Displaying items by tag: Consumption
Update on Pakistan, April 2024
24 April 2024Changes are underway in South Asia’s second largest cement sector, with two legal developments that affect the industry set in motion in the past week. At a national level, the Competition Commission of Pakistan recommended that the government require cement producers to include production and expiry dates on the labels of bagged cement. Meanwhile, in Pakistan’s largest province, Punjab, a new law tightened procedures around the establishment and expansion of cement plants. At the same time, the country’s cement producers began to publish their financial results for the first nine months of the 2024 financial year (FY2024).
During the nine-month period up to 31 March 2024, the Pakistani cement industry sold 34.5Mt of cement, up by 3% year-on-year. Producers have responded to the growth with capacity expansions, including the launch of the new 1.3Mt/yr Line 3 of Attock Cement’s Hub cement plant in Balochistan on 17 April 2023. China-based contractor Hefei Cement Research & Design executed the project, including installation of a Loesche LM 56.3+3 CS vertical roller mill, giving the Hub plant a new, expanded capacity of 3Mt/yr.
Pressure has eased on the operating costs of Pakistani cement production, as inflation slowed and the country received a new government in March 2024, following political unrest in 2022 and 2023. Coal prices also settled back to 2019 levels, after prolonged agitation. Pakistan Today News reported the value of future coal supply contracts as US$93/t for June 2024, down by 2% over six months from US$95/t for January 2024.
Nonetheless, cost optimisation remained a ‘strong focus’ in the growth strategy of Fauji Cement, which switched to using local and Afghan coal at its plants during the past nine months. Its reliance on captive power rose to 60% of consumption, thanks to its commissioning of new waste heat recovery and solar power capacity. During the first nine months of FY2024, the company’s year-on-year sales growth of 14% narrowly offset cost growth of 13%, leaving it with net profit growth of 1%.
Looking more closely, the latest sales data from the All Pakistan Cement Manufacturers Association (APCMA) shows a stark divergence within cement producers’ markets. While exports recorded 68% year-on-year growth to 5.1Mt, domestic sales fell, by 4% to 29.4Mt. The association further breaks down Pakistani cement sales data into South Pakistan (Balochistan and Sindh) and North Pakistan (all other regions). Domestic sales dropped most sharply in South Pakistan, by 6% to 5.16Mt. In the North, they dropped by 3% to 24.2Mt. Part of the reason was a high base of comparison, following flooding-related reconstruction work nationally during the 2023 financial year. Meanwhile, the government finished rolling out track-and-trace on all cement despatches during the opening months of the current financial year, and commenced the implementation of axle load requirements for cement trucks. APCMA flagged both policies as potentially disruptive to its members’ domestic deliveries, amid a strong infrastructure project pipeline.
Pakistani producers suffer from overcapacity, but have established themselves as an important force in the global export market. They continue to locate new markets, including the UK in January 2024. Lucky Cement was among leading exporters overall, with a large share of its orders originating from Africa.
On 17 April 2024, the government of Punjab province set up a committee to assess new proposed cement projects, with the ultimate goal of conserving water. Falling water tables are considered a significant economic threat in agricultural Punjab. Besides completing an inspection by the new committee, proposed projects must also secure clearance from six different provincial government departments and the local government. While acknowledging the necessity of the cement industry, the government insisted that it will take legal action against any cement plant that exceeds water allowances.
Pakistan’s cement plants have grown in anticipation of a local market boom. Without this strong core of sales, underutilisation will remain troublesome, especially in North Pakistan where exposure is highest. At the same time, APCMA has given expression to the perceived lack of support affecting production and distribution. For an industry with expansionist aims, new restrictions on its growth and operations can feel like an existential menace.
Cement consumption in Spain continues to fall
17 April 2024Spain: Cement consumption has dropped by 10% in the first quarter of 2024, totalling 3.3Mt. This represents an 11% year-on-year decrease compared to the same quarter of 2023, according to the latest data released by Oficemen. The 2024 quarterly decline was influenced by a 23.6% fall in consumption in March 2024 to 1.1Mt, 339,869t less than March 2023. Over the last 12 months (April 2023 - March 2024), consumption fell by 6.4% to 14.1Mt, nearly 1Mt less than in the previous corresponding period of April 2022 – March 2023.
Oficemen general director Aniceto Zaragoza said "Aside from the situational circumstances of March 2024, the year-moving data reflect a negative trend, resulting from 10 months of decline. This is concerning but in line with our forecasts that anticipated a negative start to the year, with a modest recovery in the second half, provided that the international and local situation remains stable.”
Cement exports have declined by 25.1% in the first quarter of 2024, standing at around 1Mt. In March 2024, the decline was 32.4%, with a loss of 178,953t, marking nine months of consecutive declines. Over the year-moving period, the fall is 14%, with a total of 4.8Mt of cement exported. representing a loss of almost 800,000t less than in the previous 12 months.
Ukraine: Data from Ukrcement, the Ukrainian Cement Association, show that cement consumption grew by 17% from 4.6Mt in 2022 to 5.4Mt in 2023. Pavlo Kachur, the head of Ukrcement, said that consumption is expected to continue growing modestly in 2024, according to Interfax-Ukraine. He added that the country exported 1.24Mt of cement in 2023.
Before Russia invaded the country in 2022 it reported consumption of 10.5Mt in 2021. It has a production capacity of 13.6Mt/yr. Despite the ongoing war the local cement sector says it is considering plans to meet future market demand such as repairing plants in Balakliya and Kramatorsk and even, potentially, building new production lines.
Russia sees sustained growth in cement consumption
16 April 2024Russia: Cement consumption in Russia has increased for 13 consecutive months, according to Darya Martynkina, executive director of the Soyuzcement union of cement producers. This figure increased by 8% year-on-year in the first quarter of 2024 compared to the first quarter of 2023, from 10.4Mt of cement to 11.2Mt.
Martynkina said "Development of infrastructure in Russia still does not correspond to long-term economic tasks and society needs. For example, the level of road network coverage in our country and the level of transport mobility are insufficient; high-speed motorways are close to none."
She highlighted extensive projects that will require ‘significant’ amounts of cement, including the North Siberian railway, the upgrade of 75 airports by 2030, improvements to seaports and expansions of the Eastern Range railway and the M-12 highway extending to Vladivostok.
Spain: Cement consumption in Spain witnessed a 1.5% year-on-year decline in February 2024, marking nine consecutive months of decreases amid high interest rates, surging housing prices, and a stagnant outlook for the construction sector. According to Oficemen, February's consumption reached 1.1Mt, down from 1.2Mt in February 2023. The export sector experienced an even sharper fall, dropping 13.9% year-on-year in February 2024, continuing an eight-month decline, with a 9.8% decrease in exports from February 2023 to February 2024. Conversely, imports have risen by 11.3%.
Oficemen's general director, Aniceto Zaragoza, said “With nine months already in decline, the concern with which we observe the evolution of cement consumption and, of course, the construction sector, is accentuated.” Zaragoza called for increased collaboration between public and private institutions in public contracting processes to sustain infrastructure competitiveness. The slump in cement consumption, which has been ongoing since 2019, coincides with the European Central Bank's interest rate hikes, leading to higher mortgage costs and reduced demand in the housing market.
Swiss cement shipments drop in 2023
18 January 2024Switzerland: Swiss cement shipments dropped by 10% year-on-year to 3.7Mt in 2023, from 4.1Mt in 2022. Shipments declined across all quarters, including by 10% quarter-on-quarter in the third quarter. Cement with a reduced clinker factor grew to account for 96% of shipments from 95%, and rail shipments rose to 38%. Ready-mixed concrete plants received 73% of shipments, and building sites 21%.
The Swiss cement association, Cemsuisse, said that it anticipates continued uncertainties and high import pressures in 2024.
Kazakh cement demand drops slightly in 2023
15 January 2024Kazakhstan: National cement consumption volumes totalled 11.5Mt in 2023. The figure represents a year-on-year decline of 0.9% from 11.6Mt in 2022.
Brazilian cement demand drops in 2023
12 January 2024Brazil: Brazil consumed 62Mt in 2023, down by 1.7% year-on-year, according to data from the National Cement Industry Association (SNIC). This marks the second successive year of decline, after demand dropped by 2.8% to 63.1Mt in 2022. As a result, cement’s value on the National Construction Cost Index dropped by 6%, after having risen by 13% in 2022. The domestic cement industry recorded a capacity utilisation rate of 66% in 2023.
SNIC president Paulo Camillo Penna noted high household debt, high interest rates and poor income growth as impacting the industry’s sales. He said “The My House, My Life housing programme was not fully operational until the middle of the year. Up to September 2023, the construction industry experienced a 16% decline in the number of real-estate launches.” He continued “By 2026, we will experience a period of turnaround for the cement industry.”
Cement market to grow in India but not in China in 2024
12 December 2023China/India: Research organisation Fitch Ratings has forecast continued ‘steady’ growth of 6 – 8% year-on-year in cement demand in India in 2024. Meanwhile, it expects demand in China to remain ‘weak,’ amid low activity levels in the residential construction sector. Nonetheless, Fitch Ratings said that rising installed cement capacity will limit growth in producers’ profit margins in India, while producers’ profit margins will stabilise in China.
Colombian cement shipments sliding so far in 2023
27 September 2023Colombia: Data from DANE, the Colombian national statistics authority, shows that the country produced 1.22Mt of grey cement in July 2023, a 1.7% increase compared to July 2022. Of this, 1.05Mt was consumed domestically, a 6.5% fall year-on-year, with exports increasing to compensate. The July 2023 production figure is 9.2% higher than for the July 2019, the year before the onset of the Covid-19 pandemic. DANE also recorded that Colombia produced 557,900m3 of ready-mix concrete in July 2023, a 3.1% decline compared to July 2022, when 575,800m3 was produced.