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Displaying items by tag: Export
A great question was asked at yesterday’s Virtual Global CemTrans Seminar: what impact did the recent blockage of the Suez Canal cause to the cement industry? Luckily, Rahul Sharan from Drewry was on hand discussing freight costs following the start of the coronavirus pandemic.
As most readers will know, the Suez Canal was blocked in late March 2021 when the 200,000dwt Ever Given ran aground, at around six nautical miles from the southern entry of the canal. The ultra large container vessel was subsequently refloated and towed away just under a week later. While this was happening the fate of the ship became a global news story with business analysts totting up the cost of the obstruction. 40 bulk carriers were reported as waiting to transit the waterway the day after the blockage started and some of these were carrying cement. Reporting by the BBC noted that 369 ships were stuck waiting on either side of the blockage on the day before the ship was finally freed. The Suez Canal Authority (SCA) estimated their loss of revenue from the incident at US$14 – 15m/day. Analysts like Allianz placed the cost to the global economy at US$6 - 10bn/day.
In Sharan’s view the blockage of the Suez Canal happened at a potentially risky moment for cement and clinker shipping because there was already congestion in shipping lanes built up on the east coast of South America and around Australia. However, a delay of a week around the canal, followed by the resulting congestion dispersing quickly over the following days, does not seem to have had any major impact so far.
Sharan’s presentation at Global CemTrans also included a summary of cement shipping. The key takeaways were that clinker shipping overtook cement shipping in 2019 with a connected increase in fleets investing in handymax-sized vessels. He also pointed out the key cement and clinker importing countries in 2019, before the coronavirus pandemic started causing market disruption. For cement: the US, the Philippines and Singapore. For clinker: China, Bangladesh and the Philippines. Turkey and Vietnam were the biggest exporters for both in that year.
The Ever Given incident has highlighted the continued importance of the Suez Canal for global trade for commodities. Goods still need to be physically moved around, however much stuff we digitise. It also contrasts with the issues that the Egyptian cement sector has faced in recent years such as production overcapacity. While domestic cement plants have struggled to maintain their profits, plenty of cement carriers have been transiting through the Isthmus of Suez. Local producers may well have gazed at them and wondered where they were going.
One of them, Al-Arish Cement Company, took action in this direction this week with its first export shipment of clinker. The Clipper Isadora ship disembarked East Port Said port for Ivory Coast. Future shipments are planned for West Africa, Canada, the US and Europe. Ship tracking reveals that the Clipper Isadora has not taken the Suez Canal on this occasion.
The proceedings pack for the Virtual CemTrans Seminar 2 2021 is available to buy now
Central America: Imports from Vietnam accounted for 30% of total cement imports to Central America in the first nine months of 2020. The country accounted for no significant share of cement imports to the region as recently as 2016. Central America Data has reported that Turkey supplied 18% of regional cement imports in the first nine months of 2020. Mexico supplied 8% and Barbados 4%.
Cuban cement exports fall sharply in 2020
08 April 2021Cuba: Cuba’s full-year cement exports totalled 21,200t in 2020, down by 40% year-on-year from 35,200t in 2019. ADN Cuba has reported that the value of exports fell by 45% to US$1.04m from US$1.89m. The vast majority of exported cement went to Colombia. Cuba is currently experiencing domestic shortages of cement.
Pakistan resumes trade with India
01 April 2021Pakistan/India: Pakistan has resumed trade with India following a hiatus since August 2019. The News International has reported that during the last full year of trading in 2018 Pakistan exported US$63m of cement and US$19m of gypsum to India.
Update on China: March 2021
31 March 2021Financial results for 2020 from the major Chinese cement companies are now out, making it time for a recap. Firstly, information from the China Cement Association (CCA) is worth looking at. The country had a cement production capacity of 1.83Bnt/yr in 2020. For an idea of the current pace of industry growth, 26 new integrated production lines were built in 2020 with a clinker production capacity of just under 40Mt/yr.
This is as one might expect from the world’s biggest cement market. However, the CCA also revealed that the country has over 3400 domestic cement companies, of which two thirds are independent cement grinding companies. Most of these were reportedly created during the late 2000s as dry kilns started to predominate. The CCA is concerned with the quality of the cement some of these companies produce and the lack of order in this part of the market such as regional imbalances. This suggests that the government’s attempts to consolidate the cement industry as a whole had led to the independent companies heading down the supply chain. It also raises the possibility that the government-led consolidation drive may move to grinding next. One news story to remember here is that in February 2021 the CCA called for its industry to respect competition laws following a government investigation. Later in the month it emerged that eight cement companies in Shandong Province had been fined US$35m for price fixing in a sophisticated cartel whereby the perpetrators went as far arranging a formal price management committee to regulate the market.
The CCA described 2020 as a year of sudden decline, rapid recovery and stability. Coronavirus hit cement output in the first quarter of 2020 leading to unprecedented monthly year-on-year declines before it bounced right back in a classic ‘V’ shaped recovery pattern. Despite the pandemic and bad weather later in the year, annual output rose by 2% year-on-year to 2.37Bnt in 2020 from 2.32Bnt in 2019. This has carried on into 2021 with a 61% increase in January and February 2021 to 241Mt from 150Mt in the same period in 2020. That’s not surprising given that China was suffering from the pandemic in these months in 2020 but the growth also suggests that the industry may have gone past stability and is growing beyond simply compensating for lost ground.
Graph 1: Year-on-year change in cement output in China, January 2010 - February 2021. Source: National Bureau of Statistics of China. Note that accumulated data is issued for January and February each year so these months show a mean figure.
Chart 2: Annual cement production growth by Province in 2020. Source: China Cement Association.
Chart 2 above shows cement production in 2020 from a provincial perspective. Note the sharp decline, more than 10% year-on-year, in Hubei Province (shown in dark green). Its capital Wuhan is where the first documented outbreak of coronavirus took place followed by a severe lockdown. Zooming further out, China’s clinker imports grew by 47% year-on-year to 33.4Mt in 2020. This is the third consecutive year of import growth, according to the CCA. The leading sources were Vietnam (59%), Indonesia (10%), Thailand (10%) and Japan (8%). China has become the main export destination for South East Asian cement producers and Chinese imports are expected to continue growing in 2021.
Graph 2: Revenue of large Chinese cement producers in 2020 and 2019. Source: Company reports.
Moving to the financial figures from the larger Chinese cement producers, CNBM and Anhui Conch remain the world’s two largest cement producing companies by revenue, beating multinational peers such as CRH, LafargeHolcim and HeidelbergCement. Anhui Conch appeared to be one of the winners in 2020 and Huaxin Cement appeared to be one of the losers. This is misleading from a cement perspective because Anhui Conch’s increased revenue actually arose from its businesses selling materials other than clinker and cement products. Its cement sales and cement trading revenue remained stable. On the other hand, Huaxin Cement was based, as it describes, in the epicentre of the epidemic and it then had to contend with flooding along the Yangtze River later in the year. Under these conditions, it is unsurprising that its revenue fell.
CNBM’s cement sales revenue fell by 3% year-on-year to US$19.5bn in 2020 with sales from its new materials and engineering compensating. Anhui Conch noted falling product prices in 2020 to varying degrees in most of the different regions of China except for the south. CNBM broadly agreed with this assessment in its financial results. Anhui Conch also reported that its export sales volumes and revenue fell by 51% and 45% year-on-year respectively due to the effects of coronavirus in overseas markets. The last point is interesting given that China increasingly appears in lists of major cement and clinker exporters to different countries. This seems to be more through the sheer size of the domestic sector rather than any concerted efforts at targeting exports.
One major story on CNBM over the last 15 months has been its drive to further consolidate its subsidiaries. In early March 2021 it said it was intending to increase its stake in Tianshan Cement to 88% from 46% and other related transactions. This followed the announcement of restructuring plans in mid-2020 whereby subsidiary Tianshan Cement would take control of China United Cement, North Cement, Sinoma Cement, South Cement, Southwest Cement and CNBM Investment. The move was expected to significantly increase operational efficiency of its constituent cement companies as they would be able to start acting in a more coordinated manner and address ‘fundamental’ issues with production overcapacity nationally.
In summary, the Chinese cement market appears to have more than compensated for the shocks it faced in 2020 with growth in January and February 2021 surpassing the depression in early 2020. Market consolidation is continuing, notably with CNBM’s efforts to better control the world’s largest cement producing company. Alongside this the CCA may be starting to suggest that rationalisation efforts previously focused on integrated plants should perhaps be now looking at the more independent grinding sector. The government continues to tighten regulations on new production capacity and is in the process of introducing new rules increasing the ratio of old lines that have to be shut down before new ones can be built. Finally, China introduced its interim national emissions trading scheme in February 2021, which has large implications for the cement sector in the future, even if the current price lags well behind Europe at present.
Indonesia: Semen Indonesia has detailed its plans for future exports of cement to North America. The Investor Daily newspaper has reported that the producer and subsidiary Solusi Bangun Indonesia will target 0.5 – 1Mt of cement exports to North America in 2021, according to president director Hendi Santoso. The export plans will be carried out in partnership with Japan-based Taiheiyo Cement, which already has a US market presence and owns a 15% stake in Solusi Bangun Indonesia. Hendi said that the move aims to ‘cushion’ the decline in domestic cement sales, down by 28% bulk and 13% bagged year-on-year in 2020. The company successfully exported cement to Australia, Bangladesh, China, Fiji and Sri Lanka in 2020.
President commissioner Rudi Antara said, "The Covid-19 outbreak still colours our lives. There is no other choice but to increase business efficiency and the top line outside of our main markets."
Dangote Cement grows sales and earnings in 2020
25 March 2021Nigeria: Dangote Cement has recorded sales of US$2.52bn in 2020, up by 16% year-on-year from US$2.18bn in 2019. Earnings before interest, taxation, depreciation and amortisation (EBITDA) increased by 21% to US$1.17bn from US$965m. Total cement sales volumes rose by 8% to 25.7Mt from 23.7Mt and Nigerian cement sales rose by 13% to 15.9Mt from 14.1Mt. Highlights for the year included the start of clinker exports from the Apapa terminal and the commissioning of the Onne cement terminal in Nigeria. The group also commissioned a gas power plant in Tanzania.
Chief executive officer Michel Puchercos said, “Despite the impact of the Covid-19 pandemic, 2020 was a record year for Dangote Cement across the board. Several firsts made 2020 a productive year such as our maiden clinker shipment, maiden bond issuance and successful buyback programme. We increased our capacity by 3Mt/yr in Nigeria, commissioned our two export terminals and commissioned our gas power plant in Tanzania. All this was achieved whilst we focused on protecting our people, customers, and communities from the impact of the pandemic.”
Tajikistan: Tajik cement plants produced 4.2Mt of cement in 2020. Tajikistan Newsline has reported that cement exports for the year were 1.3Mt. Uzbekistan imported 764,000t, Afghanistan imported 505,000t and Kyrgyzstan imported 42,000t. The Tajikistan Ministry of Industry and New Technologies has predicted a 46% increase in cement exports to 1.9Mt/yr by 2023.
Cemex Dominicana to recommission production line
09 March 2021Dominican Republic: Cemex Dominicana plans to recommission line 1 at its 2Mt/yr integrated San Pedro de Macorís plant. The move is expected to increase its existing clinker production capacity by more than 0.5Mt/yr. The reactivation is scheduled for the last quarter of 2021. It is part of Cemex Dominicana's growth plan, seeking to strengthen its capacity to response to both local market demand and the export market.
"At Cemex Dominicana, we reiterate our commitment to the sustainable development of the Dominican Republic, in the context of boosting the national economy, aiming with these investment plans to reduce the need for imports, promote local industry, and contribute to the generation of employment in the country," said José Antonio Cabrera, Director of Cemex Dominicana.
Pakistan’s cement sales rise by 15% to 38.0Mt in first eight months of 2021 financial year
03 March 2021Pakistan: Members of the All Pakistan Cement Manufacturers Association (APCMA) recorded cement sales of 38.0Mt in the eight-month period ending on 28 February 2021 – the first eight months of its 2021 financial year – up by 14% year-on-year from 33.3Mt in the corresponding period of the 2020 financial year. The Dawn newspaper has reported that exports rose by 7% to 6.33Mt from 5.94Mt while local dispatches rose by 16% to 31.6Mt from 27.4Mt.
The association said that producers face problematically high costs due to rises in coal and energy prices.