 yuan (HK$3,897) per tonne, at least 50 per cent below international levels. The growth rate was far below other raw materials, such as steel, which rose 20 to 25 per cent year on year.