Displaying items by tag: Huaxin Cement

2020 has been a year like no other and this clearly shows in the financial results of the major cement producers so far.

The first jolt is that several major Chinese cement producers have seen their sales fall. Following a tough first quarter due to coronavirus, the Chinese industry then overcame floods in the summer, to eventually report a decrease in cement output of 1.1% year-on-year to 1.68Bnt in the first nine months of 2020. The world’s largest cement producer, CNBM, reported a slightly smaller drop in sales year-on-year in the first nine months of 2020. This relatively small fall, just below 1%, may be due to CNBM’s size and diversity of business interests. Other large Chinese producers have noted bigger losses, such as Huaxin Cement’s 9% sales decline to US$3.04bn and Jidong Cement’s 5% sales fall to US$3.8bn. However, Anhui Conch actually saw a 12% rise in sales to US$18.7bn.

Graph 1: Sales revenue from selected cement producers, Q1 - 3 2020. Source: Company reports.

Graph 2: Cement sales volumes from selected cement producers, Q1 - 3 2020. Source: Company reports.

LafargeHolcim’s sales look worse in Graph 1 than they really are because the group was busy divesting assets in 2019. Its net sales fell by 7.9% on a like-for-like basis to US$18.7bn in the first nine months of 2020, a rate of change similar to HeidelbergCement’s. Being a properly multinational building materials producer brings mixed benefits given that these companies have suffered from coronavirus-related lockdowns in different times in different places but they have also been able to hedge themselves from this effect through their many locations. In the third quarter of 2020, for example, LafargeHolcim was reporting recovering cement sales in its Asia-Pacific, Latin America and western/central parts of its Europe regions but problems in North America. Again, HeidelbergCement noted a similar picture with cement deliveries up in its Africa-Eastern Mediterranean Basin Group area, stable in Northern and Eastern Europe-Central Asia and down elsewhere. How the latest round of public health-related lockdowns in Europe round off a bad year remains to be seen.

The other more regional producers are noteworthy particularly due to their different geographical distribution. Cemex has seen a lower fall in sales revenue and cement sales volumes so far in 2020, possibly due to its greater presence in North America. What happens in the fourth quarter is uncertain at best, with US coronavirus cases rising and the Portland Cement Association (PCA) expecting a small decline in cement consumption overall in 2020. Along similar lines, Buzzi Unicem appears to have benefitted from its strong presence in Germany and the US, leading it to report a below 1% drop in sales revenue so far in 2020, the lowest of the decreases reported here for the western multinational cement companies.

Looking more widely, UltraTech Cement, India’s largest producer, had to contend with a near complete government-mandated plant shutdown in late March 2021. The figures presented here are calculated for comparison with other companies around the world due to the difference between the standard calendar financial year (January to December) and the Indian financial year (April to March). However, they suggest that Ultratech Cement suffered a 14% fall in sales to US$3.9bn and an 8% decline in sales volumes to 56Mt, among the worst decline of all the companies featured here. This is unsurprising given that UltraTech mostly operates in one country. Sure enough it bounced back in its second quarter (June – September 2020) with jumps in revenue, earnings and volumes.

Finally, for a view of a region that hasn’t had to face coronavirus-related economic disruption of anything like the same scale, Dangote Cement has reported solid growth so far in 2020, with rises in sales and volumes both above 5%. Economic problems at home in Nigeria have seen relatively higher growth elsewhere in Africa in recent years but now the pendulum has swung back home again. The big news has been that the company has pushed ahead with plans to turn Nigeria into a cement export hub, with a maiden shipment of clinker from Nigeria to Senegal in June 2020. The vision behind this has expanded from making Nigeria self-sufficient in cement from a few years ago into making the entirety of West and Central Africa cement and clinker ‘independent.’

The big news internationally this week was of the reported effectiveness of a Covid-19 vaccine in early trials by Pfizer and BioNTech. It might not yet make it into people’s arms at scale but it shows that the vaccine appears to work and that others in development and testing may do too. Building material manufacturer share prices didn’t rally as much as airlines or cinema chains on the news, construction has carried on after all, but this is a positive sign that normality for both health and wealth is on the way back at some point in 2021. One point to consider, given the wide regional variation with the economic effects of coronavirus, is what effect a disjointed global rollout of a vaccine or vaccines might have. A building material manufacturer dependent on a region that stamps out the virus later than other places might face an economic penalty. Recovery seems likely in 2021 but it isn’t guaranteed and the implications of the coronavirus crisis seem set to persist for a while yet. Here’s hoping for a different outlook at this point in 2021.

China: The Ministry of Industry and Information Technology has named Huaxin Cement’s Yangxin plant in Hubei province on its National Green Manufacturing 2020 list. The list includes industrial facilities that have taken successful measures towards sustainability and pollution reduction.

The company said that the plants have together invested US$15m in “dust collection system transformation, rain and sewage separation projects, mill sound insulation and noise reduction treatment, kiln bypass air release and other large-scale environmental protection projects, supplemented by “greening and cleaning” and tree planting.” It added that the plant processes 219,000t/yr of refuse-derived fuel (RDF), saying, “This signifies our successful transformation from a traditional cement company to a green and environmentally friendly building materials company.”

China: Huaxin Cement’s sales in the first nine months of 2020 were US$3.04bn, down by 9.2% year-on-year from US$3.35bn over the corresponding period of 2019. Net profit also dropped by 17% to US$660m from US$800m.

China: Huaxin Cement has published a figure for its predicted profit for the first nine months of 2020 of US$135m, down by 44% from US$241m in the first nine months of 2019. The company attributed the forecasted decline “mainly to the severe impact of the coronavirus epidemic in the first half of 2020 and the large-scale flooding in the River Yangtze in July.” It added, “The production and sales of the company’s leading products were greatly affected, and prices also fell, resulting in operating income decline.” The company noted that third-quarter profit is expected to increase by 5% year-on-year.

China: Huaxin Cement’s sales and profit fell in the first half of 2020 due to the coronavirus outbreak. It said that the health situation, “resulted in grave insufficient demand in the markets of main products and rapid slump in price, coupled with restrictions on personnel flow and traffic, equipment maintenance plan was affected severely.” The cement producer disposed of medical waste for free at its Yangxin, Wuxue and Yichang plants before the market recovered in the second quarter.

Huaxin’s sales revenue fell by 12.7% year-on-year to US$1.84bn in the first half of 2020 from US$2.11bn in the same period in 2019. Its net profit dropped by 29% to US$330m from US$463m. Cement sales and concrete volumes declined by 8% to 32.7Mt. The company also started clinker production at its 2Mt/yr Jizzakh cement plant in Uzbekistan in June 2020.

China: The Tibet Autonomous Region Department of Economics and Information has awarded Huaxin Cement subsidiary Huaxin Tibet’s Shigatse Company Tibet Company cement plants with regional Green Factory status. The plants are among eight businesses across the autonomous region selected for their dedication to green development. The company says that it attaches “great importance to the protection of plateau ecology, the scientific development of mineral resources and the promotion of mine reclamation and greening.”

The Tibet Company circulates used cooling water from cement production into irrigation systems for mine reclamation. The Shigatse Company “strengthened the greening of mines and plant areas according to local conditions, and insisted on special environmental protection training for front-line employees and middle-level leaders,” improving environmental awareness across its operations, according to Huaxin Tibet.

Tanzania: Huaxin Cement subsidiary African Tanzanian Maweni Limestone has ignited the kiln and begun trial production of clinker at its newly upgraded 0.75Mt/yr Maweni Limestone clinker plant. Huaxin Cement acquired the subsidiary in May 2020 and begun upgrading the kiln line on 1 June 2020, in spite of the fact that only 14 Huaxin Cement management team colleagues remained in the country due to the company withdrawing staff to China prior to the coronavirus lockdown.

Huaxin Cement says that it will not upgrade the plant’s grinding unit “for various reasons.” The company said, “subject to the epidemic prevention and control situation, the company will send an excellent management team to implement advanced cement process technology and management. We are committed to turning Maweni Limestone into a benchmark industrial enterprise in Tanzania and promoting the local cement industry to achieve quality.”

Uzbekistan: China-based Huaxin Cement has successfully ignited the kiln at its 2Mt/yr Jizzakh cement plant in Jizzakh Oblast. 200 employees attended the plant’ opening ceremony, which was streamed by video link to Huaxin Cement’s global headquarters in Wuhan Province. Huaxin Cement president Li Yeqing said, “Everyone has done a very good job, demonstrating the company's strength and personnel capabilities.” Trial operation had been due to begin in April 2020, but was delayed due to the coronavirus outbreak.

China: Huaxin Cement has announced that it burned 2.7t of seized opiates in its fuel mix at its Diwei cement plant in Chongqing. Representatives of the Chongqing Anti-Drug Committee, Public Service Bureau, Eco-Environmental Bureau and Procuratorate were in attendance. Huaxin Cement reports that the dangerous substances have been “safely disposed of.” The producer said that this is the largest single volume of drugs to have been combusted in a cement kiln. The plant previously burnt 1.22Mt of illicit substances in 2018.

Exports are the theme this week with news that the value of Turkey’s cement exports fell by 26% year-on-year in April 2020. Reporting from the Trend News Agency showed that the export market has been stable so far for the year to date, with some countries, like Kazakhstan, increasing exports and others, like France, decreasing exports. However the change in April may mark the start of a new trend.

As Tamer Saka, the chairman of the Turkish Cement Manufacturers’ Association (TÇMB), said earlier in the year, his country is one of biggest cement exporters in the world and among its most important markets are the US, Israel, Ghana and Ivory Coast. To look at one of these countries, United States Geology Survey (USGS) data shows that cement and clinker imports from Turkey to the US grew by 26% year-on-year to 1Mt for the first quarter of 2020 but that exports fell by 24% year-on-year to 0.11Mt in March 2020. Each of these countries is being affected in different ways by the coronavirus pandemic and at different times. Overall though, Saka’s and the TÇMB’s forecast in February 2020 that exports would rise by 15% year-on-year in 2020 is looking decidedly shaky. Any knock to the export market in Turkey is particularly unwanted given the poor state of the Turkish economy at the moment.

What would be useful to know here is how other major cement exporters are coping with the global situation. Data from the Pakistan Bureau of Statistics shows that Pakistan’s cement exports dropped by 31% year-on-year to 0.36Mt in April 2020. Data from the All Pakistan Cement Manufacturers Association (APCMA) for the same month tells a similar story. Its data shows a 57% drop in exports to 0.25Mt in April 2020, with a bigger share lost by plants in the north of the country than those in the south.

The other country to note is Vietnam. Here, data from the General Department of Vietnam Customs shows that cement exports fell by 9.7% year-on-year to 7.73Mt in the first quarter of 2020. This follows the announcement by Vietnam Cement Association (VCA) chair Nguyễn Quang Cung in May 2020 that all cement plant projects scheduled to begin in 2020 would be suspended. Luckily those currently being built avoided this fate. This has included a new line at Thanh Thang Group Cement’s integrated Bong Lang cement plant, which Germany’s Loesche has just sent a pair of clinker mills to this week.

These changes from the major cement exporters are bad for their host countries but the other side of the chain is how their destinations are affected. For example, Australia’s clinker imports nearly doubled between 2010 – 2011 and 2018 – 2019 to 4.1Mt. This compares to local clinker production of 5.6Mt in 2018 – 2019, according to the Cement Industry Federation and the Australian Bureau of Statistics. With this in mind, this week saw the resolution to a legal dispute between Wagners Holdings and Boral over a cement supply contract. Boral found a cheaper source of cement from Cement Australia in early 2019 and the two parties argued over their contract. This dispute may have nothing to do with foreign import levels but Wagners Holdings, Boral and Cement Australia all operate standalone clinker grinding plants and will all be subject to general market pricing trends. Higher international clinker levels may add pressure to pricing issues surrounding cement supply contracts in Australia and elsewhere.

Finally, cement trade flows aren’t the only commodity that has been affected by coronavirus disruption. The mass movement of workers home and then back to work is expected to complicate India’s return to business, as discussed in last week’s column. In this context it’s pleasing to come across one sign of normality. Local press in Hubei, China reported this week that workers from Huaxin Cement finally flew back to Uzbekistan. They were originally meant to commission a new plant in March 2020 but became stranded at home when they returned for the Chinese New Year. Commissioning of the plant is now planned for later in June 2020.

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