Displaying items by tag: Uzbekistan
Kyrgyz lawmaker calls for lift of cement import ban from Uzbekistan
27 September 2024Kyrgyzstan: MP Alisher Kozuyev has called for the removal of the ban on importing Uzbek cement, stating during a parliamentary committee meeting on 24 September 2024 that it would reduce prices and enhance quality for Kyrgyz consumers by increasing market competition. He argued that the current ban supports local monopolies and raises domestic cement prices. The ban was introduced three months ago and is designed to protect local manufacturers, according to officials. Nonetheless, deputy minister of economy and commerce, Choro Seyitov, warned that cheaper Uzbek cement could threaten local industries, especially in the Osh region, and risk jobs and tax revenue. Seyitov also noted that some Uzbek cement does not meet Kyrgyz standards and certification requirements, and accused Uzbek exporters of price dumping.
Cement production rises in Uzbekistan
13 September 2024Uzbekistan: Cement companies in Uzbekistan produced 9.08Mt of cement from January to July 2024, marking a 34.6% rise year-on-year. In July 2024, production reached 1.33Mt.
Afghanistan: The governments of Azerbaijan and Uzbekistan have agreed to build a new 1Mt/yr cement plant in northern Afghanistan. Trend News has reported that representatives of the three countries met to discuss the upcoming plant, as well as other opportunities for regional cooperation, railways and the role of Afghanistan in the Economic Cooperation Organisation.
Kyrgyzstan: 174,800t of cement entered Kyrgyzstan in the first half of 2024, more than double first-half 2023 import volumes of 83,200t. Neighbouring Kazakhstan supplied 152,000t (87%) of the total, according to data from the Kyrgyz National Statistical Committee. Central Asia News has reported that other imports originated from China, Iran and Uzbekistan.
Kyrgyzstan’s first-half cement production declined by 2% year-on-year in the period under review, to 1.3Mt. However, it grew by 10% year-on-year in June 2024. The country exported 190,000t of cement throughout the first half of 2024, all of it to Uzbekistan, down by 21% from first-half 2023 levels.
No imports into my backyard
21 August 2024A couple of stories have popped up this week regarding restrictions on cement imports. First, authorities in Taiwan have launched an anti-dumping investigation into Vietnamese cement. Secondly, and perhaps more surprisingly given its growing economy, the authorities in Kyrgyzstan are planning to ban overland imports of cement from within Central Asia. More on that later…
First, to the Far East, where Taiwan’s Trade Remedies Authority has launched an anti-dumping investigation into cement and clinker imported from Vietnam. It will assess imports covering the year from 1 July 2023 to 30 June 2024 and target seven specific Vietnamese cement producers among others. The Vietnamese companies are mandatory respondents – they will be compelled to answer investigators’ questions.
Vietnamese cement has long been among the cheapest in the region due to the country’s drive to hit production targets, rather than simply meeting demand. The situation has resulted in a vast amount of cement available for export. This, coupled to Vietnam’s long, indented coastline, makes it easy to ship cement overseas.
Even with export volumes falling by 1.2% year-on-year to 31.3Mt in 2023, around a third of Vietnam’s capacity, this is a massive volume of cement - and it’s only getting cheaper. The average export value of Vietnamese cement and clinker fell from US$46-48/t at the start of 2023 to just US$31-32/t in May 2024, a decline of 30-35%. These changes have been due, in part, to an increase in tax on clinker exports from 5% to 10% on 1 January 2023 and an anti-dumping investigation launched by the Philippines in March 2023. Falling prices and volumes represent a ‘double-whammy’ for producers, several of which have announced that they made losses in the first half of 2024. Vicem’s top management said that challenges also arose at home due to a reduced demand following limited civil engineering projects and a stagnant real estate market.
It is easy to see why Taiwanese cement producers may feel threatened by the prospect of greater volumes of cheap cement on their doorstep. Taiwan only made 4.9Mt/yr of cement in the first half of 2024. With domestic prices in the region of US$65-70/t according to Cement Network, this provides a very attractive margin of US$33-39/t for Vietnamese producers to export to Taiwan. It will be interesting to see how far the country’s authorities are willing to go to protect the country’s producers and whether any anti-dumping policies lead to further falls in the landed volumes of Vietnamese cement.
Meanwhile, 4600km to the west, Kyrgyzstan has announced that it will enforce a six-month road import ban on several types of cement including Portland cement, alumina cement and slag cement. The ban, affecting both cement and clinker, will take effect on 1 October 2024 and last for six months. According to the State Statistical Committee of Kyrgyzstan, the country saw a 76% year-on-year increase in cement imports – mainly from Iran, Kazakhstan, China and Uzbekistan - between January 2024 and May 2024. The total import volume over the five months was 125,737t. For a country that made just 1Mt over the same period, this is a major change.
The overland import ban is more of a surprise than the Taiwan / Vietnam situation, as Kyrgyzstan recently reported that the North of the country was experiencing a ‘construction boom’ and cement shortages. However, two new plants due to start production in the coming months could help the country out... unless it too would like to export its newly-developed cement production capacity.
And here we arrive at a ‘classic’ impasse. From Pakistani cement in South Africa, to price arguments in West Africa, import bans in Central Asia and Vietnamese cement in Philippines and Taiwan, more and more exporters are finding that their markets are already self-sufficient in cement, with the US perhaps the notable exception. Soon there will be nowhere left for cement to be exported to. Are we at peak cement?
Uzbekistan: Shriram EPC, a subsidiary of India-based conglomerate SEPC, has been awarded a US$325m contract from JV Ohongron Sement to build a 3Mt/yr greenfield cement plant in Urgaz Village, Akhangaran District, reports NDTV Profit. Shriram EPC will handle design, engineering, project management, civil works, supply, erection, testing and commissioning at the plant. The project will be completed over the next 30 months, according to an exchange filing.
Cement production rises in Uzbekistan
22 July 2024Uzbekistan: Cement manufacturers in Uzbekistan produced 6.2Mt of cement from January to May 2024, reflecting 35% growth year-on-year, according to data from the local Statistics Agency. In May 2024, production was at 1.7Mt.
Uzbekistan sees rise in cement production
10 July 2024Uzbekistan: From January to May 2024, Uzbekistan's cement production rose by 35.6% year-on-year, reaching 6.2Mt. In May 2024, companies produced 1.7Mt of cement, according to the latest data by the local Statistics Agency.
Kazakhstan: Steppe Cement saw a notable decrease in net profit to US$4.5m in 2023, down from US$17.9m in 2022. The company also reported a decrease in revenue to US$81.8m from US$86.7m in 2022, largely due to competitive pressures and logistical challenges, that affected exports. Despite these hurdles, domestic sales grew by 4%, though exports nearly ceased, reflecting the new capacities in neighbouring Uzbekistan which have driven down prices and diminished profits from exports.
The country's cement market contracted slightly to 11.5Mt in 2023, with per capita consumption settling at 575kg. The local cement industry has balanced demand and production, but seasonal fluctuations continue to affect the market, particularly in northern regions. Production costs increased by US$8m and the company has responded by increasing capacity by 0.1Mt with a US$3.1m capital expenditure aimed to enhance efficiency at its facilities. Looking ahead to 2024, an additional US$2.4m is earmarked for further improvements.
China to cap clinker production capacity
12 June 2024The National Development and Reform Commission and other government bodies in China released plans this week to cap clinker production capacity at 1.8Bnt/yr by the end of 2025. Energy efficiency of existing capacity will be used as the driver to determine which production lines can remain open. 30% of capacity will be required to be above the benchmark energy efficiency level. Plants below this line will be obliged to upgrade or face elimination.
Points of interest from the longer release include detail on how the authorities intend to promote energy efficiency. Installing improved production line equipment is as might be expected. However, there is also a drive towards low-carbon fuel substitution such as an increased thermal substitution rate (TSR) through the use of alternative fuels (AF), promotion of renewable energy sources and, interestingly, no new cement plants will be able to add captive coal power plants. The government is targeting a TSR of 10% by the end of 2025 with 30% of lines using AF in some form or another. A plan to reduce the clinker factor in cement is also being pushed through for the increased use of blast furnace slag, fly ash, carbide slag, manganese slag and other supplementary cementitious materials. This last point might have big implications for the ferrous slag export market but that’s a story for another day.
Working out how much these new measures will affect the cement sector in China in the short term is not straightforward since it’s unclear what the country’s actual production capacity is and how much of it is actually active. Data from the National Bureau of Statistics of China showed that cement output was 2.02Bnt in 2023. The China Cement Association (CCA) estimated that the capacity utilisation rate was 59% in 2023. So, if the sector were using all of its integrated cement plants flat out, then one might crudely suppose that the national production capacity might be around 3.5Bnt/yr. This guess does not take into account the prevalence of blended cements and a whole host of other factors so should be treated with caution. Given that cement output fell by 5% year-on-year in 2023, output could be just over 1.8Bnt in 2025 if the rate of decline holds. Research by Reuters in April 2024, suggested that the capacity utilisation rate hit 50% in that month, suggesting that the sector could meet the target in 2024 if it’s a particularly bad year. So, provided the production cap is enacted along the same lines of peak-shifting, where plants are temporarily shut for periods, then the target looks well within reach.
As reported in April 2024, the Chinese cement sector has faced rationalisation in recent years as the real estate market collapsed. Output peaked in 2020 and then fell subsequently. Most of the big producers endured falling sales volumes, revenue and profit in 2022, although some managed to resist the continuing decline in 2023. One coping mechanism has been to focus on overseas markets as proposed by the government’s Belt and Road initiative. Huaxin Cement has been a particular proponent of this strategy. The CCA says that China-based companies have invested in and built 43 clinker production lines in 21 countries with a cement production capacity of 81Mt/yr. Another 43Mt/yr of capacity is currently being built outside of China with yet another 25Mt/yr of capacity proposed for construction.
It is interesting, then, to note that the CCA issued an official warning this week to its members to invest ‘cautiously’ in Uzbekistan. The association said in a statement that at the end of April 2024 the country had 46 integrated production lines with a cement production capacity of 38Mt/yr. This is double the country’s demand for cement. Half of this production capacity is managed by China-based companies. It added that the utilisation rate was currently 50%, that the price had dropped by about 40% since 2020 and that competition was ‘fierce.’ Incredibly, another 7Mt/yr of capacity is expected to be added in 2024. The CCA has advised Chinese companies to consider the state of the Uzbek cement market before making any more investments.
The two news stories we have explored this week cover two sides of the same issue: Chinese cement overcapacity. The local market is finally slowing down after a period of phenomenal growth and the big question is what is the actual market demand now that all the big stuff has already been built. The government gives every impression it is using the decline to meet its sustainability goals. Like institutions in many other places it has set itself targets that it seems likely to meet. The flipside of overcapacity at home is investment overseas. China-based plant equipment manufacturers have certainly done well out of this situation. Yet in Uzbekistan, at least, it looks like the cement sector in China has also managed to export its overcapacity. This has created the absurd situation where the CCA has implored its members and others to exercise the same self-discipline abroad that the government extols at home. Another way to put this might be that Chinese cement companies are increasingly unable to make money at home… or in Uzbekistan. This then leaves a query over where else enthusiastic Chinese cement investors may be causing market imbalances. One solution might be for the Chinese government to impose a cap on clinker production by its companies outside the mainland. Whatever happens next though, the introduction of a capacity cap in mainland China marks a decisive change to the local cement sector.