Displaying items by tag: Forecast

China: Huaxin Cement has forecast a 9 -14% year-on-year fall in full-year net profit in 2020, of up to US$140m. It said that it recorded a net profit attributable to shareholders after deducting non-recurring gains and losses of around US$980m in 2019.

The company said, “The main reason for 2020 performance decline is the hit of Covid-19 in the first half of this year and vast flood disaster along Yangtze River in July 2020. The sales volume of main products were hugely affected and the price fell to some extent, leading to the reduction in the operating revenue.”

India: Credit ratings agency ICRA expects cement demand to rise by 20% year-on-year in the 2022 Indian financial year, which starts in April 2021, allowing the local market to return to volumes previously seen before the coronavirus pandemic. In its latest report the credit ratings agency predicts that growth will be supported by rural demand, including affordable housing, and recovery in infrastructure segment, according to the Press Trust of India. Cement production capacity is forecast to increase by up to 22Mt compared to 17Mt in the previous year. Most of this additional capacity is expected to be in the eastern region. Capacity utilisation rates should recover to 64% from 56%.

Vietnam: Vietnamese cement export growth is forecast to slow in 2021. The Viet Nam News newspaper has reported on research by SSI Research that expected exports to remain stable due to high infrastructure spending in China, but that growth is unlikely due to the full recovery of Chinese domestic cement supply in 2020. SSI Research forecasts a total 2021 cement and clinker sales growth of 2% year-on-year to 104Mt from 102Mt. It predicts a 5% - 7% increase in domestic sales. The country’s installed cement production capacity is due to rise by 7% or 7Mt in early 2021.

Dominican Republic: The Dominican Association of Portland Cement Producers (ADOCEM) estimates that local production fell by 8% year-on-year in 2020 due to the coronavirus pandemic. Julissa Báez, the executive director of ADOCEM, said this compared to a 16% drop in the construction industry generally, according to local media. She added that local cement plants were allowed to continue production during a local lockdown that started in March 2020.

Russia: Soyuzcement, the national cement manufacturing union, has forecast a 4% year-on-year fall in cement production in 2020. Greater declines are expected in the central and southern federal regions. It observed that only half of the country’s production capacity was used in 2020. However, the organisation has credited government subsidies for mortgages as staving off the worse economic effects of the coronavirus pandemic in the first half of the year by stimulating construction.

Brazil: The National Cement Industry Association (SNIC) has predicted cement sales in 2020 to rise by 10% year-on-year to 60Mt. Valor International News has reported that president Paulo Camillo Penna said, “If in 2021 we maintain the 60Mt we expect to reach this year, or have some progress beyond this volume, it will be a very satisfactory result considering the high uncertainties ahead."

Ed Sullivan was present to tell Global Cement Live viewers about the Portland Cement Association’s (PCA) autumn forecast last week. The PCA expects US cement consumption to drop by 1.5% year-on-year on 2020. This is a weighted average of its three projections, which cover a gradual recovery from coronavirus-related economic disruption, a less controlled scenario and one where wide-spread vaccination has a positive effect in the second half of 2021. The first scenario is the PCA Market Intelligence’s most likely one but only the fast vaccination scenario predicts a return to growth in 2021. This is wide but understandable deviation from the PCA’s autumn forecast in 2019 that expected moderate growth albeit a slowly weakening economy. Almost nobody seriously expected 2020 to turn out like it has. Follow the link at the bottom of this article to view the presentation in full.

Graph 1: Portland & Blended Cement shipments by US region in 2019 and 2020. Source: United States Geological Survey (USGS).

We’ll now take a general look at the US cement industry so far in 2020 to compliment Sullivan’s economic overview. Up until 2020 cement consumption, production and imports had been growing steadily since the financial crash in 2008. Using August 2020 data the PCA says this is changing. Graph 1 above shows a general reverse of the position in the autumn of 2019 [LINK] with declines in the South and North-East and growth in the West and Midwest. Imports alongside this have continued to build. Overall, national cement shipments increased by 2.2% year-on-year to just under 50Mt in January to July 2020 from 48.9Mt in the same period in 2019. This was driven by growth of 10.8% in the Midwest. Missouri is the standout in the region, behind only Texas and California nationally as the third biggest cement shipping state so far in 2020.
From the corporate side, LafargeHolcim, the US’ biggest cement producer, described North America as having, “…the most resilience of all regions despite Covid-19 restrictions in some areas.” It reported an overall fall in cement volumes of 1.4% year-on-year to 8.9Mt in the first half of 2020. However, it didn’t go into specifics for the US. Cemex’s experience seemed to be doing better with an 8% rise in cement volumes supported by the infrastructure and residential sectors. HeidelbergCement went further and described the impact of coronavirus on the US economy as ‘significant.’ It reported a decrease in cement deliveries at its North American plants of 4.9%, to 7.1Mt. Both Buzzi Unicem and CRH reported cement sales growth of 4 – 5%, with CRH noting that, “strong volume trends in West supported by growth in our downstream businesses drove performance.”

Perusing the industry news reveals a slew of environmental stories. So far in 2020, Holcim US said it was going to run a carbon capture and storage (CCS) study at its Portland cement plant in Colorado, Alamo Cement signed a deal to build a solar farm, Grupo Cementos de Chihuahua’s (GCC) Rapid City plant in South Dakota announced plans for a wind farm, CalPortland launched a sustainable product line with a lower clinker factor, LafargeHolcim launched its ECOPact low-carbon concrete range, LafargeHolcim US also said it was adopting new environmental product declarations and Holcim US opened a solar power plant at its Hagerstown cement plant. There have been a few upgrade stories, like the new line being built at National Cement’s Ragland plant in Alabama or Lhoist’s new lime kiln projects, but Lehigh Hanson said it was suspending work on the upgrade to its Mitchell plant in Indiana in April 2020.

At this point all eyes are on the US Presidential election scheduled to run on 3 November 2020. Donald Trump’s long promised but never delivered infrastructure still hasn’t arrived although blame could be apportioned to both sides of the local political divide for this. The PCA believes that both presidential candidates will probably see it through although the Republicans’ interpretation might well involve more cement! In the interest of balance though, it also expects the Democrats to focus on low-income housing construction. At this stage it seems more likely that the early arrival of a coronavirus vaccine will have more impact on the cement industry in the short to medium term than the results of the election.

View Ed Sullivan’s presentation at Global Cement Live

India: Motilal Oswal Securities predicts that Aditya Birla subsidiary UltraTech Cement’s second-quarter profit is likely to rise by 100% year-on-year in the 2021 financial year, which began on 1 April 2020, to US$161m from US$80.5m in the second quarter of the 2020 financial year. The Economic Times newspaper has reported that the analysts expect an increase in sales of 3.5% to US$1.36bn from US$1.31bn, an increase in cement volumes of 3.9% to 19.4Mt from 18.7Mt, a price drop and a fall in costs in the quarter, which ended on 30 September 2020. The analysts added that cement makers may show volume growth in the seasonally weak quarter due to pent-up demand as the economy has reopened following coronavirus-related disruption.

Global Cement apologies to UltraTech Cement for the previous version of this article that wrongly suggested that the company had made the forecast

US: The Portland Cement Association (PCA) has forecasted a fourth-quarter cement demand decline of 1.5% year-on-year in 2020, slowing to 0.9% throughout 2021. It said that all three of its post-coronavirus economic recovery scenarios involved a decline until mid-2021, primarily due to “weak construction sectors specifically within retail, hotel and office” non-residential markets, though in the best-case scenario a vaccine could prompt a recovery in these sectors, reducing total demand decline to 0.1% in the second half of 2021. A worst-case ‘W-shaped’ scenario would result from state governments implementing second lockdowns.

Senior vice president and chief economist Ed Sullivan said, “We think that the gradual sustained recovery – the 'U' – has the largest likelihood, followed by the 'vaccine' scenario. The growth-interrupted 'W' scenario is the least likely. He said that in each case federal spending in the fourth quarter of 2020 and the first quarter of 2021 would be essential “in preventing a deep and prolonged downturn in economic recovery,” as it did in the second and third quarters of 2020.

China: Gansu Qilianshan Cement has announced that it expects to record a profit of US$208m in the first nine months of 2020, up by 41% year-on-year from US$147m in the corresponding period of 2019, according to Reuters. It said the results would be in line with its growth trajectory thanks to a significant increase in demand towards the end of the first half of 2020.