Displaying items by tag: market

Nigeria: Authorities in Seme Customs Area say that Nigeria's exports of cement to Togo fell 75,000t below its target for 2022. The Sun newspaper reported that Nigeria-based Dangote Cement faced intense competition in the Togo market, leading to the shortfall for the year.

India: Adani Group says that it will raise funds for its 2028 capacity expansion plan through internal accruals. The producer plans to double its cement capacity to 140Mt/yr by 2028, and also double its sales to US$8.5bn that year. The Financial Express newspaper has reported that the group says its internal accruals will be 'sufficient' to realise its aims. The group is reportedly 'on track' to commence the first phase of the planned expansion in early-mid-2023. It has also set out a cost reduction roadmap with a view to becoming India's most profitable cement company.

Chair Gautam Adani says that he anticipates a 'multi-fold rise' in all-Indian cement consumption due to forecast high economic growth and the government's infrastructure spending plans.

The Chinese cement sector had a tough time in 2022. This was confirmed this week as the large domestic cement producers released their financial results. Revenue was down, profits fell and cement sales volumes tumbled. The key causes included the continuation of the country’s zero-coronavirus policy, the declining real estate market and rising input costs for raw materials such as coal. Demand for cement withered and so did the fortunes of the cement companies.

Graph 1: Cement output in China, 2018 to 2022. Source: National Bureau of Statistics of China.

Data from the National Bureau of Statistics of China shows that cement output fell by 9.8% year-on-year to 2.13Bnt in 2022 from 2.36Bnt in 2021. The greater decrease was in the first half of the year rather than the second. The China Cement Association (CCA) said that this was nearly the lowest output in the last decade and the largest decline since 1969 ! The National Bureau of Statistics of China also pointed out in a release that, despite investment in fixed assets increasing by around 5% in 2022 and national infrastructure spending growing by 9%, real estate development investment dropped by 10% to US$1.46Tn.

Graph 2: Sales revenue from selected Chinese cement producers. Source: Company financial reports.

Graph 3: Sales volumes of cement and clinker from selected Chinese cement producers. Source: Company financial reports.

The cement producers warned in their forecasts that the results for 2022 were going to be rough and so it came to pass. China National Building Material (CNBM)’s revenue fell by 16% year-on-year to US$33.4bn in 2022 and Anhui Conch’s sales fell by 21% to US$19.2bn in 2022. Although, Tangshang Jidong Cement and Huaxin Cement reported declines of income or revenue in single digits. Profits halved for all of the companies covered here. Various combinations of the reasons covered above were cited for the situation.

What is more interesting are the responses some of the producers are making and what has gone well. CNBM, for example, is pinning its hopes on better staggered peak production and infrastructure projects. Anhui Conch, meanwhile, appears to have been diversifying its business by increasing both its concrete and solar power production capacity significantly in 2022. It was also announced that it plans to spend US$2.81bn on capital expenditure projects in 2023. China Resources Cement (CRC) said it had optimised its presence in South China through selected acquisition and divestments. Huaxin Cement has continued its focus on overseas markets with its share of operating revenue originating from outside China rising to 13% of the group’s total in 2022 compared to 8% in 2021. It also mentioned a number of unnamed projects around the world steadily drawing nearer to action. Sure enough, the group announced earlier in March 2023 that it was buying a majority stake in Oman Cement.

As for 2023, the CCA forecast in January 2023 that cement demand would be flat or slightly down. However, at the same time, provincial changes to the real estate market are expected to improve market conditions and infrastructure development will further drive demand for cement. The CCA identified that the cement sector’s production overcapacity could become an issue with lower demand. In 2022 the national clinker production utilisation rate was 65%, a fall of 10% from that in 2021. It also pointed out that peak-staggered production had actually helped cement producers generally to cope with smaller declines in profits compared to less well regulated industries.

Problems such as the zero-coronavirus policy, the real estate market and rising raw material costs have made the country’s production overcapacity issue worse. Changes are being made such as the national abandonment of the coronavirus lockdowns in late 2022, and, as mentioned above, the real estate market is being modified. In addition to this, various environmental changes are on the way, as the government works towards its sustainability goals. The country remains the largest cement producer in the world. Yet the message here is that we should expect more of the same for the cement sector in China in 2023.

China: Anhui Conch Cement plans to invest US$2.81bn in capital expenditure (CAPEX) throughout 2023. The investments will go towards building new capacity, upgrading to new technologies and increasing plants' energy efficiency. The Morning Star newspaper has reported that the producer currently faces high energy costs, against a backdrop of reduced cement demand.

Anhui Conch Cement recorded sales of US$19.2bn in 2022, down by 21% year-on-year from US$24.4n in 2021.

China: West China Cement recorded US$1.23bn in sales in 2022, up by 6% year-on-year from US$1.16bn in 2021. The producer's profit dropped by 23% to US$176m from US$230m.

Looking to the 2023 full year, West China Cement said that it expects demand in Guizhou and Xinjiang Provinces to 'remain subdued.' It noted upcoming infrastructure projects in Shaanxi Province as a source of substantial demand, but overall does not expect significant demand growth there. Meanwhile in Mozambique, the group expects its performance to remain unchanged.

Argentina: Holcim Argentina has advanced its diversification strategy with the acquisition of coatings company Quitam. Quitam produces the Quimexur range of paints and liquid membranes. Holcim Argentina said that the range will join its GacoFlex Technoprotect waterproofing and roofing offering.

Holcim Argentina CEO Christian Dedeu said "This is a business opportunity strongly aligned with Holcim's growth strategy in Argentina, allowing us to expand our portfolio of solutions and products for construction, taking advantage of our channel of distributors and the over 450 points of sale of our Disensa retail network." Dedeu added "This agreement helps us to consolidate our 2025 strategy, with a focus on integral solutions to reinforce our leadership and continue to support the development of the construction sector.”

Paint and membranes currently constitute 11% of the Argentinian building products market.

Vietnam: Thang Thang Cement has despatched a shipment of 55,000t of cement produced at its Ha Nam cement plant to a customer in Central America. Vietnam Investment Review News has reported that Lotus Cement and Commodities Trading Corporation shipped the order from Ho Chi Minh City.

Vietnamese cement producers are reportedly seeking new trade partners due to 'lingering headwinds' in the domestic and global markets.

India: Credit rating agency Crisil expects the Indian cement sector's capacity to expand at a compound annual growth rate (CAGR) of 4 - 5% over the four-year period up to the end of the 2027 financial year on 31 March 2027. It would thus begin the 2028 financial year at 715 - 725Mt/yr in installed capacity, compared to 570Mt/yr at the end of the 2023 financial year. The industry's total investment in the expansion is expected to be US$14.5bn. Major multi-state producers are expected to contribute over US$7.25bn (50%) of investments towards the total sum.

Over the same period, Crisil expects all-India cement demand to rise at a CAGR of 6 - 7%.

Jamaica: Local investor Mark Hart plans to establish a new cement terminal at Montego Bay, St James. Hart plans to invest US$8m in the terminal's construction. The Jamaica Observer newspaper has reported that construction will commence later in 2023. Once operational, the terminal will supply local roadbuilding and hotel, home and hospital construction. Current projects in this vein include a widening of the North Coast Highway and construction of the Montego Bay perimeter road and Runaway Bay and Discovery Bay bypasses, worth a total US$274.5m, and of new hotels with a total of 20,000 rooms.

Buying House Cement operates the only existing cement terminal in Montego Bay. The company imports cement produced in the Dominican Republic by Domicem. It currently serves 10% of Jamaica's demand. Hart is chair of Cargo House Handlers, which holds a 30% stake in the importer.

Hart said " We have highways, we have hotels, we have the hospitals being built in the west, we have a lot of housing projects. The government has a very ambitious plan to provide a lot of housing units. And all these things rely on stable, well-priced cement." He continued "We are proposing to offer an alternative to the one supplier that exists so that they have stability of supply and stability of pricing for the customers, so that the construction industry can continue to do what they do."

South Africa: PPC has forecast a drop in its cement sales volumes during the 2023 financial year, which will end on 31 March 2023. It says that its South African sales will drop by 4%, and its Botswanan sales by 7%. In the first half of the financial year, sales dropped by 2.6% year-on-year. PPC now says that disruptions at South African ports will likely limit the decline in its sales volumes in its home country by reducing competition from imports. South Africa imported 30% of cement consumed during the 2022 financial year, however congestion at ports and currency effects have kept this figure from rising throughout the present financial year.

PPC's CEO Roland van Wijnen said "Rising input costs and the objective of maintaining our market share continue to cause margin pressure." The group now expects to reduce its debt by 28 - 33% to US$39.5 - 42.2m in the 2023 financial year.