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Türkçimento’s Volkan Bozay took to the airwaves last week to raise the issues that the war in Ukraine is causing for Turkey-based cement producers. The head of the Turkish Cement Manufacturers’ Association explained, to the local Bloomberg HT channel, that the dramatic jump in the price of Newcastle Coal posed a serious threat to the sector. The price jumped nearly US$100/t in a single day in early March 2022. Bozay said that the cost of cement from a plant using imported coal would consequently rise by around US$15/t. He added that the association’s members had an average of 15 – 20 days of coal stocks.

Graph 1: Price of coal, March 2020 – March 2021. Source: Trading Economics.

In a separate press release Türkçimento revealed that Turkey, as a whole, imported approximately US$1.5bn of coal from Russia in 2021. The cement industry imported about 5Mt of coal in 2021, from all sources, although the majority of this came from Russia. Coal shipments from Russia since the start of the war were reported as ‘very limited or even not possible.’ It was further explained that each US$10/t increase in the price of coal put up plant production costs by US$1.5/t of cement.

Naturally Bozay’s appearance on a television news show carried a lobbying aspect. He called for government import standards – such as the sulphur ratio, lower heating values and volatile matter limits - to be relaxed to allow coal to be imported more freely from sources such as Colombia, Indonesia and South Africa. There was also a push to let in more alternative fuels such as tyres and waste-derived fuels. The bit that Bozay didn’t mention though was how many of his members had long term coal supply contracts in place to cushion them, from short term price inflation at least. Yet, if coal shipments from Russia have simply stopped, then the price is irrelevant. A cement kiln configured to run on coal stops when it uses up its stocks.

Turkey was the world’s fifth largest cement producer in 2021 according to the United States Geological Survey (USGS). Türkçimento data shows that in 2020 it exported 145,000t of cement to Russia by sea. Overall it exported 16.3Mt of cement and 13.5Mt of clinker. The US, Israel, Syria, Haiti and Libya were the top destinations for cement. Notably, Ukraine was the sixth largest recipients of cement, with 752,000t imported, although anti-dumping legislation introduced in mid-2021 looked set to reduce it until the war started. Ghana, Ivory Coast, Guinea, Cameroon and Belgium were the principal recipients of clinker. Cumulative cement exports for the year to October 2021 were up by 3% year-on-year compared to the first 10 months of 2020. Clinker exports were down by 27% though. Overall domestic production and sales in Turkey rose by 9.5%, suggested an estimated production figure of 79Mt for 2021.

Other fallout in the cement sector from the war in Ukraine this week included Ireland-based CRH’s decision to quit the Russian market. It entered the region in 1998 through a subsidiary based in Finland and was operating seven ready-mixed concrete plants via its LujaBetomix joint venture. CRH says that all operations in Russia have now stopped. In 2021 it sold its lime business in Russia, Fels Izvest, to Russia-based Bonolit. Although selling concrete plants is not trivial, these are far cheaper assets than clinker production lines. Germany-based HeidelbergCement, Italy-based Buzzi Unicem and Switzerland-based Holcim each operate at least one integrated cement plant in Russia. So far these companies have publicly expressed dismay at the humanitarian crisis unfolding in Ukraine and made donations to the Red Cross.

Graph 2: European Union Emission Trading Scheme price, 2020 – March 2022. Source: Sandbag.

Finally, one more surprise this week has been a crash in the European Union (EU) Emission Trading Scheme (ETS) carbon price from a high of Euro96/t in early February 2022 to Euro58/t on 7 March 2022. As other commentators have stated, normally the carbon price would be expected to follow the energy market, but this hasn’t happened. Instead investors have pulled out, possibly to maintain liquidity for other markets.

With the US set to ban Russian oil, gas and coal imports and phase-outs to varying degrees promised by the UK and the EU in 2022, we can expect more turbulence from energy markets in the coming days. As the Turkish example above shows, all of this can... and will... have effects on cement production.

Chile: Andrés Pérez Algarra has been appointed as the general manager of Cemento Polpaico. He succeeds Javier Moreno Hueyo who has been in the post for five years, according to the Valor newspaper. Andrés Pérez Algarra, who is currently working as the commercial manager for the company, will take up his new position in April 2022.

US: Solidia Technologies has appointed Padmaja Parakala as its director of research and development.

She holds 20 years of experience working in corporate material science, most recently working for Innovantage, a professional services firm she founded that has worked with Solidia Technologies and the Boral Innovation Factory. Prior to this she worked as the principal scientist and product performance leader at James Hardie Building Products in Australia. Earlier in her career she also worked for GE at the John F Welch Technology Center.

Parakala holds s PhD in material engineering from the Queensland University of Technology and master’s degrees from the Indian Institute of Technology in Kharagpur and the Indian Institute of Technology in Varanasi.

US: Cement shipments grew by 4.2% year-on-year to 107Mt in 2021 from 103Mt in 2020. Data from the United States Geological Survey (USGS) show that domestic shipments and imports rose by 2.3% to 90.8Mt and 16% to 16.3Mt respectively. Regionally, particular gains were reported in New England and Middle Atlantic, West North Central, Arkansas, Oklahoma, Arizona and New Mexico. Puerto Rico reported a 47% decline in shipments. The largest cement exporting nations to the US were Turkey, Canada, Greece, Mexico and Vietnam. Turkey, Greece and Vietnam each increased their imports by over 30% in 2021.

China: China Tianrui Group has forecast its full-year profit and total comprehensive income as US$187m - 218m in 2021. This corresponds to a 30 - 40% year-on-year decline from its US$312m profit and comprehensive income in 2020. The company attributed the expected decrease to a year-on-year rise in coal prices and decline in cement prices, the latter due to flooding-related demand disruptions in Henan Province.

UK: Breedon Group’s sales revenue grew by 33% to Euro1.48bn in 2021 from Euro1.11bn in 2020. Its statutory earnings before interest and taxation more than doubled to Euro153m from Euro74m. Cement and concrete sales volumes increased by 20% to 2.4Mt and 23% to 3.2Mm³ respectively. The group described 2021 as an ‘exceptional’ year for its cement business due to pent-up demand following the outbreak of the Covid-19 pandemic.

“2021 was a record year for Breedon. We navigated the second year of the pandemic successfully, supplied our customers with more materials than at any point in our history and fully integrated the Cemex assets,” said chief executive officer Rob Wood.

UK: Hercules Enterprises plans to establish an up to 0.5Mt/yr grinding plant at Sheerness on the Isle of Sheppey in Kent, according to Kent Online News. The plant would comprise two clinker grinding lines, a mobile ecohopper, a mechanical transport system for transfer of material into storage, a 47,000m³ clinker storage hall, six 3000m³ cement silos, three 3000m³ fly ash silos, two packing plants and a palletising hall.

Egypt: Misr Cement Qena recorded a consolidated net profit of US$11.1m in 2021, more than seven times its 2020 net profit of US$1.46m. Its net sales were US$160m, up by 0.4% from slightly below US$160m.

India: ISGEC Heavy Engineering has received an order from Shree Cement to supply a waste heat recovery (WHR) unit for the integrated 3.8Mt/yr Nawalgarh plant in Rajasthan. The scope of work includes design, manufacture and supply of the system. The supplier says that this will be one of the world’s largest steam-based WHR units by capacity. ISGEC previously supplied two WHR units for Shree Cement’s Raipur plant.

Algeria: The Entreprise des Ciments et Dérives d’Ech-Cheliff (ECDE) plant plans to export 1.5Mt of cement in 2022. Exports will be sent to countries in Europe, Africa and Latin America, according to the Algeria Press Service. The subsidiary of Groupe des Ciments d'Algérie’s (GICA) opened a third production line at the site intended solely for exports. The unit has a production capacity of 4.2Mt/yr.