Global Cement speaks with Kayrros, an advanced data analytics company that is using satellites to offer new insights into the global cement sector.
Global Cement (GC): Please could you introduce Kayrros and what it does?
Nikolaos Antonopoulos (NA): Kayrros is a global platform for industrial asset observation. It measures and monitors energy, natural resource and industrial activity worldwide by harnessing machine learning, natural language processing and advanced mathematics, as well as satellite imagery, geolocation data, text and other unconventional data. It currently observes more than 200,000 assets worldwide. To keep on top of this we employ a technical team of 140 experts from across finance, heavy industry, shipping, trading, data science and market analysis.
GC: When and why did Kayrros start to monitor the cement sector?
Simon Ben Arous (SB): Kayrros was looking to expand its range of products in 2019. As part of this, we used our access to the Copernicus Sentinel satellite constellation, operated by the European Space Agency, to monitor cement kilns from the end of 2019. This comprises two satellites equipped with visual and near infra red (NIR) cameras. Using them allows us to observe when industrial assets, such as cement kilns, are hot or cold. We use this as a proxy for whether or not they are making clinker.
Our proprietary AI algorithms then take this information and combine it with the capacity of the kiln to estimate clinker production. Across a large enough sample, this provides accurate estimates of clinker production for a given country or region.
GC: How many plants does Kayrros look at?
SB: Theoretically the satellites could monitor every cement kiln worldwide. We are not there yet, but Kayrros is increasing its coverage rapidly. As an indication, we have found that our modelling, even at coverage levels below 50%, including in China, is sufficient for 90% accuracy. In many countries our coverage is much higher, which increases the accuracy too.
When adding a new plant, we outline a polygon over specific area(s) of interest. Then, when the satellite passes over the plant, it can view the kiln(s) individually and assess whether they are in use or not. Each plant is visited at the same local time each time the satellite passes, always during daylight hours and most often between 10:00 and 18:00. The average time between visits is five days, allowing us to monitor changes in activity with good accuracy.
GC: What are the benefits of Kayrros’ approach?
NA: What our approach allows us to do is to look at clinker production on the ground, in as close to real-time as possible. This offers unprecedented insights into the industry. Our subscribers can access weekly clinker production reports from any country on the Kayrros cement plant database. Those that opt for Kayrros Studio can drill down into the data for individual kilns at specific sites. This even enables them to track shutdowns for individual kilns. There is also four years of historical production data that can be accessed.
This is powerful data that is updated continuously in granular form from the kiln upwards. It is available way in advance of data from cement associations and producers, which is often released many months after the fact.
GC: So who are Kayrros’ clients?
NA: It has long been a common practice to look at economic forecasts and say ‘GDP will rise by X% so cement demand will rise by Y%.’ but this approach trips up even the best forecasters. Why? The two are linked, but not that way round. It is more the case that cement production is an indicator of where the economy will go, rather than where it has been.
The high quality and timeliness of the data Kayrros can generate makes it of interest for a wide range of clients. It is not just interesting for those in the cement sector, or even just for those that invest in it, but for anyone who wants to look at the overall economic situation. Cement production can be a reliable leading indicator of economic performance. It is also a reliable indicator of future trends like iron ore demand, the other essential ingredient for large infrastructure projects. For this reason, we have clients from mining companies, investors in mineral deposits and other sectors of the economy.
GC: What does the latest aggregate data tell us?
NA: Kayrros recently released summary 2020 data for the ‘big five’ western European cement markets: Spain, France, Italy, Germany and the UK, which jointly have a capacity of more than 150Mt/yr of cement. The data was gathered from more than 100 cement plants.
Despite each of these five governments excluding cement production from industrial shutdowns, Kayrros’ data shows that being permitted to operate is not a guarantee of producing cement. There were significant declines in demand, particularly in the second quarter of 2020, as shown by Figures 2 & 3. For the rest of 2020, cement production activity recovered to levels similar to 2019. This is consistent with more flexible measures regarding construction and cement being in place for the subsequent lockdowns.
On a country basis, both the UK and Spain experienced a decline in cement plant activity in excess of 15%, with France falling by less than 10%. Surprisingly, Italy, one of the hardest hit European countries for lockdowns and deaths relating to Covid-19, maintained a relatively stable cement plant activity curve according to the sample. The best performer was Germany, which matched 2019 volumes in 2020.
GC: What data does Kayrros have on the larger cement producing nations?
NA: We are ramping up our coverage in China, India, the US and other major cement producing countries and already supply that data to our subscribers. We will release summaries for 2020 in due course.
GC: What are the technical limitations of the Kayrros approach?
SB: Data acquisition can be limited by cloud cover, which the satellites cannot see through. This can be troublesome in the tropics in particular. You could get an image every five days, but it might be just clouds. Thankfully such conditions don’t persist for too long, so the effect is a slight increase in average revisit time, from 3 - 5 days to every 7 days.
Another potential drawback is that we provide data for clinker, not cement. The ratio between these two can vary quite significantly depending on the market, the plant and other factors. Clients must take care to apply ratios that are appropriate for their analysis. Most clients are experienced data analysts, so errors are rare. In any case, our team is always on hand to help clients get the best out of the data.
GC: What challenges does the cement sector give rise to that others don’t?
SB: One factor that makes the cement sector somewhat difficult to observe is the sheer number of plants, which run into the thousands. Other sectors have considerably fewer sites to look at. The task of getting full coverage is, as we already mentioned, ongoing. However, once we confirm the capacity, the AI only needs some minor tweaks and it can start collecting. Other sectors, particularly those with larger sites, need more refinement.
GC: What are Kayrros’ future plans for its cement sector coverage?
NA: Aside from growing our coverage across the global cement sector, we also plan to estimate the CO2 emissions from the sector, in line with our wider monitoring of sustainability trends. CO2 output depends on a number of factors like kiln type, fuels and clinker factor. It sounds like a fairly simple task to calculate the emissions for a single plant, but it is much more of a challenge across several thousand kilns. Tasks like this will keep the team busy going forward.
GC: Thank you both for your time today.
SB/AN: You are very welcome indeed Peter.