Displaying items by tag: Türkiye

Spain: Turkey’s Çimsa Çimento has purchased Cemex’s white cement business in Spain, including its Buñol plant, for around US$180m. Cemex expects to sign the final agreement in April 2019 and close this divestment during the second half of 2019. The proposed divestment does not include Cemex’s white cement business in Mexico, nor its interest in Lehigh Cement in the US.

“With the purchase of the Buñol white cement plant in Spain, we are upgrading our game in the white cement sector, the highest value-added business in the global cement market. With the integration of the Buñol white cement plant to our production and distribution networks, we will increase our white cement production capacity by 40%, translating into Çimsa becoming the world's largest white cement company,” said Tamer Saka, the president of Sabancı Holding Cement Group and chairman of Çimsa. He added that Çimsa is among Turkey’s leading exporters. In 2018 it generated over 50% of its operational profit from overseas operations.

Once a final agreement is reached the transaction is subject to standard regulatory approval.

There was lots to mull over in the latest Committee for European Construction Equipment (CECE) Annual Economic Report. The headlines were that the construction industry market peaked in 2017 and that the mining industry was still recovering, but maybe slowing, in 2018.

For the construction industry the CECE reported that a growth period from 2008 to 2018 reached a high level of growth of 4.1% in 2017. This fell to 2.8% growth in 2018 and is forecast to drop to 2% growth in 2019. It put this in terms of the sector having a cyclical nature, normally of around eight years. This means it believes a downturn is overdue. Slowing gross domestic product (GDP) growth and tighter financial and monetary conditions are expected to drag on the residential sector. The non-residential side is growing by more than 1.5% in Europe but it has started to following the residential sector. It also noted the ‘very poor’ performance of the infrastructure sector due to government under-investment.

Graph 1: GDP vs Construction Output, year-on-year change (%). Source: Euroconstruct & CECE.

The construction equipment sector saw sales rise by 11% in 2018, bringing it to only 10% below the high recorded in 2007. The CECE reported that the rate of growth for concrete equipment was becoming ‘less dynamic’ after four years of growth. Sales in Europe grew by 17% in 2018 but there was a wide difference between northern and southern countries. France and Germany had 9% and 14% growth respectively but Italy and Spain had 23% and 60% growth respectively. Looking at product groups, truck mixer sales and batching plant sales were particularly strong, with growth rates over 10%. Overall, most countries experienced growth, with the exception of Turkey.

Graph 2: Growth rates in construction equipment sales by product groups in Europe, year-on-year change (%). Source: CECE.

Looking globally, the CECE said that Europe ‘slightly underperformed’ in 2018 as worldwide equipment sales grew by a fifth. It attributed this to the return of emerging markets, led by China and India. Sales in Latin America recovered with a rise of 15% but Brazil, notably, was not part of this trend. North America and Oceania had growth rates of around 20% but the Middle East and Africa saw declining sales. The CECE forecasts global equipment sales growth of 5 – 10% in 2019 subject to there being no trade wars.

Tying into this, the German Mechanical Engineering Industry Association (VDMA) said today that Sebastian Popp, its Deputy Managing Director, described cement plant equipment manufacturers as a ‘drag’ on the rest of the building materials plant sector. His words were from an event that took place earlier in March 2019. Overall incoming order and turnover fell in 2018. He blamed this on a cement market characterised by overcapacity. However, if cement plant engineering was removed from the calculations then the incoming orders of German building material plant manufacturers would have risen by 17% year-on-year and turnover by 16%.

None of this is encouraging for the European cement equipment manufacturers. However, as we said in February 2019 (GCW 390), the market is changing and so too are the suppliers. A period of transition is to be expected. Recent good news from Denmark’s FLSmidth include an order for a new plant in Paraguay and sales figures for its vertical roller mills in 2018. Russia’s Eurocement ordered three mills from Germany’s Gebr. Pfeiffer just last week.

Panama: The Ministry of Commerce and Industries (MICI) is planning to introduce regulations testing cement imports for Hexavalent chromium (chromium VI). Edgar Arias, Director of Standards and Industrial Technology of the MICI, said at a trade forum that the new rules had been agreed, according to La Estrella de Panamá newspaper. At present cement is tested at the discretion of the importer. Under the new regulations cement will be tested before it leaves its country of origin, when it arrives in Panama and for a third time at the point of sale at the discretion of the authorities.

Panama imports 10,000 – 20,000t/month of cement from countries including China, Turkey and Vietnam. Around 20 importers handle the market. Import tax on cement ranges from 10 – 20% depending on the point of origin.

Turkey: Akçansa’s sales revenue grew by 13% year-on-year to Euro285m in 2018 from Euro252m in 2017. Its net profit increased by 21% to Euro29.8m from Euro24.7m. The joint venture between Sabancı Holding and Germany’s HeidelbergCement attributed its sales growth to continued efforts to protect its domestic market against competition and its growth overseas. Umut Zenar, Akçansa General Manager, said that the company started exporting products from Ambarlı Port in 2018. The cement producer aims to double its exports during 2019.

Kazakhstan: Dal Holding plans to build a 1.8Mt/yr cement plant in Aktobe region for around US$270m. The project will be a joint venture with the Aktobe Civic-Entrepreneurship Company (CEC), according to Interfax. The joint venture has been created and a road map has been signed. Construction at the site is scheduled to start in April 2019. Dal Holding is an engineering company that undertakes projects in the cement, mining and energy sectors. Previously, in 2016, China’s Huaxin Cement was linked to cement projects in the region.

One of the more interesting news stories in recent weeks was the completion of Oyak Cement’s acquisition of Cimpor. Previously we focused on the connection to Taiwan Cement (GCW377). Around the same time that the Oyak-Cimpor deal was announced in late October 2018 the Taiwanese company bought a 40% stake in the Turkish cement producer for around US$640m. However, as the world’s sixth largest cement producer by cement production capacity, Turkey is always a country worth keeping an eye on for both the Oyak deal and the wider industry.

Graph 1: Turkish domestic cement sales, 2007 - 2017. Source: Turkish Cement Manufacturers' Association (TÇMB).

Graph 2: Turkish cement and clinker exports, 2007 - 2017. Source: Turkish Cement Manufacturers' Association (TÇMB).

Data from the Turkish Cement Manufacturers' Association (TÇMB) shows that domestic cement sales have been rising steadily to 72.2Mt in 2017 after a blip in the late 2000s. So far 2018 has not kept the trend, with a drop of 2.01% year-on-year to 50.8Mt for the first nine months of 2018 from 51.8Mt in the same period in 2017. Turkey is also a major exporter of cement so these are the other figures to watch. After hitting a high of nearly 18Mt in 2010 they dropped for five years before rising again. The ratio of clinker in the exports total has also been growing recently. LIke domestic production ,exports were down at the nine month mark in 2018, by 1.8% to 9.9Mt, but the ratio of clinker exports has continued to grow.

Given the focus on exports for the Turkish market Oyak Cement’s international purchases via Cimpor widen its options. The deal covered assets in Portugal and Cape Verde including three integrated cement plants and two mills, with a total cement production capacity of 9.1Mt/yr. It’s not clear yet how Oyak wants to run its new foreign plants but it might be tempting to focus on a grinding model abroad using imported Turkish clinker depending on running costs. Back home in Turkey Oyak Cement is the largest local producer with a 15% market share. It operates seven integrated plants with a production capacity of 16Mt/yr according to Global Cement Directory 2019 data.

As for the other major companies, Akçansa, a joint venture of Sabancı Holding and HeidelbergCement, saw its sales rise by 4% to US$277m in 2017. Its sales volumes of cement and clinker rose but its exports fell by 13% to 1.3Mt. In its third quarter report for 2018 HeidelbergCement highlighted issues with the local economy such as high inflation, a currency crisis and a resulting loss of confidence.Sabancı also holds a majority stake in the other major producer, Çimsa Çimento. At the six month mark Çimsa Çimento reported that its sales grew by 35% year-on-year to US$162m and its net profit increased by 55% to US$23.2m. Notably, Çimsa also runs a number of international terminals in Germany, Italy, Spain, the disputed Turkish Republic of Northern Cyprus and Russia, with distribution operations in Romania and the US also.

As mentioned above the general Turkish economy faced problems in 2018 when the value of the Turkish Lira dropped sharply in mid-2018 and interest rates soared. This led to a reduction in industrial output. On the cement side this is likely visible in falling local sales in 2018 and the switch to exports. Raw materials have also risen in this environment leading the president of the TÇMB to reassure the construction industry that the price of cement would not rise too sharply in 2019. Some of the eye-watering input hikes that he cited included a 76% rise in electricity costs, a 182% rise in the price of coal and a 170% rise in the price of petcoke. With this kind of backdrop the 2018 annual results for the Turkish producers may not make easy reading. Yet this also may explain why Oyak Cement moved overseas and allowed Taiwan Cement to invest in it when it did. Looking more widely it seems exports are likely to grow in the near future.

Portugal: Turkey’s Oyak Cement has completed it acquisition of Cimpor. The completion of the transaction follows the approval of the European Commission in mid-January 2019, according to the Expresso newspaper. The purchase includes three integrated cement plants, two grinding plants, 20 quarries and 46 ready-mix concrete plants in Portugal and Cape Verde.

Belgium: The European Commission has approved the acquisition of sole control over Cimpor Portugal by Turkey’s Oyak. The commission ruled that there are no competition concerns between the cement producers given that they operate in different geographic markets. The deal was announced in late October 2018.

Turkey: YD Madencilik, part of Üstyapi Insaat Group, has ordered two grinding plants from Germany’s Christian Pfeiffer for a new cement plant in the Düzce region. Christian Pfeiffer will supply two parallel grinding plants, consisting of a roller press (2x 1450kW) and a ball mill (Ø 4.0 x 13.0m, 3200kW), supplemented by a KS200 static separator and a TFS 325-Z twin feed separator.

Each of the two plants ensures a production of 210t/hr of ordinary Portland Cement. Alternatively, the two grinding plants can also be operated separately to allow production of different types of cement. It is also possible to operate the roller presses or the ball mills in single mode. Delivery of components for the plants started in late 2018 and they are scheduled to be completed by the end of may 2019. Christian Pfeiffer previously worked with YD Madencilik in 2015.

Turkey: Nihat Özdemir, the chair of Limak Holding and president of the Turkish Cement Manufacturers’ Association (TÇMB), has reassured the construction industry that the price of cement will not rise too sharply in 2019. He denied that the price would rise by up to 40%, according to the Hürriyet Daily News newspaper. However, he did confirm that prices would increase due to growing input costs and negative foreign currency exchange effects. Özdemir said that electricity costs had risen by 76%, coal by 182% and petroleum coke by 170%.

In late December 2018 the Construction Contractors Confederation (İMKON) complained about an expected 40% price rise in cement products and it called on the government to intervene. The Independent Industrialists’ and Businessmen’s Association (MÜSİAD) has also issued a similar warning.