Displaying items by tag: Sales

Many Saudi Arabian cement producers have reported increased annual sales and profits in recent weeks. Southern Province Cement’s sales revenue rose by 27% year-on-year to US$440m in 2020 from US$347m in 2019. Net Profit after zakat and tax increased to US$162m from US$123m. Other producers enjoyed similar boosts. The reason can be seen in the country’s domestic cement sales. They rose by 21% year-on-year to 51Mt in 2020 from 42Mt in 2019. After a promising start to the year the coronavirus pandemic hit local production hard in the second quarter of 2020. However, it nearly doubled year-on-year in June 2020 and kept up the pace thereafter.

Graph 1: Domestic cement sales in Saudi Arabia, 2010 – 2020. Source: Yamama Cement.

Graph 1 above puts the cement sales in 2020 into context over the last decade. Sales hit a high in 2015 but then started to wane as infrastructure spending dried up due to lower oil prices and decreased government spending. A ban on exporting cement was subsequently relaxed but the general market appeared to adapt to the new situation. This changed significantly in 2020 with analysts attributing the turnaround to programs organised by the Ministry of Housing. This growth has carried into 2021 with NCB Capital forecasting an increase of 3.5% in local cement sales in 2021 due to the ongoing housing programs, the country’s so-called ‘Giga’ projects and investment by its sovereign wealth fund, the Public Investment Fund (PIF), as part of its 2021 - 2025 strategy. They reported that demand created by the country’s large-scale projects began to be felt along the supply chain in the fourth quarter of 2020 and associated contracts have started to be issued.

To give an example of the scale of some of these schemes, one of the proposed giga projects is to build a new city called Neom from scratch near the Red Sea coast. The resulting conurbation is intended to showcase new technologies and diversify the Saudi Arabian economy away from hydrocarbons. It has a price tag of US$500bn. An airport was built in 2019 and a next step was announced in January 2021, introducing a 160km linear city without roads called ‘The Line.’ Doubtless it will require lots of cement to realise the dream in whatever forms it happens to end up taking.

The wider picture here is that global oil prices hit a low in April 2020 as coronavirus lockdowns triggered a worldwide drop in demand although they then started to recover. The International Monetary Fund (IMF) estimates that Saudi Arabia’s gross domestic product fell by just under 4% in 2020. In response the PIF has upped its investment in the local economy including in the ‘Giga’ projects like Neom. There has been scepticism internationally about whether these projects will progress any further beyond press releases and actually get built. However, the cement producers’ financial results, cement sales figures and reporting from analysts like NCB Capital show that some investment is happening and it’s having results. The sector still faces a battle against overcapacity. It had a production utilisation rate of just under 70% despite the increase in cement production in 2020. Yet cement producers in Saudi Arabia have done well. While the Saudi Arabian government continues to spend on infrastructure in order to rebalance its economy this looks set to continue.

Germany/Sweden: Refratechnik Group and Sweden-based Höganäs Borgestad Group have started a strategic agreement for the supply of refractory products to customers in Nordic countries. Höganäs Borgestad customers will now have direct access to the product range and application knowledge of the Refratechnik Group. The refractory suppliers said that their arrangement, “underscores the desire of both companies for long-term, sustainable and mutually beneficial partnerships; resulting in a secure supply of top-quality product for the customer.”

Germany-based Refratechnik Group operates refractory and industrial mineral businesses, with over 1900 employees in 27 locations worldwide. Sweden-based Höganäs Borgestad is the largest refractory company in the Nordic region providing installation services and refractory materials to many industries.

Pakistan: Members of the All Pakistan Cement Manufacturers Association (APCMA) recorded cement sales of 38.0Mt in the eight-month period ending on 28 February 2021 – the first eight months of its 2021 financial year – up by 14% year-on-year from 33.3Mt in the corresponding period of the 2020 financial year. The Dawn newspaper has reported that exports rose by 7% to 6.33Mt from 5.94Mt while local dispatches rose by 16% to 31.6Mt from 27.4Mt.

The association said that producers face problematically high costs due to rises in coal and energy prices.

Russia: Siberian Cement produced 4.6Mt in 2020 from its five plants, a decline of 4.7% year-on-year. Notably, its integrated Krasnoyarsk cement plant managed to increase production by 3% to 0.63Mt. Majority owned subsidiaries, Iskitimcement and Angarskcement, officially became part of Siberian Cement in mid-June 2020. The group currently reports it has a production capacity of 9Mt/yr.

Argentina: Data from the Asociación de Fabricantes de Cemento Portland (AFCP) shows that cement shipments fell by 11.1% year-on-year to 9.87Mt in 2020 from 11.1Mt in 2019. They fell significantly in the first half of the year but subsequently recovered. Overall shipments - including local sales, imports and exports – last rose in 2017. Despite this, exports rose by 31% to 0.13Mt in 2020 from 0.10Mt in 2019.

Brazil: Cement producers sold 60Mt of cement in 2020, up by 11% year-on-year. The Valor Econômico newspaper has reported that residential and commercial renovations and new projects contributed to the increase. The National Cement Industry Association (SNIC) has forecast that growth will not exceed 1% in 2021. It said that this will be due to an economic downturn and the end of the government’s emergency aid programme.

Vietnam: The Vietnam National Cement Corporation (VICEM) aims to increase cement production by 1% year-on-year to 22Mt in 2021. The Viet Nam News newspaper has reported that the company is targeting a sales increase of 7% to US$1.5bn and a profit increase of 13% to US$99m. The company says that it expects domestic cement consumption to rise by 5% to 30Mt.

The group has set out six solutions by which to achieve its goals: continue to ‘optimise and improve production capacity’ through promoting research and application of advanced science and technology, focus on ‘investment in depth,’ reduce consumption, use resources economically and reduce environmental impacts throughout the supply chain.

VICEM chair Bui Hong Minh said, “Implementing the comprehensive restructuring project of the corporation in the period of 2019 - 2025 approved by the Ministry of Construction, VICEM is focussing on promoting innovation and creativity to bring new development space and motivation to the Bim Son Cement unit in particular and the cement industry in general.”

In 2020 VICEM increased its full-year profit by US$30m.

Vietnam: Vietnamese cement export growth is forecast to slow in 2021. The Viet Nam News newspaper has reported on research by SSI Research that expected exports to remain stable due to high infrastructure spending in China, but that growth is unlikely due to the full recovery of Chinese domestic cement supply in 2020. SSI Research forecasts a total 2021 cement and clinker sales growth of 2% year-on-year to 104Mt from 102Mt. It predicts a 5% - 7% increase in domestic sales. The country’s installed cement production capacity is due to rise by 7% or 7Mt in early 2021.

Syria: The General Company for Cement and Building Materials in Hama central province (Hama Cement) recorded cement sales in excess of 1Mt in 2020. Clinker sales were 0.7Mt. Syrian Arab News Agency (SANA) has reported that the total value of sales was US$96m. The year included the beginning of concrete paving slab production at the company’s plant.

The company said that 2021’s tasks consisted of improving the technical specifications of the product and producing new cement types, modernising equipment, developing workers’ skills and diversifying investments.

Saudi Arabia: Domestic cement sales in November 2020 were 4.8Mt, up by 17% year-on-year from November 2019. Mubasher News has reported that Saudi cement exports fell by 6% to 179,000t from 192,000t. Clinker exports rose by 85% to 490,000t. The national clinker inventory fell for a seventh consecutive month, to 38Mt.

In November 2020 Saudi Arabia produced 5.0Mt of cement and 4.3Mt of clinker.