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Delegates at the IEEE-IAS/PCA Cement Industry Technical Conference in Dallas, Texas this week may have smiles upon their faces if the following data is correct. The US cement industry has rocketed into 2016 with solid sales growth. Multinational cement producer balance sheets are being propped up by the good news and data from the United States Geological Survey (USGS) backs it up.

LafargeHolcim led the pack with an 18.9% bounce in its cement sales volumes to 3.4Mt in the first quarter of 2016. Most of this rise was driven by high demand for building materials in the US supported by a ‘vigorous’ housing market and positive infrastructure spending. HeidelbergCement followed this up with a 13.8% in its cement sales volumes to 2.5Mt in North America. Cemex reported a 8% rise, Buzzi Unicem reported a 16.3% rise, Martin Marietta reported a 13.8% rise and Cementos Argos reported a 47.3% rise.

Graph 1: Portland and blended cement shipments by US Census Bureau region for 2016 to February 2016. Source: USGS

USGS data shows this ‘bounce’ in cement sales shipments at the start of 2016 quite well. Although the publicly released preliminary data only goes as far as February 2016 you can clearly see an up-tick at the start of the year. By comparison shipments in each of the main US census regions fell from January to February 2015 before picking up as the spring started. The main reason for this was the harsh winter in 2015. Overall, cement volumes rose by 11.6% year-on-year for the mainland US in January and February 2016. These were led by Maine, New York and Illinois in the Northeast and Midwest, presumably recovering from the previous winter, before a load of southern states, including Northern Texas and South Carolina, kicked in with growth of above 20%. As an aside it is also worth pointing out the seasonal variation between the Midwest and the West. The Midwest has a more pronounced summer production peak most likely due to the colder winters the region endures.

The reason for that bounce at the start of 2016 is important because it determines whether the US cement party will continue or not. A few of the cement producers in their financial reports mentioned that sales were up due to pent up demand following the harsh winter in 2015. HeidelbergCement gave a much more considered assessment than its rivals. They pointed out that, despite the growth in construction markets, economic growth slowed in the country in the quarter. This fits more in line with the Portland Cement Association’s (PCA) more cautious assessment that the construction industry in the US should be growing but that an uncertain economic outlook is messing with this. It seems that the US cement industry has growth for the moment but that certainty that this will continue is far more elusive. This week’s news that plans have been scrapped to build a third kiln at the Lafarge North America Joppa cement plant just adds to this feeling.

For further information on the US cement industry take a look at the May 2016 issue of Global Cement Magazine.

Indonesia: Semen Indonesia has appointed Rizkan Chandra as its new president director at its annual general meeting. He will hold the post of president director until 2020. Rizkan Chandra replaces Suparni.

Rizkan Chandra, aged 47 years, has previously served as the director of Semen Indonesia (Persero) and worked for Telekomunikasi Indonesia (Persero), Telkomsel and Sigma Cipta Caraka. He holds an undergraduate degree in Informatics Engineering and a master’s degree in Management of Technology from the National University of Singapore.

US: Lafarge North America has scrapped plan to expand its Joppa cement plant in Illinois. One of the two kilns at the plant was shut in 2012. However, the company announced it was restarting this kiln and planning on building a third kiln in 2015, according to the Paducah Sun newspaper. The subsidiary of LafargeHolcim blamed the cancellation on poor market recovery for its products. Production is expected to continue at the cement plant using its existing two kilns. No job losses are anticipated.

Austria: A TEC are working on plans to increase kiln output with coarse and lower calorific fuel at the LafargeHolcim Mannersdorf cement plant. The intention is to increase the alternative fuels substitution rate to 100%. Other work being conducted includes lowering emissions and reducing pressure drop in the preheater tower. A higher separation efficiency of the top stage cyclones will also be achieved with increased production capacity.

A TEC will lead on the project as an engineering, procurement and construction (EPC) contractor. The execution of the project will be performed in collaboration with the Czech company Aliacem s.r.o. Přerov. Erection works will start in September 2016 and the whole project will be finished in March 2017.

Saudi Arabia: A lifting of the Saudi Arabian export ban on cement is unlikely to help local cement producers much according to a research report issued by Arqaam Capital. The investment bank has predicted that export volumes are likely to be restricted to 20% of output and possibly subjected to an export tax. This tax, equivalent to fuel subsidies Saudi producers benefit from, and transport costs would reduce the price advantage Saudi producers hold over international competitors.

"The domestic supply situation remains difficult. Sector clinker stocks have not budged since July 2014, remaining at nearly 21Mt as of March 2016 equivalent to four months of output. This, combined with existing capacity of 70Mt, and incoming capacity of 7Mt due in the 2016, equates to total potential capacity of around 100Mt. This suggests a substantial near/medium term surplus of 60%, given stalled domestic contracts and the fact that few export markets are currently viable," said Mohammed Kamal, Executive Director, Equity Research at Arqaam Capital.

Arqaam Capital view Yemen, Egypt, Qatar, Jordan, UAE, Bahrain, East Africa and Iraq as potential export destinations. However, on a Freight On Board (FOB) price basis and by taking export taxes into account, only Yemen, Iraq, and Jordan are seen as viable export destinations. This then narrows the list of potential Saudi cement exporters to Southern Cement, Najran, Tabuk, Al Jouf and Northern Cement.

Oman: Raysut Cement Company (RCC) has recently launched a new silo at its cement plant in Salalah. The storage capacity of the new silo is 20,000t. It has a diameter of 30m and a height of 43m. RCC say it is one of the largest silos in the region.

The silo contains three compartments with a capacity of 3000 - 12,000t. It is designed to hold Ordinary Portland Cement, sulphate-resistant cement and oil well cement. The silo also contains two units for the loading of bulk cement with a delivery rate of 300t/hour. Weighbridges have been fitted beneath the silo to allow direct weighing of bulk cement before it is packed. The new silo will feed a proposed packing plant with 150t/hour of cement. This new packing plant is expected to be completed in the fourth quarter of 2016.

RCC intends to use its new silo and packing plant to target local and international markets.

Brazil: Magnesita’s net operating revenue has dropped by 17% year-on-year to US$66.9m for the first quarter of 2016 from US$80.2m in the same period in 2015. The company’s sales volumes of refractory materials fell by 8.7% to 232,000t from 254,000t. Earnings before interest, taxation, depreciation and amortisation (EBITDA) fell by 12.8% to US$11.4m from US$13.1m. The company blamed the falling revenue on falling steel production in South America and Western Europe and on a poor construction market in Brazil negatively affecting its cement clients.

"2016 began with interesting prospects for Magnesita. While the world is mired with excess steel production, uncertainties surrounding the Chinese economy and substantial political turmoil in Brazil, we have begun to see green shoots coming out of the US (our most relevant market) and the first results of the array of self-help initiatives Magnesita has overtaken in the last few years,” said Octavio Pereira Lopes, Magnesita’s chief executive officer. He added that the quarterly drop in steel production in Western Europe was driven by a 39% drop in the UK due to capacity shutdown.

Germany: ThyssenKrupp is reorganising its Industrial Solutions business area, its division responsible for engineering and construction. It aims to modernise its management structure by focusing on customers and business fields along with integrating the Marine Systems and System Engineering units more closely. The new position of chief operating officer will be created on the business area board for this. In addition, Johan P Cnossen will join the leadership team of Industrial Solutions to aid the reorganisation.

The new structure will be implemented at the start of the new fiscal year on 1 October 2016. Industrial Solutions will then have eight business units: Industrial Specialties, Mining Technologies, Cement Technologies, Electrolysis & Polymers Technologies, Fertilizer Technologies, Services, Marine Systems and System Engineering.

As part of the changes ThyssenKrupp’s plant technology business will be simplified by removing a layer of management. In addition the transformation program will hasten the integration of the company’s plant engineering businesses including Uhde, Polysius and Fördertechnik. Under the roof of Thyssenkrupp Industrial Solutions a uniform network structure is now being created that will make it possible to share expertise and capacities across all business units and also integrate Marine Systems and System Engineering more closely.

Paraguay: Industria Nacional del Cemento (INC) has reported progress on upgrade projects at its cement plants in Vallemi and Villeta. At its plant in Vallemi the company is continuing work on upgrading the fuels that the kiln can use. The project is expected to save up to US$22m/yr. CIE is conducting the work and the launch is scheduled for January 2017.

INC is also building a cement grinding plant at Villeta. The new mill is being built by Sinoma for a cost of US$11.5m and is scheduled for delivery in August 2016. It will have a cement production capacity of 80t/hour or be able to produce around 800,000 bags/month of cement. INC also plans to start operating a pozzolan drying unit at Villeta in September 2016.

Colombia: Cementos Argos has reported that its revenue rose by 34% year-on-year to US$740m in the first quarter of 2016 from US$553m in the same period in 2015. Its net income rose by 27% to US$33.4m from US$26.4m. The company attributed the gains to ‘healthy’ sales volumes in all of its markets with a particular emphasis in the US.

By region Cementos Argos saw its cement sales volumes rise by 47.3% to 935,000t in the US led by growth in the Carolinas, Alabama and Georgia. In Colombia its cement volumes fell by 17.1% to 1.48Mt due to lower growth in the central region of the country. Despite this the company increased its revenue in this territory in the quarter. In its Caribbean and Central American region the cement producer reported a rise of 14.4% to 1.11Mt in its cement sales volumes.