Displaying items by tag: Clinker
Clinker wars
24 April 2019One of the long running trends in the cement industry is that of production overcapacity. Sure enough more than a few news stories this week covered this, as various players reacted to international trade in clinker and cement. The Bangladesh Cement Manufacturers Association wants its government to cut import duties on clinker. Algeria’s shift from an importing cement nation to an exporting one continues.
Armenia and Afghanistan are coping with influxes of cement imports from neighbouring Iran. Pakistan’s cement exporters, who have been losing ground in Afghanistan, are once again lobbying to remove anti-dumping measures in South Africa. The argument between Hard Rock Cement and Arawak Cement in Barbados may have swung Hard Rock Cement’s way as the Caribbean Court of Justice (CCJ) has ruled in favour of lower tariffs for imports. Last week it was reported that the Rwanda Bureau of Standards had blocked cement imports from Uganda on quality requirement grounds.
The summarised version is that all this excess clinker and cement can cause arguments and market distortions as it finds new markets. Typically, the media reports upon the negative side of this, when the representatives of national industries defend their patch and speak out about ‘quality concerns,’ potential job losses and blows to the local economy. However, it isn’t always like this as the Afghan story shows this week. Here, although the Chamber of Commerce and Industries wants to promote locally produced cement, imports are welcome and the relative merits of different sources are discussed. Ditto the situation in Bangladesh where a predominantly grinding-based industry naturally wants to cut its raw material costs.
We’ve covered clinker and cement exports more than a few times, most recently in September 2018 when the jaw-dropping scale of Vietnam’s exports in 2018 started to become clear. Yet as the continued flow of news stores this week makes clear it’s a topic that never grows old.
Graph 1: Top cement exporting countries in 2018. Source: International Trade Centre.
Looking globally raises a number of issues. First, a warning. The data in Graph 1 comes from the International Trade Centre (ITC), a comprehensive source of trade statistics. Most of its figures are in line with data from government bodies and trade associations but its export figure is around a tenth of the estimated export figure for Iran of around 13Mt for its 2018 - 2019 year. Last time this column looked at exports similar issues were noted with a discrepancy between Vietnam’s exports from the ITC compared to government data.
Iran aside, all the usual suspects are present and correct. A point of interest here is that the list is a mixture of countries that make the headlines for their exports, like Vietnam, and those that are quietly just getting on with business. Japan for example exported 10.7Mt in 2018. More telling are the changes in exports from 2017 to 2018. Exports fell in Japan, China and Spain. They rose in Vietnam, Thailand, Indonesia, Pakistan and South Korea.
Looking globally, China is the elephant in the room in this topic given its apparent massive production overcapacity. The industry here is structurally unable to export cement on the scale of other countries but, as its major companies expand internationally, this may change. Despite this China still managed to be the third biggest exporter of cement to the US in 2018 at 2Mt and the fifth biggest in the world. Yet, as the ITC data shows, its exports fell by 30% year-on-year to 9Mt in 2018.
Vietnam, Pakistan and Turkey continue to be some of the key exporting nations with production capacities rising in defiance of domestic realities. Pakistan, for example, is coming off a building boom from the China–Pakistan Economic Corridor infrastructure project and all those plants are now looking for new markets. Vietnam says it is benefitting from industry consolidation in China. Its exports grew by 55% year-on-year rise to 31.6Mt. It shipped 9.8Mt to China in 2018. Its main export markets in 2019 are expected to be the Philippines, Bangladesh, China, Taiwan and Peru. Turkey, meanwhile, struggled with general economic issues in 2018. Its cement exports fell by 6% to 7.5Mt in 2018 according to Turkish Cement Manufacturers Association data. Once again this is at odds with ITC data, which reports nearly twice as many exports.
This touches the tip of the iceberg of a big issue but while production over-capacity continues these kinds of trade arguments will endure. Vietnam, for example, may be enjoying supplying cement in China as that country scales down production. Yet, what will happen to all of those Vietnamese plants once Chinese consumption stabilises?! Similar bear traps lie in wait for the other major exports. Alongside this many of the multinational cement companies are pivoting to concrete production. This may be in recognition of the fact that in a clinker-abundant world profits should be sought elsewhere in the supply chain. A topic for another week.
For an overview of some of these themes and more read Dr Robert McCaffrey’s article ‘The Global Cement Industry in 2050’ in the May 2019 issue of Global Cement Magazine and his forthcoming keynote presentation at the 61st IEEE-IAS/PCA Cement Conference 2019 at St Louis in Missouri, US.
Algeria exports over 0.5Mt to Europe
24 April 2019Algeria: The Algerian cement industry has exported over 0.5Mt of clinker to Europe as part of a shift to international markets. Samir Setiti, the president of Groupe des Ciments d’Algérie’s (GICA) Sodismac subsidiary, said that the company was currently transporting 15,000t of clinker from its Beni Safi plant to the Ivory Coast from the Port of Ghazaouet, according to the L’Expression newspaper. This is part of 15 export operations the cement producer has conducted since May 2018.
Armenia: Tigran Khachatryan, the Minister of Economic Development and Investments, says that the government is considering adding clinker to a list of goods subject to import duties. A tariff of around Euro40/t could be introduced for a year until April 2020, according to the ARMINFO News Agency. This would be similar to proposed duties on imported cement.
The measures are intended to protect local cement production. Khachatryan noted that imports from Iran could be up to a third of the price of locally manufactured cement due to cheaper energy supplies and state subsidies.
China: Tianrui Cement has entered into a clinker supply deal with Ruiping Shilong. It will buy clinker from Ruiping Shilong from 1 April 2019 until 31 December 2021. The price and quantity will be set following negotiations, although a cap of around US$74m/yr has been set. Tianrui Cement’s chairman and his wife hold a significant minority share in Ruiping Shilonga.
Algeria: GICA Group’s Hadjar Soud cement plant has made its first 37,000t clinker shipment to the Ivory Coast via the Port of Annaba. It is part of a 0.2Mt/yr consignment planned for 2019 from the unit, according to the Algeria Press Service. Overall, GICA intends to export 1.5Mt of clinker to African countries in 2019.
Ivory Coast imported 3.1Mt of clinker in 2018
15 March 2019Ivory Coast: Imports of clinker rose by 2.3% year-on-year to 3.10Mt in 2018 from 3.03Mt in 2017. The value of the product increased by 9.7% to US$162m from US$148m, according to Connection Ivoirienne. Clinker surpassed crude oil as the most imported commodity by volume into the country in 2017.
UK: Thamesport Cement, a subsidiary of France’s Cem’In’Eu, has applied for planning permission to build a grinding plant at the London Thamesport seaport on the Isle of Grain in Kent. The unit is expected to cost around Euro21m.
It is proposed that all the mineral raw materials will be imported by sea and the finished cement will then be transported by road either in bulk or in bags. Around 0.48Mt/yr of raw materials will be imported to the site, comprising 24,000t/yr of gypsum, 72,000t/yr of limestone and 384,000t/yr of clinker. Ships will be unloaded using cranes at the wharf. The plant will have six silos with a capacity of 500t for finished products. It is expected to create 35 full time jobs.
Whale Rock Cement eyes up export market
14 March 2019Namibia: Whale Rock Cement says it plans to start exporting cement to countries in Africa following the accreditation of its Cheetah Cement products with the Namibia Standards Institute and the South African Bureau of Standards. It hopes to send its exports to Mozambique, Congo and Ivory Coast, according to the Namibian Sun newspaper. The cement producer started producing clinker at its 1.2Mt/yr integrated plant near Otjiwarongo in late 2018. Prior to this it was importing clinker from Egypt.
PPC says that Zimbabwe business remains resilient
08 March 2019Zimbabwe: South Africa’s PPC says that its business in Zimbabwe has remained resilient despite the economic ‘challenges’ experienced over the last year. It said that it had kept its pricing in line with inflation and that demand remained ‘strong.’ Its cautionary measures in the country include: keeping 90% of input costs locally sourced; increased exports; continuing clinker imports from South Africa; and share purchases of PPC on the Zimbabwe Stock Exchange. Previously, PPC reported that growth had been low in Zimbabwe in 2018.
ZAG settles with US Department of the Treasury's Office of Foreign Assets Control over Iranian clinker
22 February 2019US: ZAG has reached a US$506,250 settlement with the US Department of the Treasury's Office of Foreign Assets Control (OFAC) over breaches on trade sanctions with Iran. Between mid-2014 and early 2015 OFAC says that ZAG purchased 263,563t of Iranian produced clinker via a company based in the UAE. The government body added that ZAG knew that the clinker came from Iran although it was assured at the time by the supplier that it was not subject to US sanctions. The clinker was then sold to a company in Tanzania. However, OFAC said that since ZAG voluntarily disclosed its violation of sanctions to the office it viewed the case as a so-called a ‘non-egregious case‘ and the resulting fine was far below the maximum.