Displaying items by tag: Yura

Peru: The Directorate for Research and Promotion of Free Competition (DLC) of the Peruvian National Institute for the Defence of Competition and Protection of Intellectual Property (INDECOPI) has launched administrative proceedings against Gloria Group subsidiary Yura. The El Comercio newspaper has reported that nine Yura employees face allegations of participating in, planning and executing anti-competitive conduct. Logistics partner Racionalización Empresarial is also subject to the investigation.

Two fairly serious investments in Peru made the industry headlines this week. The first was Yura’s plans to upgrade its Arequipa cement plant at a cost of US$200m. The project will involve increasing the plant’s clinker production capacity as well as installing a new mill and a 4.3km conveyor. The second was the latest instalment in Cementos Interoceanicos’ long held ambition to build a plant. It has struck a deal with France-based Satarem to build a 1Mt/yr plant near Puno. The deal also includes Satarem buying a 30% stake in Cementos Interoceanicos and plans to construct two lime units as well.

Graph 1: Local cement sales in Peru, January 2020 to February 2021 compared to January 2019 to February 2020. Source: ASOCEM.

These projects follow a squeeze for the local industry due to coronavirus-related containment measures. Data from the Association of Cement Producers (ASOCEM) shows that cement sales collapsed during the lockdown to just 11,000t in April 2020 before recovering in the autumn. Total annual local sales fell by 17% year-on-year to 9.7Mt from 11.6Mt. Sales have also remained high in January and February 2021.

The experience from the larger cement producers mirror the data from ASOCEM. Cementos Pacasmayo’s sales revenue fell by 7% year-on-year to US$354m in 2020 and its earnings before interest, taxation, depreciation and amortisation (EBITDA) fell by 21% to US$86.3m. Unión Andina de Cementos’ (UNACEM) income fell by 14% year-on-year to US$467m in 2020. Despite this, UNACEM managed to sign a deal to buy Cementos La Unión Chile for US$23m in December 2020. The purchase consists of a 0.3Mt/yr cement grinding plant and a 0.34Mm³/yr ready-mix concrete business with multiple concrete plants and trucks. UNACEM described Chile as its main clinker export destination and it holds concrete and precast subsidiaries in the country.

Yura’s general manager Ramón Pizá reportedly called his company’s plans a “vote of faith in Peru.” This is not an understatement considering the market shocks caused by coronavirus in 2020. The country implemented public health measures relatively early during the pandemic but still ended up with one of the worst death rates per capita in Latin America so far. As the British Medical Journal (BMJ) pointed out earlier this month, the timing was right but tragically the application of public health measures has been found wanting. Yet, the fundamentals for the Peruvian cement market are strong. Annual sales mounted from 2017 to 2019, and were showing signs of continuing this in early 2020 before the lockdown shut the market down. This growth pattern has continued so far in 2021.

Peru: Yura plans to upgrade its Arequipa cement plant at a cost of US$200m. The planned upgrade will increase the plant’s clinker production capacity to 8000t/day from 5000t/day. The La República newspaper has reported that the sustainability-enhancing expansion involves the installation of a new vertical roller mill, packing, storage and dispatch equipment and a 4.3km raw materials conveyor. General manager Ramón Pizá called the modernisation a “vote of faith in Peru.”

Peru’s been the place over the last week with news reports of new production capacity and its targeting as a key export market by Vietnam.

Local press reported this week that three new cement grinding plants are planned to start production in 2019. Cemento Inka plans to build a 0.6Mt/yr grinding plant at Ica near Pisco. It also plans to upgrade the kilns at its plant at Cajamarquilla near Lima. Then Mixercon, a ready-mix concrete firm, wants to spend US$20m towards building two new plants in northern Lima, also in 2019. It also has plans to open distribution centres around the capital too.

For a local industry generally dominated by local often family-controlled producers this is quite a change. The larger companies – Pacasmayo, UNACEM and Yura – normally dominate the headlines and the market here. Unsurprisingly then that Pacasmayo and Yura also have upgrades planned for their plants in 2019 too.

Changes to capacity started in late May 2018 when Salaverry-based importer Invecem was said to be buying equipment for a 0.25Mt/yr grinding plant. Then things really started moving when Unacem bought Cementos Portland (Cempor), a joint venture between Chile's Cementos Bío Bío and Brazil’s Votorantim Cimentos. The foreign companies were planning to build a plant near Lima but the project was delayed by a legal battle over environmental issues intitiated by Unacem. This was followed by Cal & Cemento Sur (Calcesur), a subsidiary of Grupo Gloria, announcing that it was going to add a new production line to its cement and lime plant in Puno.

With this level of interest in grinding plants going on it’s unsurprising that Vietnam, a major exporter of cement, has taken an interest. Imports of cement to Peru rose by 65% year-on-year to 0.94Mt in the 12 months from December 2017 to November 2018 from 0.57Mt in the same period previously. Imports of clinker rose by 37% to 0.78Mt from 0.57Mt. This compares to a rise of 21% to 0.61Mt in cement imports in 2017 and a fall of 1.2% to 0.51Mt in 2016. In the 12 months to the end of November 2018 most of that imported cement (81%) came from Vietnam followed by 14% from China and 3% from Mexico. Clinker imports have been more varied with 39% from South Korea, 31% from Vietnam, 19% from Ecuador and 11% from Japan. The general situation for the clinker producers has been a slight increase in cement production to 10Mt for the 12 months to the end of November 2018 and slightly higher increases in despatches.

So, it looks like an apparent cement demand is up in Peru and the importers are rushing to meeting demand. The question, then, is why haven’t the clinker producers announced projects to squeeze out the grinders? As mentioned above Pacasmayo and Yura have upgrades planned but nothing really large seems to be coming yet. Also, given the tough time Cempor was given by the local companies what kind of opposition are the new projects by Cemento Inka, Mixercon and Invecem likely to face? The country’s gross domestic product (GDP) growth rate is below the glory days of the 2000s when it topped 6% but it is still one of the strongest in South America with 3.8% forecast for 2019 by the World Bank. This is the country in the region to watch in 2019.

FLSmidth 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.

Peru: Yura has ordered a vertical roller mill from Loesche America for installation at a cement plant in Arequipa.

The subsidiary of Gloria Group has chosen a Loesche Mill Type LM 56.2+2 C/S to be part of a clinker and pozzolana dry-grinding plant. The product rates will be exceeding 170t/hr of cement with a fineness of 5000cm²/g Blaine. The gearbox has an installed capacity of 4000kW.

Loesche will be responsible for the complete import portion of the grinding plant in between mill feeding hoppers and cement silo inlet. Additionally, Loesche will deliver a compact LOMA hot gas generator, the set of main drive motors, a set of instruments for process control loops and the dust emission monitoring. Delivery is expected to take eight months.