Displaying items by tag: Import
Too much cement in Nigeria?
25 April 2012Nigeria: This week has seen a major development in the Nigerian cement industry, with a call from domestic manufacturers to ban cement imports, three months ahead of the government's schedule for the ban. The call has been presented in some quarters as proof that the country, long blighted by high cement imports, has achieved President Goodluck Jonathan's bold target of making Nigeria a net exporter of cement before 2013. In the face of steadily diminishing oil revenues the government would like Nigeria to be known as the regional cement exporter, but what else might happen?
According to the Cement Manufacturers' Association of Nigeria (CMAN), the country's total cement capacity now stands at 22.5Mt/yr. Domestic consumption is estimated at 18.5Mt/yr, translating into a required capacity utilisation rate of 82%. It is bizarre, therefore, that cement producers feel the need to call for an import ban. Perhaps:
a) The producers know that they can't compete with the low cost of imports from outside Nigeria,
b) The producers want to recoup their plant investment costs as quickly as possible,
c) The producers know that they can't export if the country continues to import.
With notoriously poor transport links within Nigeria, option c may be a small factor. If road and rail links are poor, transport costs increase and exports become less desirable for both the supplier and the end-user. What is more likely however, is a combination of a and b. Producers need to recoup their investments but can't if China and India can undercut them from thousands of miles away. If the desire to recoup investments goes unchecked when the import ban comes in, there is a high potential for cartel-like behaviour to surface again in the country.
One does not have to look back far to the last major incident of apparent cement market cartelisation in Nigeria. In mid-2011 President Jonathan had to step in and personally call for a 25% price reduction. His target was hit within three months, but since then prices have slowly started to rise again, even with Dangote's Ibese 6Mt/yr plant coming online just three months ago! With four producers committed to setting up a 3Mt/yr plant each by 2015 in exchange for 2011 import licences, the supply of cement in Nigeria will continue to rise, making the temptation to collaborate even stronger.
Nigerian producers seek import ban before August 2012
25 April 2012Nigeria: Cement producers in Nigeria have called on the Federal Government to ban bulk cement imports before the August 2012 deadline set by the government, claiming that the volume of cement currently produced in the country is enough to meet local demand.
"The government should enforce the ban before the August deadline," said Daljeet Ghai, Group Chief Executive at Dangote Cement. "Dangote alone has the capacity needed to meet local demand and sustain supply of the commodity across the nation."
The current production data from the various plants in the country, obtained from Cement Manufacturers Association of Nigeria (CMAN) show that the country's total cement production capacity is now at 22.5Mt/yr while the country's cement consumption is 18.5Mt/yr.
Dangote alone currently accounts for 15Mt/yr while Lafarge Wapco Cement contributes 7.5Mt/yr. Unicem produces 2.5Mt/yr and Ava Cement produces 0.5Mt/yr.
Citing the example of the company's Ibese cement plant as basis for confidence in the ability of local manufacturers to meet domestic demand and still be able to export, Dangote's Ghai said, "The Ibese plant is grinding 0.48Mt/month, while daily production is 16,000t/day at 2400t/hr (6Mt/yr). It started with production of 12,000t/day in February 2012, but barely two months later, production moved up to 16,000t/day, it's full installed capacity."
Vijay Khana, Deputy Director of operations at Ibese Cement added that on a daily basis, the company supplies the market with more than 200,000 bags of cement.
Nigeria's second largest cement producer, Lafarge Cement Wapco, said that it is ready for the import ban. "For sure, I see a ban on cement imports happening," said Lanre Opakunle, Plant Manager at Ewekoro Cement Plant II. "The best thing for Nigeria is for us to manufacture cement here. If we manufacture it here, we create jobs here and we save the economy in terms of foreign exchange."
The CEO and President of Dangote Cement, Aliko Dangote, has said that the company will hold a 'cement import closing ceremony' whenever the ban is introduced.
Ministry removes cement import restrictions
09 March 2012Saudi Arabia: Saudi Arabia's Ministry of Commerce and Industry has removed restrictions that had been in place on imports of cement, saying that it "has adopted several decisions to ensure the stability of the price of cement and its provision in the local market." The decisions include halting exports, making it obligatory for cement factories to work at full capacity and making producers bear the freight costs to the areas of increased demand. It expects that these measures will mean that cement reaches consumers at a 'reasonable' price.
This is not the first step taken to ensure that the cement supply keeps pace with the huge demand for cement that the construction boom has created. Earlier in 2012 Saudi cement factories were ordered to open up new production lines. These are estimated to have added an extra six million bags to the Kingdom's production every month, taking its total monthly production to about 80 million bags.
The moves come following complaints by cement consumers in remote areas that the price of cement had skyrocketed in recent months, with some accusing dealers of fixing artificially high prices. Saudi Arabia currently has an estimated US$163.5bn-worth of construction projects in the concept phase. It is understandable that it wants to secure the best value cement possible.