Displaying items by tag: Intercement

Paraguay: Cement has been entering Paraguay at a rate of 6000t per month, up by 400% from 1000t per month upon the removal of restrictions on 19 November 2019, as importers move to fill the supply gap created by falling domestic production. ABC has reported that the construction sector requires 0.1m bag/day of cement, of which the state-owned Industria Nacional del Cemento (INC) is currently providing 20,000 and Intercement 30,000. ABC has named neighbouring Argentina as a source of Paraguay’s incoming cement.

Paraguay: Paraguay’s main cement producer, state-owned Industria Nacional del Cemento (INC), has ‘significantly’ slowed production at its 1.0Mt/yr integrated Puerto Vallemi plant to a rate of 12,000 bags/day, creating a supply gap that imports and Intercement’s 0.4Mt/yr integrated Asunción plant have been unable to fill. Esmerk Latin American News has reported that the shortage has precipitated a 33% price rise in the cost of a bag of cement in the country to US$10.20 from US$7.00 when the shortage began in October 2019.

SNIC, the Brazilian national cement industry union, was being cautious this week but signs of improvement were there. Its cement sales data showed a 3% year-on-year rise to 40.5Mt for the first nine months of 2019 from 39.4Mt in the same period in 2018. SNIC President Paulo Camillo Penna was keen to pour cold water over the figures with a reminder that the truck driver’s strike and an economic slowdown in 2018 had unnaturally depressed industry sales. He didn’t want to ruin the party too much though. Comments followed about a National Confederation of Industry (CNI) survey forecasting growth for the next six months and market research supporting growing residential construction.

Graph 1: Cement sales in Brazil for Q1 – 3, 2014 – 2019. Source: SNIC.

As Graph 1 above shows the local industry has been through the wringer in recent years. Cement sales peaked in 2014 before the national economy was hit by falling commodity and oil prices that contributed to a recession as well as the Petrobras political crisis. At the start of 2017 Camillo Penna described the situation as the worst in the industry’s history. From the peak to the trough cement sales plummeted by 27%.

Camillo Penna’s caution now may have something to do with his previous prediction that the industry was going to recover from the second half of 2018. The sales may not have perked up but merger and acquisition activity did, with the European multinationals Buzzi Unicem and Vicat buying stakes in BCPAR (Grupo Ricardo Brennand) and Cimento Planalto (Ciplan) respectively. So far in 2019 it has been quietly optimistic but not without the odd hiccup. There have been a few new plant project announcements from Brennand Group, Votorantim and CSN Cimentos. Yet, InterCement converted its integrated Pedro Leopoldo plant in Minas Gerais to a terminal. Cimento Tupi reportedly ran into trouble with its investors when it tried to merge with its parent company following defaulting on loan payments in 2018. Notably, the country’s two cement associations also released a Cement Technology Roadmap to 2050 in April 2019. It plans to reduce specific CO2 emissions by over 30% from 2014 to 375kg CO2/t of cement in 2050 amongst other ambitions.

On the corporate side, Votorantim’s domestic sales rose by 3% year-on-year to US$771m in the first half of 2019 from US$745m in the same period in 2018. It attributed the growth to improved prices. Other news of note included the acquisition of a mortar plant in Belém, Pará state and plans to upgrade its clinker grinding unit at Pecém in Ceará. InterCement’s cement and clinker sales volumes rose by 6.8% to 4.04Mt from 3.78Mt. It declared that this was way ahead of the industry average of 1.5%. Sales revenue fell slightly, possibly due to high production overcapacity and competition on prices. Earnings were also reported as having improved in the second quarter partly due to a ‘significant’ reduction in its cost structure.

On the supplier side, refractory manufacturer RHI Magnesita reported that its margin recovery was ‘going quite well’ in Brazil during the first half of 2019. Stefan Borgas, RHI Magnesita’s chief executive officer (CEO) forecast that the margin in that country would help drive its business in the second half of 2019 and that the business was returning to the global average. RHI Magnesita also announced a Euro57.1m upgrade to its plant at Contagem, Belo Horizonte in Minas Gerais this week, including building a new regional headquarters for its South American business.

Everything seems to be coming together slowly for Brazil’s cement industry. Yet Camillo Penna and SNIC are right to be careful for another reason. The United Nations (UN) and various analysts are warning about the growing risk of global recession in 2020 based on indicators like the US yield curve. This could be especially devastating for an economy like Brazil’s that is heavily dependent on commodity markets. History may not repeat itself but the strength of that recovery may be tested sooner than anyone would like.

Argentina: Loma Negra plans to close its Olavarría integrated cement plant. The unit has 45 employees who will be relocated elsewhere in the business, according to the Buenos Aires Económico newspaper. In recent years the plant has been operating solely as a grinding and bagging unit. The cost of upgrading the plant and the relative distance of its raw materials were factors in the decision to close it. The Olavarría cement plant was the first to be built in the country.

In September 2019 the subsidiary of Brazil’s interCement said it was converting its San Juan integrated cement plant to grinding and bagging only. Earlier in the year it came close to closing its Barker plant as it was unable to reach an agreement with the local union over staff redundancies. Alongside this it is building a new production line at its L'Amalí cement plant.

Argentina: Loma Negra says that a minor fire broke out at an auxiliary building for the second production line at the L'Amalí integrated cement plant on 1 August 2019. No casualties or injuries were reported in the incident. The subsidiary of Brazil’s InterCement said that the causes of the accident are yet to be determined but that no significant impacts are expected. The plant is currently being upgraded with a new production line that is scheduled for completion in early 2020.

Brazil: InterCement is to stop production at its integrated Pedro Leopoldo plant in Minas Gerais. It plans to temporarily run the unit as a cement terminal, according to Por Dentro De Tudo. The plant has 53 employees. 28 will be relocated to other plants in the company and the remaining 25 will be made redundant.

Argentina: Loma Negra has signed an agreement with the Asociación Obrera Minera Argentina (AOMA) union and the government to keep the Barker cement plant open. The deal follows three months of negotiations, according to La Nacion newspaper. The cement producer wanted to reduce the number of shifts at the grinding plant. It previously said it had started to close the plant in early-June 2019. The plant will continue to operate with 160 staff working a reduced workload amongst other concessions.

Argentina: Loma Negra is challenging a proposed US-based court case on behalf of US-based shareholders. The legal challenge alleges that the cement producer misled investors by misrepresenting its exposure to a corruption scandal and downplayed the potential impact of the economic crisis in 2018, according to the Ámbito Financiero newspaper. Loma Negra says that it was never involved in any bidding process related to the corruption case relating to its Brazilian owner Camargo Correa. The US lawsuit is also taking legal action against the banks involved with Loma Negra’s initial public offering (IPO) in late 2017.

Argentina: Loma Negra is planning to make 100 staff redundant at its Barker cement plant in Buenos Aires. It employs 230 direct employees and 90 others at the site, according to Infobae. The cement producer says it is reducing staffing levels in order to adjust the plant’s production capacity to the local market. It has also threatened to close the plant entirely if it is unable to reach an agreement over the redundancies with the union.

Mozambique: Cimentos de Mocambique has closed its Matola plant due to low demand. It made the decision following large losses, according to the O Pais newspaper. The subsidiary of Brazil’s Intercement said that the unit cost US$25m. It operates one integrated plant and four grinding plants in the country with a total production capacity of 2.9Mt/yr.