Displaying items by tag: Production
India: Credit rating agency ICRA expects that cement demand growth will fall to 7% year-on-year in the first quarter of the 2019 – 2020 financial year from 13% in the previous year. It has blamed this on a slowdown in infrastructure projects due to the general election and resulting labour shortages. However, higher cement prices and lower input costs - including power, fuel and distribution expenses – are forecast to improve profits. Cement consumption is predicted to increase in the third quarter due to housing demand and pickup in infrastructure schemes.
The agency also said that around 18 – 20Mt/yr of cement production capacity would be added in the 2019 – 2020 year. This will be from a variety of integrated and grinding projects. This is below the projected demand growth of 24Mt/yr but overall sector production overcapacity is expected to continue at around 71%.
Update on Malaysia
26 June 2019The Malaysian Competition Commission took the rather ominous step this week of saying it was taking extra care to watch the cement industry. Ouch! It said that had taken note of recent price rises by both cement and concrete producers and that it was working with the Ministry of Domestic Trade and Consumer Affairs as it met with the sector. It also said it was well aware of the recent merger between YTL and Lafarge, “...which had led to the market being more concentrated at the upstream and downstream level.”
The background here is that at least one unnamed cement producer announced a price hike of 40% in mid-June 2019. End-users panicked and the local press took up the story. The Cement and Concrete Association of Malaysia then defended price rises in general, when it was asked for comment, due to all sorts of mounting input costs. Although, to be fair, to the association the Malaysian Competition Commission acknowledged the price pressures the industry was under due to input costs in a report it issued in 2017.
Back in the present, the government became involved and Saifuddin Nasution Ismai, the head of the Domestic Trade and Consumer Affairs Ministry, calmed the situation down by saying that producers had agreed not to raise their prices after all and that any future planned price adjustments would be ‘discussed’ with the authorities first. Finance Minister Lim Guan Eng then followed this up with calls for an investigation into prices in Sarawak state in Eastern Malaysia. In response, Suhadi Sulaiman, the chief executive officer (CEO) of CMS Cement, batted this straight back by blaming industry mergers in Peninsular Malaysia and saying the company had no plans ‘anytime soon’ to raise its prices.
As the Malaysian Competition Commission kindly pointed out, this entire furore took place about a month on from the competition of LafargeHolcim’s divestment of its local subsidiary to YTL. The commission agreed to the acquisition of Lafarge Malaysia by YTL knowing that it was giving YTL ownership of over half of the country’s production capacity. With this in mind it is unsurprising that the commission might have wanted to look tough in the face of even a whiff of market impropriety, whether it was real or not.
The problem, as the Malaysian Competition Commission alluded to in its statement, is that the local industry suffers from production overcapacity. On top of this local demand has been contracting since 2015. The country has 11 integrated cement plants with a production capacity of 27.1Mt/yr, according to Global Cement Directory 2019 data. Production hit a high of 24.7Mt in 2015 and then fell year-on-year to 18.8Mt in 2017. Data from the Cement and Concrete Association of Malaysia painted a worse picture taking into account both integrated and grinding capacity reporting an estimated production capacity utilisation rate of just 59% in 2016. Lafarge Malaysia reported a loss before tax of US$97.7m at the end of 2018 as well as declining revenue. Shortly thereafter it announced it was leaving the country, as well as neighbouring Singapore.
In theory the buyout by YTL should have been one step closer to solving Malaysia’s overcapacity woes as either it gained synergies through merging the companies or shut down some of its plants. Certainly, the system appears to be working at some level, as the proposed 40% price rise hasn’t happened. Yet, if the government is reacting to voters rather than the market it could prolong the capacity-demand gap indefinitely. Under these conditions LafargeHolcim’s decision to exit South-East Asia may prove prescient.
Egypt: Cement sales fell by 7.7% year-on-year to 10.9Mt in the first quarter of 2019. Data from the Central Bank of Egypt shows that production fell by 8.1% to 11.2Mt, according to Mubasher.
Eurasian Economic Union: The Eurasian Economic Union (EEU) produced 12Mt of cement in the first quarter of 2019. Armenia produced 68,000t and imported 47,200t. Belarus produced 0.84Mt, imported 79,500t and exported 0.26Mt. Kyrgyzstan produced 0.35Mt, imported 38,600t and exported 0.15Mt. Kazakhstan produced 1.47Mt, imported 0.11Mt and exported 0.33Mt. Russia produced 9.3Mt, imported 0.18Mt and exported 0.17Mt. Usually production in the first quarter represents 16 – 19% of annual production. Consumption of cement in the EEU region is expected to grow by 2.5% year-on-year in 2019.
Sales fall in Puerto Rico
11 June 2019Puerto Rico: Total cement sales in Puerto Rico fell by 11.1% year-on-year in May 2019, to stand at 1.21 million 42.5kg bags (51,425t). Cement sales have been contracting since February 2019, after 13 consecutive increases. Meanwhile, domestic cement production plunged by 33.1% year-on-year, to stand at 1 million bags, representing the fourth consecutive fall.
Brazilian cement a quarter higher in May 2019
11 June 2019Brazil: According to data from SNIC, the Brazilian national cement industry union, 4.6Mt of cement was sold in Brazil during May 2019. The figure is 27.6% higher compared to May 2018, with the large percentage increase due to the low base resulting from a truck drivers’ strike in May 2018. The first five months of 2019 recorded sales of 21.6Mt, a 5.6% year-on-year rise.
Nigeria: Dangote Cement has published its first sustainability report following Global Reporting Initiative (GRI) standards. Key data from the report include a CO2 emissions per tonne of cementitious material of 687kg CO2/t across all operations. Its total CO2 emissions were 16.4Mt. In 2017 it reported estimated total CO2 emissions of 8.45Mt from its domestic operations. The cement producer had an energy consumption of 52M GJ 2018. It had a 49% production capacity utilisation rate at its Nigerian plants. The group said that it supported 37,000 direct, indirect and induced jobs in Nigeria.
US: Dragon Products’ Thomaston cement plant in Maine restarted production in early May 2019. A fire damaged the unit in late March 2019, according to the Penobscot Bay Pilot. Plant employees and contractors spent six weeks repairing and replacing building structures, conduit and wires, motors, gearboxes, bearings, material transport equipment and other equipment.
Senegal: Falling export sales have reduced cement production. Exports dropped by 28% year-on-year to 0.14Mt in March 2019 from 0.2Mt in March 2018, according to the Agence de Presse Africaine. Cement production fell by 10% year-on-year to 0.59Mt in the first quarter of 2019 from 0.66Mt in the same period in 2018. Local sales remained stable in March 2019.
Gabon: Cement production rose by 42% year-on-year to 0.49Mt in 2018 from 0.34Mt in 2017. Sales rose at a similar rate to 0.49Mt, according to Infos Gabon. The Ministry of Economy attributed the growth in production and sales to the government’s decision to suspend imports of cement in mid-2017.