Displaying items by tag: Indonesia
Siam Cement Group to spend US$2bn on CO2 reduction by 2030
15 December 2021Thailand: Siam Cement Group (SCG) plans to spend US$2bn towards meeting its CO2 reduction target by 2030. The industrial group and cement producer intends to reduce its emissions by 20% by the end of the decade, according to the Bangkok Post newspaper. Chief executive officer Roongrote Rangsiyopash, said that the investment will be made from 2022 to 2030 and that it follows the United Nation’s Sustainable Development Goals (SDG), the Thai government's bio, circular and green (BCG) economic model and environmental, social and governance standards (ESG). After 2030 the group has a net zero goal for 2050.
In cement production the SCG wants to increase its rate of alternative fuels such as biomass and refuse-derived fuel. It also wants to invest in carbon capture utilisation and storage, use electric vehicles and use artificial intelligence systems in energy management. The group plans to reduce coal usage at its cement plants in Thailand, Vietnam, Laos, Cambodia and Indonesia by 50% in 2022. It also plans to use more electricity generated by renewable energy for its factories.
Wiroat Rattanachaisit appointed as vice president of Siam Cement Group’s regional cement business
01 December 2021Thailand: Siam Cement Group has appointed Wiroat Rattanachaisit as the Vice President of its Regional Cement Building Materials Business with effect from the start of 2022. He also becomes the Vice President of the group’s Housing Products and Solution Business. Rattanachaisit is currently a country director for the group’s cement business in Indonesia. He holds a bachelor’s degree in business administration from University of the Thai Chamber of Commerce and also attended the Harvard Business School’s Advanced Management Program.
Siam Cement Group acquires stake in Indonesian retail chain
25 November 2021Indonesia: Thailand-based Siam Cement Group (SCG) has completed its acquisition of a 13% stake in building materials retailer Caturkarda Depo Bangunan (CKDB). SCG made the purchase through a joint venture its runs with Siam Global House. The cement producer said that the acquisition was intended to support its strategic expansion in the Association of Southeast Asian Nations region and that it might increase its stake at a later date. CKDB is headquartered in Surabaya, East Java.
Indonesia: China-based China National Building Material (CNBM) International Engineering has commissioned a 2.1Mt/yr cement plant at Grobogan, Semarang, in Central Java for GITI Group. The 6000t/day project was ignited and started production in mid-November 2021. Work on the US$350m project originally started in late 2017. GITI Group is a conglomerate based in Singapore principally known for tire manufacture.
Indonesia’s nine-month cement demand increases by 5.5% in 2021
01 November 2021Indonesia: Cement demand rose by 5.5% year-on-year nationally in the first nine months of 2021, according to the Indonesia Cement Association. The association recorded an increase in bagged cement demand of 6.9%, while bulk cement demand increased by 0.9%. Total cement demand grew in all regions except for Bali, East Nusa Tenggara and West Tenggara. Sulawesi recorded the highest demand growth with a rise of 10%, consisting of 80% bagged cement and 20% bulk cement demand growth.
In 2020, domestic cement demand was 62.7Mt. Indonesia has an installed cement capacity of 115.3Mt/yr.
Semen Indonesia improves cement sales volumes to 19.2Mt
04 August 2021Indonesia: Semen Indonesia’s revenue grew by 1.2% to US$1.13bn in the first half of 2021 from US$1.12bn in the same period in 2020. Its sales volumes of clinker and cement rose by 5.7% to 19.2Mt from 18.1Mt. Earnings before interest, taxation, depreciation and amortisation (EBITDA) increased by 2.1% to US$247m from US$242m. The state-owned cement producer said that sales volumes were supported by growing domestic sales volumes and improving exports. It added that the national cement production capacity utilisation rate had fallen to 56% in 2020 from a high of 82% in 2014 due to new cement plants being built and a drop in domestic demand growth due to the coronavirus pandemic in 2020.
Indonesia: The newly cement producing province of North Sulawesi on Celebes exported 63,000t of cement in May 2021. The Philippines News Agency has reported the value of the exports as US$2.18m. The main destination for the province’s exported cement was Malaysia, which received 32,500t (51%) for US$1.10m, corresponding to 50% of the total value. Taiwan imported 23,500t (37%) for US$764,000 (35%) and the Philippines imported 1.87Mt (13%) for US$317,000 (15%).
Bangladesh: Cement producers are warning of price rises due to a ‘significant’ rise in international freight rates. The Bangladesh Cement Manufacturers Association (BCMA) has expressed concern about the situation, according to the New Nation newspaper. Freight rates to transport clinker from Indonesia, Vietnam or the Middle-East have increased by up to 30% in the last few months. The BCMA has called on the government to cut import duties to keep consumer prices low.
Indonesia: SCG Packaging, part of Thailand-based Siam City Group, has entered into a share purchase agreement to acquire a 75% stake in Intan Group, a corrugated container producer. The purchase is intended to strengthen SCG Packaging’s downstream paper-based packaging business in the country. It awaits approval from the relevant authorities and the transaction is expected to close in mid-2021.
Update on China: March 2021
31 March 2021Financial results for 2020 from the major Chinese cement companies are now out, making it time for a recap. Firstly, information from the China Cement Association (CCA) is worth looking at. The country had a cement production capacity of 1.83Bnt/yr in 2020. For an idea of the current pace of industry growth, 26 new integrated production lines were built in 2020 with a clinker production capacity of just under 40Mt/yr.
This is as one might expect from the world’s biggest cement market. However, the CCA also revealed that the country has over 3400 domestic cement companies, of which two thirds are independent cement grinding companies. Most of these were reportedly created during the late 2000s as dry kilns started to predominate. The CCA is concerned with the quality of the cement some of these companies produce and the lack of order in this part of the market such as regional imbalances. This suggests that the government’s attempts to consolidate the cement industry as a whole had led to the independent companies heading down the supply chain. It also raises the possibility that the government-led consolidation drive may move to grinding next. One news story to remember here is that in February 2021 the CCA called for its industry to respect competition laws following a government investigation. Later in the month it emerged that eight cement companies in Shandong Province had been fined US$35m for price fixing in a sophisticated cartel whereby the perpetrators went as far arranging a formal price management committee to regulate the market.
The CCA described 2020 as a year of sudden decline, rapid recovery and stability. Coronavirus hit cement output in the first quarter of 2020 leading to unprecedented monthly year-on-year declines before it bounced right back in a classic ‘V’ shaped recovery pattern. Despite the pandemic and bad weather later in the year, annual output rose by 2% year-on-year to 2.37Bnt in 2020 from 2.32Bnt in 2019. This has carried on into 2021 with a 61% increase in January and February 2021 to 241Mt from 150Mt in the same period in 2020. That’s not surprising given that China was suffering from the pandemic in these months in 2020 but the growth also suggests that the industry may have gone past stability and is growing beyond simply compensating for lost ground.
Graph 1: Year-on-year change in cement output in China, January 2010 - February 2021. Source: National Bureau of Statistics of China. Note that accumulated data is issued for January and February each year so these months show a mean figure.
Chart 2: Annual cement production growth by Province in 2020. Source: China Cement Association.
Chart 2 above shows cement production in 2020 from a provincial perspective. Note the sharp decline, more than 10% year-on-year, in Hubei Province (shown in dark green). Its capital Wuhan is where the first documented outbreak of coronavirus took place followed by a severe lockdown. Zooming further out, China’s clinker imports grew by 47% year-on-year to 33.4Mt in 2020. This is the third consecutive year of import growth, according to the CCA. The leading sources were Vietnam (59%), Indonesia (10%), Thailand (10%) and Japan (8%). China has become the main export destination for South East Asian cement producers and Chinese imports are expected to continue growing in 2021.
Graph 2: Revenue of large Chinese cement producers in 2020 and 2019. Source: Company reports.
Moving to the financial figures from the larger Chinese cement producers, CNBM and Anhui Conch remain the world’s two largest cement producing companies by revenue, beating multinational peers such as CRH, LafargeHolcim and HeidelbergCement. Anhui Conch appeared to be one of the winners in 2020 and Huaxin Cement appeared to be one of the losers. This is misleading from a cement perspective because Anhui Conch’s increased revenue actually arose from its businesses selling materials other than clinker and cement products. Its cement sales and cement trading revenue remained stable. On the other hand, Huaxin Cement was based, as it describes, in the epicentre of the epidemic and it then had to contend with flooding along the Yangtze River later in the year. Under these conditions, it is unsurprising that its revenue fell.
CNBM’s cement sales revenue fell by 3% year-on-year to US$19.5bn in 2020 with sales from its new materials and engineering compensating. Anhui Conch noted falling product prices in 2020 to varying degrees in most of the different regions of China except for the south. CNBM broadly agreed with this assessment in its financial results. Anhui Conch also reported that its export sales volumes and revenue fell by 51% and 45% year-on-year respectively due to the effects of coronavirus in overseas markets. The last point is interesting given that China increasingly appears in lists of major cement and clinker exporters to different countries. This seems to be more through the sheer size of the domestic sector rather than any concerted efforts at targeting exports.
One major story on CNBM over the last 15 months has been its drive to further consolidate its subsidiaries. In early March 2021 it said it was intending to increase its stake in Tianshan Cement to 88% from 46% and other related transactions. This followed the announcement of restructuring plans in mid-2020 whereby subsidiary Tianshan Cement would take control of China United Cement, North Cement, Sinoma Cement, South Cement, Southwest Cement and CNBM Investment. The move was expected to significantly increase operational efficiency of its constituent cement companies as they would be able to start acting in a more coordinated manner and address ‘fundamental’ issues with production overcapacity nationally.
In summary, the Chinese cement market appears to have more than compensated for the shocks it faced in 2020 with growth in January and February 2021 surpassing the depression in early 2020. Market consolidation is continuing, notably with CNBM’s efforts to better control the world’s largest cement producing company. Alongside this the CCA may be starting to suggest that rationalisation efforts previously focused on integrated plants should perhaps be now looking at the more independent grinding sector. The government continues to tighten regulations on new production capacity and is in the process of introducing new rules increasing the ratio of old lines that have to be shut down before new ones can be built. Finally, China introduced its interim national emissions trading scheme in February 2021, which has large implications for the cement sector in the future, even if the current price lags well behind Europe at present.