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Cement industry reactions to coronavirus
25 March 2020Cement producers and suppliers are now reacting to the coronavirus pandemic at scale. The biggest obvious development has been the lockdown in India that began on 24 March 2020. The implications for the cement industry are profound given the country’s population (1.3Bn) and massive cement consumption under normal conditions. It is the country with the world’s second largest cement production capacity.
UltraTech Cement, the biggest producer, said that it was suspending production at ‘various’ locations although it added that the situation was ‘dynamic’ and that it was monitoring it from time to time. Ambuja Cement and JK Lakshmi Cement have done likewise. The latter has suspended cement production at an integrated plant in Rajasthan and three grinding plants in Gujarat. Some Indian states have moved faster than others towards shutting down movement of people so JK Lakshmi’s decision may merely be based on legal necessity. However, a difference may arise in producer strategies between keeping integrated and grinding plants open. Building up inventory is one strategy seen in poor market conditions previously around the world. Alternatively, moving to more of a grinding model might make sense in some territories if, as is happening, countries implement lockdowns at different periods. However, some Indian states have moved faster than others towards shutting down movement of people and JK Lakshmi Cement’s closure pattern may simply reflect this.
At the international scale HeidelbergCement gave an idea to Reuters of the challenge facing the multinationals. Chief executive officer (CEO) Dominik von Achten described the start of 2020 as being strong but that construction projects were being delayed in the US and that activity in France and Spain was starting to weaken. Unsurprisingly, the company has shut down three of its plants in Lombardy at the centre of the Italian epidemic. He added that the group was holding a daily crisis call to assess the effect of the virus upon staff. He also said that the group was stockpiling cement amid the disruption. The clear warning sign was of an existential threat like that faced by the airlines whereby sales could simply stop for a three or four week period… or longer.
On the supplier side, Denmark’s FLSmidth has issued a robust plan on how it is aiming to maintain service and support for its customers. Past all the now-usual stuff such as remote working it included detail on how to support clients on site where absolutely necessary on a case-by-case basis. With regards to its supply chain it pointed out that it was confident, “that any local interruptions to our suppliers can be minimised, even when the agility of some suppliers is put to the test. We have redundancy built into the system.” To this end it emphasised the global nature of its business to ensure that it could deliver parts and equipment to its customers. It claimed that it coped with coronavirus in China due to its ‘very flexible’ supply chain but did admit to some supply chain impacts. Yet it says that production is back to approaching full capacity with workshops in Qingdao and Shanghai above 90% as they work their way through accumulated backlogs. Finally, it is also offering advice on how the company can support its customers on reducing or shutting down operations.
Other supplier comments on the situation have mainly been about protecting staff, working remotely and supporting customers through continued supply of equipment and services. Back in India, Sameer Nagpal, the CEO of refractory manufacturer Dalmia-OCL told Business Standard that the company was coping so far with the crisis with little major impact seen so far. Its raw material supply chain was dependent on China but after some minor disruption it was secure. Most of its customers are domestic, where it hadn’t reported problems so far, although this may change with the Indian lockdown. Exports were a different story as it sends around 10% of its production abroad and it has a plant in Germany. In Europe it was seeing a challenge due to supply chain disruption.
The experiences above are a snapshot of some of what is happening in parts of the industry as coronavirus disruption hits home. China’s restrictions are easing, most of Europe is in lockdown, India has started its quarantine and the US has restricted movement in about a third of its states. The current restrictions in the UK, for example, allow for construction work to continue but local media is debating the associated risks for workers. Other territories have different rules. All of this is affecting demand for cement and concrete. This in turn feeds through to producers and their suppliers. Global Cement continues to monitor the situation and wishes readers a safe passage through the pandemic.
Kenneth Capes re-elected CEO of Metier Mixed Concrete and Sephaku Holdings executive director
25 March 2020South Africa: The board of Sephaku Holdings, owner of Sephaku Cement and 36% owner of Nigeria-based Dangote Cement, has re-elected Kenneth Capes as chief executive officer (CEO) of Métier Mixed Concrete. The board also re-elected Capes as an executive director of Sephaku Holdings, a position he first attained in 2013. He co-founded Métier in 2007.
Frank Siefert appointed as head of Claudius Peters Group
25 March 2020Germany: Frank Siefert has been appointed as the chief executive officer (CEO) and managing director of Claudius Peters Group. He also takes the role of managing director of Claudius Peters Projects. Siefert was previously with the Liebherr Group, a manufacturer of construction machinery, and brings with him a wealth of experience in the capital equipment sector. He holds a degree in mechanical engineering and has also held various senior positions in sales, technology and production during his career.
Kurt Herrmann has also been appointed as Managing Director - Global Sales, Claudius Peters Group and Managing Director Sales, Claudius Peters Projects. He joined the Claudius Peters group in 1991 and has held the position of Managing Director of Claudius Peters (China).
Germany: ThyssenKrupp has decided to retain Martina Merz as its chief executive officer (CEO) for a three year term from 1 April 2020. She was originally delegated to the position for a year. As part of the transition she will resign from the supervisory board.
The group has also decided to appoint Klaus Keysberg as its chief financial officer (CFO) following the resignation of Johannes Dietsch. Keysberg, who holds a PhD in business administration, will remain responsible for the materials businesses in addition to his new role as CFO. Plant Technology will in future be the responsibility of Martina Merz.
With these personnel changes the executive board of ThyssenKrupp now consists of only three members. In addition to Martina Merz as CEO and Klaus Keysberg as CFO, Oliver Burkhard will continue in his role as Chief Human Resources Officer and Labor Director.
Paulo Lima appointed Aumund Brazil CEO
25 March 2020Brazil: Germany-based Aumund subsidiary Aumund Brazil has appointed Paulo Lima its chief executive officer (CEO). Lima brings many years’ mechanical engineering experience, specialising in conveying technology in cement and other industries. He previously worked for Aumund Brazil in leading sales positions between 1996 and 2000 and from 2004 to 2008.
Uzbekistan: The total volume of cement produced in January and February 2020 in Uzbekistan was 1.02Mt, down by 20% year-on-year from 1.22Mt in the first two months of 2019. February 2020 production rose by 16% month-on-month and fell by 13% year-on-year, to 551,000t from 474,000t in January 2020 and 659,000t in February 2019.
Uzbekistan Newsline has reported that the level of utilisation of Uzbekistan’s 11.1Mt/yr cement production capacity in January and February 2020 was 55%.
China: Asia Cement (China) Holdings’ whole-year net profit for 2019 was US$444m, up by 30% year-on-year from US$341m in 2018. Revenues grew by 11%, to US$1.78bn from US$1.60bn in 2018.
The group said that it expects cement demand to shrink in early 2020, recovering in early/mid-2020 to remain ‘at peak season level’ into late 2020, according to Reuters.
Spain: Andalusian cement demand typified the slight slow down of the Spanish construction sector in the first two months of 2020, with a fall of 4.6% year-on-year to 435,000t from 441,000t in 2019.
Work continues as normal however Arquitectura y Sostenibilidad Online newspaper has reported that Andalusian Cement Manufacturers Association (AFCA) president Isidoro Miranda forecasts a sharp drop in consumption in March 2020. He said, "We support the communiqué of the Spanish Confederation of Associations of Manufacturers of Construction Products (CEPCO), regarding not stopping the works.” He called construction a ‘pillar of the Spanish economy,’ adding, “It is of utmost importance that all current works, including infrastructure works, maintain their activity.”
Anhui Conch net profit rises by 13% year-on-year in 2019
24 March 2020China: Anhui Conch Cement recorded a net profit of US$4.77bn in 2019, 13% higher than its 2018 net profit of US$4.23bn in 2019. Revenues rose by 22% year-on-year to US$22.2bn from US$18.2bn in 2018.
Indian producers pull plug on operations
24 March 2020India: Several cement producers have responded to the coronavirus pandemic with plant closures. Reuters has reported that India Cements has temporarily closed all of its plants. JK Lakshmi Cement has suspended cement production at its 4.2Mt/yr integrated plant in Jaykaypuram, Rajasthan and at three grinding plants. JK Lakshmi subsidiary Udaipur Cement Works has shut its 1.6Mt/yr integrated Udaipur plant, also in Rajasthan.
Dalmia Bharat refractory production subsidiary Dalmia-OCL’s CEO Sameer Dagpaal told the Business Standard newspaper that he expected the virus’ impact on the company to be ‘relatively limited,’ with a slowdown in demand from the cement sector lasting at most ‘a couple of months.’ He noted that there had been ‘some minor supply-side disruptions relating to a shortage of raw materials from China.’
On 24 March 2020 the all-India total number of coronavirus cases crossed 500, with nine dead, according to Al Jazeera. 200 cases are in the western states of Maharashtra and Kerala.