Displaying items by tag: Infrastructure
Indian cement demand to rise to 440Mt in 2024 financial year
22 September 2023India: Ratings agency Crisil has forecast all-Indian cement consumption growth of 11% year-on-year to 440Mt during the current financial year, which ends on 31 March 2024. Crisil attributed this to a 51% year-on-year rise in infrastructure spending, to US$6.75bn throughout the year. Press Trust of India News has reported that infrastructure projects currently account for 30% of all cement consumption.
Mexico: Holcim Mexico says that its supply of cement to the government’s Tren Maya railway project is 170,000t/month. This corresponds to 50 – 60% of its total production volumes. Local press has reported that construction of the 1500km-long Tren Maya railway will consume 1Mm3 of concrete. Holcim supplied its cement for Sections 1 – 3 of the line between 2020 and 2022. It is currently supplying Section 5, which is 50% complete. The cement comes from the company’s Orizaba, Veracruz, plant; its Macuspana, Tabasco, plant and its Mérida, Yucatán, plant.
Holcim Mexico’s infrastructure development manager Fernando Roldan said "Our participation has been a challenge, but the relationship we have with the suppliers and with the construction companies in charge of the railway has allowed us to meet the requirements."
Coal and road projects to boost cement production in Pakistan
08 September 2023Pakistan: The Central Development Working Party (CDWP) has cleared four development projects worth US$528m that are likely to lead to increased cement demand. This includes the Coal Rail Connectivity Project to connect significant coal reserves in the Thar Coal Mines with the existing rail network, including last mile connectivity to the Port of Qasim, according to the Nation newspaper. The project, part of the government’s Pakistan Vision 2025 policy, has been designed to provide reliable and efficient railway infrastructure to ‘break the geographical barriers’ of accessing domestic coal for industrial use, including cement production, which is currently reliant on more expensive imported fuels.
Separately, funding has been approved for a road project to connect the N50 and N70 national highways, to serve as the main route to connect the Central Cities of Northern Balochistan to Southern Punjab. This is expected to raise cement demand in these areas.
Mexico: Construction activity grew by 29% year-on-year during the first half of 2023. Local press has reported that this is its sharpest increase since reporting began in 2006. Major infrastructure projects reportedly drove the growth. These include the Mayan Train, Isthmus Train and Mexico-Toluca Interurban Train railway projects and the Olmeca oil refinery project.
As a result, Cemex and GCCs’ share prices have been the fastest and seventh fastest growing respectively on the main index of the Mexican Stock Exchange.
CRH boosts sales and earnings in first half of 2023
25 August 2023Ireland: CRH recorded US$16.6m in consolidated sales during the first half of 2023, up by 8% year-on-year from first-half 2022 levels. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) totalled US$2.5bn, up by 14%. Throughout the half, CRH invested US$600m in acquisitions, and maintained a ‘robust’ pipeline of further opportunities. In its Americas business, cement sales were ‘robust.’ There, volumes rose by 5%, and prices rose by 17%, despite adverse weather in Texas and the Western US. Meanwhile, price rises successfully offset local volume declines in Europe, but failed to do so in the Philippines. CRH said that infrastructure projects in the Philippines are experiencing delays. In Ukraine, it said that construction activity increased in the first half of 2023, despite the continuing Russian invasion.
CEO Albert Manifold said "I am pleased to report a strong first half performance, reflecting the continued delivery of our differentiated strategy, further commercial progress across our businesses and good contributions from acquisitions. The strength of our balance sheet, together with our relentless focus on disciplined capital allocation, will enable us to invest in future growth and value creation opportunities for our business."
Taiheiyo Cement Philippines to more than double capacity of San Fernando cement plant
17 August 2023Philippines: Taiheiyo Cement Philippines plans to install a second production line at its 0.8Mt/yr San Fernando cement plant in Cebu. The Philippines Department of Trade and industry says that the new line will more than double the plant’s capacity to 3Mt/yr. It will also entail an upgrade to reduce its total energy-related CO2 emissions by 10%. The Philippine Daily Enquirer newspaper has reported that the producer will additionally build a 700,000t/yr terminal at Calaca in Batangas. The facility will cost US$68.4m. Altogether, the company expects its growth plans to generate 2000 new jobs in the Philippines. The Philippines government has committed 6% of gross domestic product (GDP) to infrastructure investments annually.
Taiheiyo Cement Philippines previously indicated in August 2022 that the San Fernando cement plant might eventually expand to a capacity of 5Mt/yr. At that time, it expected to commission the new Line 2 in May 2024.
Special trade representative to the Philippine Trade and Investment Centre in Tokyo, Dita Angara-Mathay, said "The company's latest announcement materialises its plans to expand to Luzon from its long-time base in the Visayan region."
Australia: Alternative cement and concrete producers have welcomed a new Australian civil engineering standard that allows builders to use reduced-CO2 geopolymer concrete in infrastructure projects. Wagners, which produces Earth Friendly Concrete (EFC), said that the revision has removed on if its key barriers to wider market acceptance. EFC replaces 100% of cement with supplementary cementitious materials, including ground granulated blast furnace slag (GGBFS) and pulverised fly ash, by virtue of its binder technology. Wagners previously supplied EFC for the London Power Tunnels project in the UK, based on local technical approval-based building codes. The producer now expects a new standard like the Australian one to follow in the EU.
Update on Indonesia, July 2023
19 July 2023The government in Indonesia made building new cement capacity harder this week. The new rules are intended to strengthen the local sector in the face of a utilisation rate of only 53%. A moratorium policy and/or new investment arrangements have been placed on new cement plant projects. Instead, companies have been asked to focus on the regions of Papua, West Papua, Maluku and North Maluku instead, where demand for cement is higher than what the local production base can produce. Ignatius Warsito, the Director General of the Chemical, Pharmaceutical and Textile Industry at the Ministry of Industry, said that the new rules would be reconsidered once the capacity utilisation rate reaches 85%.
Other measures the government is also looking at include increasing exports of cement, changing regulations related to the coal Public Service Agency (BLU) and improving overland transport. On that last point the authorities and the cement producers are looking at how logistics costs can avoid rising in the face of the impending Zero Over Dimension Over Load (ODOL) policy. Proposals the sector has submitted include implementing a multi-axle policy for trucks and improving the quality of certain roads to allow for higher capacity vehicles.
As one of the government’s focus areas - coal - suggests, fuel prices have been a headache for the cement sector in recent years. Warsito noted that international coal prices started to rise in late 2020. This was likely due to the logistical mess that the coronavirus pandemic caused to the global economy. Higher coal prices caused a “significant” effect on the cement industry through both higher production costs and restrictions on supplies. One irony to note here is that Indonesia is one of the world’s leading coal producers. Donny Arsal, the head of Semen Indonesia, told the government in 2022 that the war in Ukraine had enticed local coal companies to export more coal due to the rising international price. At this time he lobbied the administration to use its local domestic market obligation (DMO) subsidy to better serve the cement sector by giving it more coal at a fixed price.
Graph 1: Cement demand and capacity in Indonesia. Source: Semen Indonesia and Indonesia Cement Association.
Overcapacity has been a recurring feature of the Indonesian cement market since at least the 1990s as the demand and capacity have grown sometimes out of step. The capacity utilisation rate reached 90% in the early 1990s only to fall to 50% by the end of that decade due to the Asian financial crisis. More recently Holcim left the market in 2019 when it sold its business to the Semen Indonesia. The state-owned company consolidated more than half of the country’s cement production capacity at the time. According to its data for the first quarter of 2023 it has a 51% market share and a 46% production capacity share. It also said that 92% of local demand was catered for from four of the country’s 14 producers, namely: Semen Indonesia; Indocement; Conch; and Merah Putih.
A recent study by the Jakarta Post newspaper suggested that after a poor first half in 2023, cement demand was expected to rebound and create modest overall annual growth by the end of the year. The key reasons for this outlook are increased government infrastructure spending, ongoing work on the new capital city Nusantara and anticipated price stability. The new city project, for example, is expected to require 1.6Mt of cement in the 2022 - 2024 period. Risk factors, of course, abound such as a global economic slowdown, financial problems at some of the government-owned construction companies like Waskita Karya and new capacity. A new 8Mt/yr (!) plant owned by local company Kobexindo and China-based Honshi Cement, for instance, is scheduled to start operation in the second half of 2023 in East Kalimantan. Even though the government says that the new unit will export 90% of its production, it will place pressure on other existing sites hoping to increase exports.
The country’s largest cement producer being majority owned by the government is a pertinent feature here given that the same government has also effectively banned new capacity. Semen Indonesia’s earnings before interest, taxation, depreciation and amortisation (EBITDA) have fallen each year consecutively since 2020. As mentioned above overcapacity has long been present in the local sector and recent events have made it worse. Yet, the companies that are likely to benefit the most from a block on newer, competitive cement plants are likely to be the established players. That said, though, with the utilisation just above 50% and new projects like the Kobexindo-Honshi plant on the way, the government likely feels it has to take some form of action. Other tools at its disposal include a national carbon exchange set to launch in September 2023. Power companies will participate from the start with cement producers anticipated to follow at a later stage. Despite the uncertain short-to-medium term outlook the cement sector in Indonesia remains one of the largest in the world with plenty of business to be done. Denmark-based FLSmidth was clearly mindful of this when it opened a new office in Jakarta in April 2023.
India: Birla Corporation says that it expects to sell 18.1Mt of cement during the 2024 financial year (1 April 2023 - 31 March 2024), up by 15% year-on-year from 15.7Mt in the 2023 financial year. That financial year, sales grew by 11% year-on-year. Looking ahead, the producer expects its new 3.9Mt/yr Mukutban cement plant in Maharashtra increase its sales. It said that it may also carry out future expansions at its Chanderia cement plant in Rajasthan.
The Hindu BusinessLine newspaper has reported that managing director and CEO Sandip Ghose said "Our strategy is based on prices not going up significantly. Volumes are going to move in a healthy manner unless there are any major dislocations, disruptions or hiccups going forward. I am very bullish on the India growth story." Regarding the company's Gujarat market in Western India, he said "Gujarat had gone through exponential growth in the past year, which boosted certain companies' profitability because of the bullet train, the expressway and other developments." Ghose forecast similar demand growth in Madhya Pradesh and Uttar Pradesh.
Hoffmann Green Cement Technologies to build four clinker-free cement plants in Saudi Arabia
21 June 2023Saudi Arabia: Hoffmann Green Cement Technologies (HGCT) and property developer Shurfah Holding have signed a letter of intent to conclude a licensing agreement for use of HGCT’s technology by the state-owned construction firm. BusinessWire News has reported that HGCT plans to build four new units to produce its clinker-free alternative cement in Saudi Arabia. Construction will begin in 2024. Shurfah Holding said that the partnership signals progress towards the development of smart cities under the state’s Vision 2030 economic plan.
HGCT co-founders Julien Blanchard and David Hoffmann thanked Shurfah Holding and said that the partnership represents an acceleration in the producer’s international development.