Displaying items by tag: GCW616

The close of the first half of 2023 brought the latest crop of seasonal cement data from the Vietnam National Cement Association (VNCA). Vietnam sold 61.4Mt of cement and clinker during the first half of 2023, up by 2.7% year-on-year.¹ Graph 1 (below) tracks the progress of full-year Vietnamese cement and clinker sales over the six years up to 2022, as well as the most recent half-year.

Graph  1 - Vietnamese annual cement production, January 2017 – June 2023

The first half of 2023 marks the first half-year in which lockdown restrictions have been absent in both Vietnam and its main export market, China, since the start of the Covid-19 outbreak.² Vietnam was especially hard-hit: it implemented the first lockdown outside of China in March 2020, and has recorded the 13th most Covid-19 cases of any country up to July 2023. Then, the Russian invasion of Ukraine in 2022 caused uncertainties for cement producers and importers all around the world. Yet the price of imported coal across Southeast Asia had returned to pre-war levels by the end of June 2023.³ This indicates that the first half of 2023 may represent a ‘typical’ first half for the Vietnamese cement industry, for the first time this decade. During the 2010s, this meant growth margins of over 10% year-on-year.

During the first half of 2023, Vietnam’s sales volumes grew by 30% from pre-Covid-19 levels of 47.1Mt in the first half of 2019, confirming the industry trend of rapid capacity expansion. Just in the course of the half year, Vietnam’s integrated cement capacity rose by 7.9% to 123Mt/yr.⁴ It previously rose by 6.9% year-on-year to 114Mt/yr in 2022. That year, first-half cement sales also grew by 6.9% year-on-year, to 59.8Mt from 55.9Mt. In the first half of 2023, capacity growth has outstripped the country’s sales growth, of 2.7% year-on-year.

Meanwhile, Vietnam exported 15.7Mt of cement and clinker in the first half of 2023, 26% of its total despatches.⁵ This corresponds to a decline of 31% year-on-year from 22.7Mt (38% of despatches) in the first half of 2022 and a rise of 0.5% from pre-Covid-19 levels of 15.6Mt (33%) in the first half of 2019.

Chinese construction is the lynchpin in the Vietnamese cement industry’s current growth model. Over successive Five-Year Plans, it has consumed increasing volumes of clinker from Vietnam, as well as cement, at diminishing prices. This strategy overreached itself in the first quarter of 2023, more than a year into an on-going Chinese property market slump, when the value of Vietnam’s cement and clinker exports to the country fell by 95% year-on-year, to US$11.4m.⁶

By lowering prices, Vietnam’s cement sector charts a careful course within the contested waters of global trade rules, but it has run aground before. Most recently, from the start of 2023, the Philippines attached tariffs of up to 28% (and up to 55% for blended cement) to Vietnamese cement from 11 different producers.⁷ The Philippines Tariff Commission had found that ‘dumped’ cement from Vietnam – constituting over 50% of cement imports over the 18 months up to the end of 2020 – threatened the domestic industry. The failure to diversify its markets is a further sign that Vietnam’s current positioning in the cement and clinker trade is, at best, medium-term.

From October 2023, cement entering the European Union (EU) will become subject to extra taxes under the carbon border adjustment mechanism (CBAM).⁸ The EU is a relatively small trade partner for Vietnam, but the longer-term effect of this policy will be to replicate itself in the statute books of other nations and trade blocs, beginning in the Global North. With forecast lignite imports of 70 – 75Mt to Vietnam in 2023 – 2026, opportunities for cement exports from Vietnam, and countries like it, are diminishing.

The best situation for Vietnam would be accelerated growth in its domestic consumption base. The government is attempting to trigger a construction boom with its 2023 budget, which includes US$5bn in residential construction funding. Meanwhile, full-year infrastructure spending will rise by 25% year-on-year.⁹ To this end, it also needs to keep the cement price low. From 1 January 2023, Vietnamese exporters paid a tax of 10% of value on shipments of cement and clinker, instead of the previous 5% rate. If successful, this will nourish booming consumption with booming, and cheap, supply. Vietnam is grafting its Chinese model back onto the domestic market.

Producers will keep exporting. In May 2023, Nghi Son Cement Corporation despatched a first shipment of 31,500t of cement to the US. Nghi Son Cement Corporation’s cement, produced with fly ash, is clearly considered by the company and its owners to have some long-term marketability in the US. Said owners include Japan-based Taiheiyo Cement, which produces cement in the US via its CalPortland subsidiary.

In Vietnam, the cement industry has undergone a period of unparalleled growth, fuelled by exports. It can now reinvest the proceeds in establishing a self-sufficient construction sector around an ever more sustainable cement industry, ready to become the first choice across new markets as they arise in Southeast Asia and beyond.

1. Global Cement, 'Vietnam's first-half cement production declines in 2023,' 29 June 2023, https://www.globalcement.com/news/item/15941-vietnam-s-first-half-cement-production-declines-in-2023

2. The Observer, ‘‘It was all for nothing’: Chinese count cost of Xi’s snap decision to let Covid rip,’ 29 January 2023, https://www.theguardian.com/world/2023/jan/29/chinese-cost-covid-xi-lockdowns-china

3. Reuters, ‘Column: Asia thermal coal prices get the blues from Europe and LNG,’ 20 June 2023, https://www.reuters.com/markets/commodities/asia-thermal-coal-prices-get-blues-europe-lng-russell-2023-06-20/

4. Việt Nam News, ‘Record input costs thwart cement groups,’ 12 July 2023, https://global.factiva.com/ha/default.aspx?mod=SavedSearch_SelectSearch&page_driver=SavedSearch_SelectSearch#./!?&_suid=168119771197707004455190223307

5. Việt Nam News, ‘Industry: Vietnam’s Cement, Clinker Exports +82.2% y/y to $116M in Jun: GSO,’ 4 July 2023, https://global.factiva.com/ha/default.aspx?page_driver=searchBuilder_Search#./!?&_suid=168908188871006418595282713178

6. Vietnam Investment Review, ‘A strenuous year ahead in cement,’ 9 May 2023, https://vir.com.vn/a-strenuous-year-ahead-in-cement-101707.html

7. Global Cement, 'Philippines Department of Trade and Industry to impose anti-dumping duties on cement from Vietnam,' 22 December 2022, https://www.globalcement.com/news/item/15084-philippines-department-of-trade-and-industry-to-impose-anti-dumping-duties-on-cement-from-vietnam

8. Global Cement, 'Too taxing? How the CBAM affects cement exporters to the EU,’ 29 June 2022, https://www.globalcement.com/news/item/14316-too-taxing-how-the-cbam-affects-cement-exporters-to-the-eu

9. Customs News, ‘Cement enterprises expect a "brighter" second half of 2023
https://english.haiquanonline.com.vn/cement-enterprises-expect-a-brighter-second-half-of-2023-25368.html

Indonesia: Semen Tonasa has appointed Asruddin Leo as its president director following a shareholders meeting. He succeeds Mufti Arimurti in the post, who resigned in May 2023, according to Rakyat Sulsel.

Asruddin has worked for Semen Indonesia and its subsidiaries, including Semen Tonasa, since 2011. He previously worked in finance roles at Semen Tonasa, before becoming the Head of Finance and then the chief executive officer at Thang Long Cement in Vietnam. He has also worked as the vice president for Financial Policy and Excellence at Semen Indonesia. He holds an undergraduate degree in accounting and a master’s degree in strategic management from the Hasanuddin University in Makassar, South Sulawesi.

Saudi Arabia: Yanbu Cement has appointed Fahd bin Sulaiman Al-Rajhi as its chair following an ordinary general assembly. Mohammed bin Abdullah Al-Khereiji has also appointed as vice chair and Nabil bin Mohammed Baghdadi as secretary to the board of directors. The term of each position will last for three years, to late June 2026.

Vietnam: The People’s Committee of Hoa Binh Province authorised Xuan Khiem Group to begin building its Xuan Son cement plant earlier in July 2023. Việt Nam News has reported that the upcoming plant will commence operations in late 2024, and will have a capacity of 2.3Mt/yr.

Kazakhstan: Steppe Cement sold 749,000t of cement during the first half of 2023, down by 11% year-on-year from 837,000t in the first half of 2022. The value of sales fell by 13% to US$38.5m from US$44.4m.

Australia: Korea Hydro & Nuclear Power has concluded a memorandum of understanding (MoU) with Hallett Group and renewable energy consultancy Elecseed. Business Korea Daily News has reported that the signatories will collaborate on Hallett Group’s Green Cement Transformation project. The project aims to reduce CO₂ emissions by 300,000t/yr, and eventually by 1Mt/yr, by producing reduced-CO₂ cement from three industrial waste streams. It will also use green hydrogen. The US$83.6m project has US$13m-worth of funding from the government.

Additionally, the partners say that they will seek to foster a ‘globally competitive hydrogen export industry.’

Ghana: The Bureau of National Investigations (BNI) and the Ghana Revenue Authority (GRA) have arrested managers of Wan Heng Ghana. The Business and Financial Times newspaper has reported that the cement producer is suspected of neglecting to pay US$43.1m in tax. An investigation showed that the company received sufficient imported clinker to produce US$120m-worth of cement between 2018 and 2021, yet declared only US$19.6m-worth of sales. Management then reportedly refused to cooperate with further investigations, leading to the arrests. Wan Heng Ghana produces Sol brand cement.

The Chamber of Cement Manufacturers Ghana (COCMAG) affirmed its commitment to ensuring fair competition and ethical practices within the cement industry. It represents cement producers in the country, including Wan Heng Ghana.

Vietnam: Tan Quang Cement says that it fell short of its first-half 2023 cement production target by 80,000t at it 800,000t/yr Trang Da cement plant in Tuyen Quang. The plant will ‘presently’ enter a shutdown period for maintenance. Việt Nam News has reported that the producer attributed the shortfall in production to low demand, amid general national overcapacity.

Portugal: Cimpor Portugal has signed a contract with Germany-based KHD Humboldt Wedag (KHD) for an upgrade to production line 7 at its Alhandra cement plant. The project is intended to increase the production capacity at the plant to 3600t/day from 3000t/day and increase the line’s alternative fuels thermal substitution rate to over 80%. It will also be the first installation of KHD’s Pyrorotor alternative fuel combustion reactor in the country.

The scope of the engineering and supply contract comprises:

• New HKSK 224/335 preheater ID fan
• New downcomer duct
• New preheater with 8064/5-type HEM cyclones
• Pyroclon R calciner with Pyrotop mixing chamber. The Pyroclon R will utilize fine refuse-derived fuel (RDF) and natural gas
• 4m x 10m Pyrorotor alternative fuel combustion reactor
• Pyrobox coal firing system for process start-up and operation balancing
• Shortening of the existing kiln and installation of new kiln inlet chamber with bypass extraction
• New kiln drive station 2 (the existing girth gear and two pinions will be reused)
• New kiln hood and take-off of tertiary air from the cooler roof
• New main kiln burner designed to use more than 50% alternative fuels (but will also be capable of burning natural gas, as well as liquid fossil and alternative fuels)
• New Pyrofloor PFC²829AW cooler with a Pyrocrusher PRC 420-3ES clinker crusher.

KHD will also be supplying its KHD ProMax software product as part of the project.

Matthias Mersmann, chief technology officer at KHD, said “The decision by Cimpor Portugal to opt for KHD pyroprocessing equipment - and especially the Pyrorotor - underlines the leading market position of KHD, as well as the outstanding capability of KHD’s unique alternative fuel-processing solution.”

Project execution will be led by KHD Germany, with support from Humboldt Wedag India and the Turkish branch office of Humboldt Wedag. Commissioning of the upgraded production line is scheduled for 2025.

Norway: Capsol Technologies has been awarded a feasibility study for the CapsolEoP (end-of-pipe) carbon capture product at an unnamed cement plant in Northern Europe. The study is for a plant aiming to capture more than 1Mt/yr of CO₂. The award is Capsol Technologies’ first paid engineering study on a cement plant. The company says it is seeing an increasing amount of request and sales engineering work in the cement sector and it expects more engineering studies to be awarded going forward.

Jan Kielland, the chief executive officer of Capsol Technologies, said “The fact that the CapsolEoP carbon capture technology is easy to integrate without disrupting the operations of the host plant is an attractive value proposition to these types of facilities. In addition, the emission from a cement plant has a high concentration of CO₂ making it especially beneficial for the CapsolEoP technology relative to competing technologies, bringing down the cost per unit CO₂ captured.”

Norway-based Capsol Technologies is promoting a solvent/scrubbing-based approach to carbon capture using hot potassium carbonate (HPC). It was awarded a technology licensing agreement for the Stockholm Exergi BEECS (Bioenergy Carbon Capture and Storage) project in July 2022. It has also received orders for its CapsolGo carbon capture demonstration unit in Sweden and Germany.