Displaying items by tag: Cement Manufacturers Association of the Philippines

Construction firm DMCI Holdings announced plans this week to enter the Philippine cement market. The company intends to build one cement plant on Semirara and three cement grinding plants elsewhere – at Batangas, Iloilo and Zamboanga – to give it a national presence. DMCI’s managing director Victor Limlingan admitted to local press that his company was taking a gamble on spending US$368m in this way.

It has staked its money on the Duterte Infrastructure Plan, a scheme from the new administration that was elected in June 2016 to target US$165bn (!) towards infrastructure spending until the early 2020s. Even if a portion of this money makes it from political hyperbole to the diggers then it is likely to mean a sustained construction boom for an economy that is already growing at around 6%/yr. DCMI’s excitement was almost palpable in mid-November 2016 when it put out a press release calling for potential partners to help it benefit from the rush when it comes. Although the company did add that all the discussions were at the exploratory stage at this time because it was still awaiting bidding documents.

DMCI’s project joins six plants in various stages of planning and construction from San Miguel, Northern Cement, Eagle Cement and LafargeHolcim. In addition four existing plants are carrying out upgrades to increase their production capacity. Clearly, things are looking up for the local cement industry. DMCI follows San Miguel which announced that it was going to spend US$1bn on building five cement plants around the country in mid-2015.

In line with this kind of investment the Cement Manufacturers Association of the Philippines (CEMAP) said that cement sales had risen by 10.1% year-on-year to 20.1Mt in the first three quarters of 2016. This follows annual sales growth of 8.7% to 21.3Mt in 2014 and of 14.3% to 24Mt in 2015. CEMAP’s data for 2015 also shows that local demand overtook the country’s kiln capacity in 2014. Subsequently imports peaked to 314,000t in 2014, the highest level since 2002.

The country’s second largest producer Republic Cement, a joint venture between CRH and Aboitiz, reported sales growth similar to CEMAP’s one for the first three months of the year. LafargeHolcim, the largest producer, didn’t reveal any figures in its third quarter report but it marked the Philippines as one of its key contributors in the quarter. By contrast, Cemex noted lower growth in its third quarter report at 4% for the nine months to September 2016. It also said that the government transition following the election had slowed cement consumption, especially from infrastructure projects.

The Philippine cement industry is in the enviable position of being in a boom. The kind of problems it has to cope with includes provincial cement shortages, lobbying to increase usage of blended cements, scrutiny of prices by the government and a rise in technical smuggling. Once the new plants and upgrades start becoming operational the true nature of the market should become more apparent. At present it looks likely that DCMI gamble may turn out to be a wise one. The next question will be how many more companies want a piece of the piece too?

Philippines: Cement sales have risen by 10.7% year-on-year to 13.2Mt in the first half of 2016 due to increased government spending on infrastructure and improved private sector involvement in construction. Ernesto Ordoñez, president of the Cement Manufacturers Association of the Philippines, also cited good weather as helping drive up sales, in comments made to the Philippine Daily Inquirer. Private sector construction constitutes 76% of cement sales, while public construction projects use the remaining 24%.

Philippines: Ernesto Ordoñez, the president Ernesto Ordoñez Cement Manufacturers Association of the Philippines (CEMAP), has said sales in the first three months of 2016 rose by 13% year-on-year to 6.43Mt in the first three months of 2016 from 5.7Mt in the same period in 2015. It was driven by strong construction activity in the country according to the Philippines Star newspaper.

“Demand will continue to be strong, especially with presumptive president Duterte saying that infrastructure will remain a high priority during his administration,” said Ordoñez. He added that the local cement industry benefitted from the higher infrastructure budget being allocated for the Department of Public Works and Highways (DPWH). CEMPA forecast that construction growth in both the pubic and private sectors will remain strong in 2016.

Philippines: The Cement Manufacturers Association of the Philippines (CEMAP) has asked the government to use more blended cement in its infrastructure projects to meet its emissions targets. “In the Philippines, the private sector uses more than 80% of blended cement. The government, on the contrary, does the opposite. It uses 80% Portland cement,” said CEMAP president Ernesto Ordoñez in an interview with local press.

In October 2015 the Philippines submitted to the United Nations its initial commitments to address climate change that included a 70% reduction of carbon emissions by 2030. The reduction is targeted to come from the energy, transport, waste, forestry and industry sectors.

Philippines: Cement sales volumes grew by 14.3% to 24.4Mt in 2015 according to the Cement Manufacturer's Association of the Philippines (CEMAP). The sales volume was 21.3Mt in 2014. In the fourth quarter of 2015 cement sales rose by 16.6% year-on-year to 6.1Mt from 5.2Mt in the same period in 2014.

CEMAP president Ernie Ordonez attributed the growth to higher investments in construction of the public sector backed with the private sector's confidence in the government, new housing projects with low interest rates and better weather in 2015.

San Miguel Corporation has upped the pace of its capacity expansion this week to a US$1bn investment towards five new 2Mt/yr cement plants in the Philippines. The announcement builds on its previous plans to build two plants for US$800m. At that time construction had already begun at subsidiary Northern Cement's plant in Pangasinan and Quezon. Plants in Bulacan, Cebu and Davao have now joined the list for completion in 2017.

The scale of this expansion is vast considering that the Philippines has 17 active cement plants with a total integrated production capacity of 24.6Mt/yr. San Miguel president and COO Ramon Ang's comments to media that if there were an oversupply of cement the market would correct itself in a couple of years may sound flippant to anyone who isn't the head of a multi-billion dollar corporation. However, if achieved it will propel the San Miguel subsidiaries from the country's fourth largest cement producer to its largest.

However each of the other major producers also have their own expansion plan in various stages of completion. Holcim Philippines announced US$40m plans in May 2015 to expand its production capacity to 10Mt/yr by the end of 2016, mainly through reviving existing projects. Cemex announced plans in May 2015 to spend US$300m towards building a new 1.5Mt/yr integrated line at its Solid Plant. Lafarge Republic had plans in April 2015 to raise its cement output through the opening of grinding plants at its Rizal and Bulacan cement plants. The former was opened in April 2015 but this is the one plant that hasn't been acquired by CRH following the sale of Lafarge Republic in the run-up to the LafargeHolcim merger. The latter was last reported due for opening in December 2015.

The big change in the Philippine cement industry in 2015 has been the merger of Lafarge and Holcim to form LafargeHolcim. Given that Lafarge Republic and Holcim Philippines held over 55% of the country's production capacity before the merger, it was inevitable that they would be forced to sell off assets. In the end CRH picked up most of Lafarge Republic's cement assets bar the Teresa Plant in Rizal, which stayed with Holcim. The merger has skewed the market towards one clear leader, LafargeHolcim (9.5Mt/yr), followed by Cemex (4.73Mt/yr) and CRH (4.19Mt/yr) with similarly sized cement production bases. These producers are then chased by San Miguel (2.15Mt/yr) and the other smaller firms. If San Miguel succeeds in its expansion strategy then the market will change once again.

Cement sales rose by 11.1% to 11.9Mt in the first half of 2015 according to the Cement Manufacturers Association of the Philippines (CeMAP). They attributed this growth to strong construction activity helped by increases in government infrastructure spending. Alongside this, gross domestic product (GDP) is predicted to rise by 6% in 2015 and 6.3% in 2016 by the Asian Development Bank. Another promising sign for development came from a study by Antoinette Rosete of the University of Santo Tomas which forecast that cement demand would meet 27Mt/yr. Capacity utilisation rates rose to 85% from 68% in 2014 according to Department of Trade and Industry data.

With this kind of encouragement, no wonder San Miguel is betting on such a large expansion project. If Rosete's forecast and capacity utilisation rates hold then the Philippines might need a capacity base of around 36Mt/yr. San Miguel's growth will fill that gap.

Of course other players might have their own ideas about giving away market share. LafargeHolcim and Cemex are likely to be saddled with debt or existing projects. CRH meanwhile is the wildcard as its expansion strategy is opaque. In recent years it has seemed to focus on acquisitions over building its own projects. The Euro5.2bn the company has spent on buying Lafarge and Holcim assets this year seems likely to slow down investment on any internal development plans. However CRH is bringing in local partner Aboitiz in the Philipines to help with a US$400m loan.

The Philippines is clearly an exciting market for the cement industry at the moment. One consequence of the current situation is that it may signal what CRH's global intentions are following the LafargeHolcim merger. If it decides or is able to start building new capacity then it may reveal the start of a new phase for the Ireland-based multinational.

Philippines: Cement sales have surged in the first six months of the year behind robust construction activities in the country, according to the Cement Manufacturers Association of the Philippines (CeMAP).

CeMAP president Ernesto Ordoñez said that total cement sales rose by 11.1% to 11.9Mt in the first half of 2015 from 10.7Mt in the same period of 2014, according to The Philippine Star. Ordoñez said that construction activity remained strong in the first semester, fuelled primarily by growing business confidence in the country. "The weather was also exceptionally good in the first half of 2015. There were some rains, but generally the weather cooperated very well," said Ordoñez.

For the second quarter of 2015, cement sales grew by 12.5% year-on-year to 6.21Mt. This followed 9.6% growth in the first quarter. According to Ordoñez, growth was higher in the second quarter because the government accelerated its spending. The government, for its part, has been increasing the budget for infrastructure to address gaps and support economic growth. CeMAP is banking on the increase of construction activities in the country to support higher cement sales.

Philippines: Cement sales rose by 8.6% in the first quarter of 2014. The surge was largely driven by rebuilding following the destruction wrought by typhoon Haiyan in November 2013, according to the Cement Manufacturers Association of the Philippines (CEMAP). Cement producers sold 5.2Mt of cement in the first quarter of 2014 compared to 4.8Mt in the same period in 2013.

"The increase was primarily due to reconstruction efforts following super-typhoon Haiyan," said CEMAP president Ernesto Ordoñez in a phone interview with local media. He added that rebuilding is likely to drive cement sales for 'more than a year' and that private sector confidence was also helping sales.

Following typhoon Haiyan the government of the Philippines raised its budget for infrastructure in 2014 by 37% to US$9bn from US$6.6bn in 2013 to provide for rehabilitation and reconstruction in areas affected by the typhoon. In 2013 sales by the local cement industry grew by 6% to 19.4Mt/yr from 18.4Mt/yr in 2012.

Philippines: Cement producers in the Philippines have asked the Department of Trade and Industry (DTI) to impose mandatory standards on the raw materials used to ensure that quality standards are being followed. These standards would also effect producers of finished products that make significant use of cement. DTI Undersecretary for consumer welfare, Zenaida C Maglaya, made the announcement following a recent meeting of Cement Manufacturers Association of the Philippines (CeMAP).

According to Maglaya, CeMAP would like raw materials such as fly ash and aggregates to be placed under mandatory standards following complaints from contractors working on infrastructure projects. CeMAP said it will take years to find out the impact of poor quality fly ash. "We are asking CeMAP to submit their study because this is a technical issue," Maglaya said.

Maglaya explained that the standards for raw materials for cement are voluntary under the Philippine law. Being voluntary, Maglaya said, the responsibility lies on the end manufacturer although this can still be raised before the DTI. The move to standardise raw materials of cement and end-products using cement has followed a crackdown by the Department of Public Works and Highways against contractors of government infrastructure projects.