Displaying items by tag: Production
GICA reports nearly 14Mt of cement production in 2017
09 January 2018Algeria: Groupe des Ciments d’Algérie’s (GICA) cement production rose by 11% year-on-year to 14Mt in 2017 from 12.6Mt in 2016. The cement producer beat its own forecast of 13.2Mt for the year, according to the L’Expression newspaper. Production rose in 2017 due to the opening of its Aïn El Kebira, Sétif cement plant in the first quarter. Local production capacity is forecast to reach 40.6Mt/yr by 2020 with 20Mt/yr supplied by GICA, 11.1Mt/yr supplied by LafargeHolcim and the remainder from other companies.
Nepalese cement grinding plants hit by clinker shortage
03 January 2018Nepal: Production at 13 cement grinding plants have been distrupted by a restriction on Indian clinker imports at Birgunj. Imports at the border town stopped on 22 December 2017 following complaints by local residents about air pollution, according to the Kathmandu Post. Cement plants in the so-called Parsa-Bara industrial corridor have resorted to using inventory supplies or clinker sourced from alternative locations.
Chip Mong Insee Cement starts production at plant in Cambodia
02 January 2018Cambodia: Chip Mong Insee Cement has started production at its new plant in the Tuok Meas district in Kampot province. The unit had a soft launch with a visit from Suy Sem, the minister of mines and energy, according to the Phnom Penh Post newspaper. The US$262m plant will have a cement production capacity of 2Mt/yr when it is fully operational.
Spanish consumption best for five years but exports fall
21 December 2017Spain: Cement consumption is expected to have risen by 10% year-on-year to 12.3Mt in Spain during 2017. This represents the highest consumption by the sector since 2012. It is still massively down on the 25Mt/yr consumption seen during the building boom experienced by the country prior to the economic downturn.
Exports, which had been a ‘lifesaver’ for the sector during the crisis, fell by 7.6% year-on-year in the first eight months of 2017 to 5.8Mt. Spain exported 9.1Mt of cement in 2016.
Uzbek government sets production target of 9.2Mt of cement for 2018
18 December 2017Uzbekistan: The government of Uzbekistan has set a production target of 9.2Mt of cement in 2018. Uzstroymateriali will produce 7.8Mt, Almalyk Mining and Metallurgy Combine will produce 1Mt and other companies will produce 0.4Mt, according to Uzbekistan Daily. Imports of cement have been set at 0.37Mt. The country is expected to consume over 9.5Mt in the period. Exports of white cement will be 4000t. The government has also ruled that cement producers must sell cement only through exchange auctions in 2018.
Chinese concrete and mortar producers ask local governments to stabilise cement prices
07 December 2017China: The Wuhan Concrete (Mortar) Association has held an emergency meeting to discuss soaring cement prices due to central government mandated environmental measures such as a peak shifting. It has urged local governments to examine the situation, according to Reuters. The association, which represents the region’s concrete and mortar producers, said that some construction projects had been suspended due to price spikes and artificial shortages of raw materials including cement. Chinese environmental policy has forced cement producers through shutting so-called ‘obsolete’ production capacity and forcing selected plants to shut through the winter.
Update on Bolivia
06 December 2017FLSmidth revealed this week that Cooperativa Boliviana de Cemento, Industrias y Servicios (COBOCE) has ordered a cement mill for its Irpa Irpa plant near Cochabamba. The Danish engineering firm was pleased to note that with the sale it has now delivered mills to three of the country’s five producers. Other recent orders include supplying an OK 36-4 mill to Sociedad Boliviana de Cemento’s (SOBOCE) Viacha cement plant, announced in early 2016, and a sale of a complete integrated production line at Sucre to Fábrica Nacional de Cemento (FANCESA) in late 2016.
These order reveal slow but steady growth in the local industry in recent years. However, a slowdown so far in 2017 suggests that the market is changing. National Institute of Statistics of Bolivia (INE) data shows that sales in the local market broke down in 2016 into a 42% sales share for SOBOCE, 25% for FANCESA, 19% for COBOCE, 8% for Yura and 6% for Itacamba. This changed somewhat in the first quarter of 2017 with a reduction in the sales of SOBOCE and Yura. Sales in the country are concentrated in the departments of Chuquisca, La Paz and Cochabamba, which held 70% of cement sales in 2016.
Graph 1: Cement production and sales in Bolivia, 2012 – 2017. Source: National Institute of Statistics of Bolivia.
Annual cement sales in Bolivia have been growing consistently since 2001. Financial services company Pacific Credit Rating placed average annual sales growth at 7.72% from 1998 to 2016. In 2016 sales reached 3.7Mt. Graph 1 shows a continuation of this trend although the first half of 2017 has been weaker than 2016. COBOCE blamed the reverse in 2017 on reduced local government spending on infrastructure projects and poor weather. The producer was expecting sales to grow by 6 – 8% as a whole for 2017. However, on the basis of the figures for July and August 2017 this is not looking likely. Sales for the two months dropped by 2.5% year-on-year to 0.64Mt. A representative of FANCESA later blamed the market change on a reduction in sales supporting the construction of tall buildings in the country’s key markets as customers switched to buying ‘random’ volumes.
Sure enough local producers have started to complain about foreign exporters damaging their trade. A union head in Chuquisaca called for cement and clinker imports by Yura from Peru to be banned and concerns have been raised about concessions offered to Itacamba, a joint venture between Spain’s Cementos Molins, Brazil’s Votorantim Cement and Camba Cement. President Evo Morales inaugurated this company’s new plant in Yacuses, Santa Cruz in early 2017. The niggles about foreign exports to Bolivia seem counter-intuitive given that the country is landlocked and it has the world’s highest capital city above sea level. Usually, markets with nearby ports are most at risk from clinker and cement imports. Yet, Itacamba was planning exports to Argentina in November so the import and export markets via road and river links can’t be discounted.
Cement sales may be down so far in 2017 but overall the wider economy appears to be in rude health. After a strong decade of growth the national Gross Domestic Product (GDP) growth rate has fallen each year since 2014, but it was still 4.3% in 2016, one of the highest in South America. If that kind of growth persists it seems unlikely that the cement industry will have trouble for long.
Peruvian sales increase in October 2017
21 November 2017Peru: A total of 925,000t of cement was sold in Peru in October 2017, an increase of 12.1% compared with sales in October 2016 and 3.3% above sales in September 2017, according to data from Asocem. Cement production stood at 922,000t, 6.3% higher than October 2016 and 4.4% higher than September 2017. Domestic sales stood at 873,000t, 5.8% higher than in October 2016 and 4.4% compared to September 2017. Cement production hit 8.19Mt in the first 10 months of 2017, 2.1% down year-on-year. Domestic cement sales reached 7.85Mt in the first 10 months of 2017, 1.5% down year-on-year. Total sales, including exports, reached 8.15Mt in the first 10 months of 2017, 1.9% down year-on-year.
Hurricanes halve cement demand in Puerto Rico
21 November 2017Puerto Rico: Cement sales in Puerto Rico contracted by 47.1% in October 2017 compared to the same period of 2016, due to the effects Hurricanes Irma and Maria. Cement sales had been falling generally since 2013 and they fell by 12.3% in 2016. Meanwhile, cement production declined by 52.9% year-on-year in October 2017. Cement production dropped by 11.5% in 2016, representing the fourth consecutive year of decline in the commonwealth.
Update on Argentina
15 November 2017Forget the news stories about poor markets in Colombia and Brazil. Argentina is riding a construction boom right now. Local producer Loma Negra recently ran an initial public offering and it picked a good time to do it. It aimed to generate up to US$800m from the flotation and in the end it raised over US$1bn. Good news for its Brazilian owner InterCement no doubt, which was last reported as aiming to sell a 32% stake in the company in order to cover its debts. More cheer must have followed from Loma Negra’s third quarter results this week. Its cement sales volumes rose by 9% in the latest quarter to 1.72Mt due to expanding local construction activity.
Graph 1: Cement production and consumption in Argentina Q1 – 3, 2008 – 2017. Source: Asociación de Fabricantes de Cemento Portland (AFCP).
As Graph 1 shows its experience mirrors the wider industry. Cement production rose by almost the same rate for the industry as whole, by 10% year-on-year to 3.19Mt for the quarter, according to Asociación de Fabricantes de Cemento Portland (AFCP) data. For the nine months as a whole production has also risen by 9% to 8.7Mt. This figure is the third highest in the last decade since 2008. Production peaked in 2015 before dropping a major 10Mt following a subdued construction industry in the wake of devaluation of the Argentinean Peso in late 2015 and early 2016. At the time LafargeHolcim, the operator of Holcim Argentina, also blamed the negative influence of neighbouring Brazil’s own financial woes. The economy has bounced back giving the country’s its highest nine month cement consumption figure, 8.8Mt, in the last decade.
Earlier in the year LafargeHolcim said it was importing 0.25Mt of cement into Argentina between May 2017 and April 2018 because it couldn’t meet local demand from its own plants. Given the over-abundance of clinker in the world one might be forgiven for being sceptical about this claim. Bolivia’s Itacamba announced it was also exporting cement to Argentina this week. However, the other point to note from the graph is that consumption has been about 90,500t higher than production so far in 2017. This is an envious position for local producers to be in. One more striking feature that sticks out from the graph above is the undulating curve than both production and consumption has. The Argentinean economy has been through the ringer in recent years and this shows in the ups and downs of the figures.
From the perspective of the three major domestic producers, Loma Negra’s sales revenue rose by 53.9% year-on-year to US$620m in the first nine months of 2017. Its adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) rose by a whopping 73% to US$157m. Cementos Avellaneda, owned by Spain Cementos Mollins and Brazil’s Votorantim, reported similar good news with its overall results boosted by the Argentine market. Its sales revenue in the country rose by 28.3% to Euro130m and its EBITDA rose by 59.5% to Euro32.4m. Although Mollins did make the point that inflation had been particular problem in Argentina, although its impact had been ‘greatly’ outweighed by price rises. LafargeHolcim has had its problems globally so far in 2017 but Argentina hasn’t been one of them. Its operations in the country have been propping up the group’s Latin American results each quarter so far in 2017. Despite being one of its smaller regions by sales revenues, its sales and earnings delivered some of the group’s highest growth in the third quarter of 2017.
In this kind of environment new production capacity can’t be far away. Sure enough Cementos Avellaneda plans to increases the capacity of its San Luís cement grinding plant by 0.7Mt to 1Mt/yr by the second quarter of 2019. US$200m has been earmarked for the project.
So, great news for Argentina and proof that poor markets can turn around. The Brazilian cement association SNIC reckoned in October 2017 that the rate decline of cement sales was slowing, suggesting that the bottom of the downturn was in sight. On the evidence of the current situation in Argentina once the market does revive, South America will be the place to watch.