Displaying items by tag: coronavirus

India: Low demand for power due to the 25 March 2020 – 31 August 2020 nationwide coronavirus lockdown has caused Shree Cement to suspend some of its power plant operations due to a lack of buyers. The Business Standard newspaper has reported that 300MW of Shree Cement’s 650MW power generation capacity produces power for sale to other users on the national grid. Joint managing director Prashant Bangur said, “Owing to the lockdown, power demand was impacted and some of our power capacities were shut. Power demand has not completely recovered yet. Right now, power plants are shut because there is no demand; viability is the second part.”

The first stage of lifting lockdown was announced on 1 June 2020.

India: Aditya Birla subsidiary Grasim Industries recorded a loss of US$36.0m in the first-quarter of the 2021 financial year (1 April 2020 – 30 June 2020), compared to US$26.9m profit in the first quarter of the 2020 financial year. The company attributed this to a 61% year-on-year fall in sales to US$260m from US$668m due to ‘lower realisation and weak demand’ during coronavirus lockdown. Consolidated cement sales over the period were US$228m, down by 29% year-on-year from US$320m.

South Africa: PPC has said that it may issue a rights offer for US$68.7m-worth of shares in order to raise funds to ‘repay and restructure debt locally and in other African markets, and to refinance after the economic effects of the Covid-19 pandemic.’ Pretoria News has reported that PPC has forecasted a 20% year-on-year drop in earnings in the year to 31 March 2020 due to ‘a slump in domestic demand and an influx of cheaper Chinese imports, even prior to lockdown.’

There has been good news from the German Cement Works Association (VDZ) this week. Following a strong start to the year, the association expects cement consumption in 2020 to remain similar to the level, 28.7Mt, reported in 2019. VDZ president Christian Knell acknowledged the difficulty in making forecasts, this year of all years, but said that the association remained positive since demand had held up so well. He noted the continued operation of construction sites, despite the local coronavirus-related lockdown from March 2020, and the ‘quick action’ of politicians.

Graph 1: German cement deliveries, 2015 – 2019: Source: German Cement Works Association (VDZ).

The year certainly started well, with a 33% year-on-year increase in domestic cement deliveries to 1.43Mt in January 2020 from 1.07Mt in January 2019. This was due in part to good weather, although it also looks good because 2019 started badly compared to 2018. Yet, the VDZ’s assessment has been supported by the results of the main producers operating in the country. HeidelbergCement reported that Germany bucked the trend of its Western and Southern Europe Group area in the first half of 2020 with a ‘positive market development’ whereas deliveries declined significantly everywhere else. Similarly, LafargeHolcim noted a ‘resilient’ performance in Germany. Buzzi Unicem released a more detailed assessment, with shipments of hydraulic binders down in April and May 2020 but then back up with a recovery in June 2020. Overall its cement plants reported a slight decline in sales for the first half of the year. Concrete production grew however, by 6% year-on-year, possibly aided by the plants that the group purchased in 2019.

Germany’s success appears to be down to two factors. The first, as Knell mentioned above, is that it was able to keep much of its construction industry open through its lockdown. Dieter Babiel, the head of Hauptverband der Deutschen Bauindustrie – the main German construction industry association - reckoned that the industry was operating at about 80% capacity in May 2020 compared to the situation in other large European countries like France, the UK, Spain and Italy where building sites totally closed at the height of local lockdowns before gradual reopening. Bauindustrie has since reported falling monthly order intake as coronavirus-effects on the general economy filter through to construction. The other reason is that the country has managed to control its outbreak better compared to other European countries. It has reported the third most cases in Europe but its fatality rate is only 4% compared to 14% in the UK, Italy and France. This has been attributed to strong public health measures and high levels of testing, particularly with respect to elderly residential care.

It’s not all plain sailing though since the International Monetary Fund (IMF) has projected a 7.8% decline in Germany’s gross domestic product (GDP) in 2020. Likewise, the VDZ is predicting weakening construction markets and cement demand in the fourth quarter of 2020. It cited falling orders and requests for building permits as mounting evidence for this trend. From here a gloomier outlook is foreseen for 2021 as construction budgets for commercial and government projects are cut. At the same time uncertainty in the labour market is expected to drag down the residential market. With this in mind the VDZ is predicting cement demand to drop by 3 – 5% in 2021.

To end on an upbeat note, if the VDZ’s forecasts are accurate, then the German cement sector looks like it might weather the coronavirus-downturn better than other industries. It knows a downturn in construction is coming and it can prepare for it.

Germany: The Verein Deutscher Zementwerke (VDZ) has forecast domestic cement consumption of 28.7Mt in 2020, consistent with the 2019 level. The impacts of the coronavirus lockdown were offset by “a good start to the year, not least due to the weather conditions” and “the continued operation of construction sites in March thanks to the quick actions of politicians.”

The organisation said that the situation was unprecedentedly unpredictable with orders and building permits currently in decline. It expects demand to partly tail off in the fourth quarter of 2020, falling by between 3 - 5%, as companies postpone or discard planned developments in the face of restricted budgets. It said, “Nonetheless, the government’s economic stimulus pacts will undoubtedly provide a positive impetus through such initiatives as public infrastructure and multi-family housing projects.

Bangladesh: Cement producers imported US$760,000-worth of raw materials in the 2020 financial year which ended on 30 June 2020, down by 13% year-on-year from US$874,000 in the 2019 financial year. Clinker, calcareous stone, granulated blast furnace slag (GBFS) and gypsum imports totalled 18.6Mt, down by 11% from 21.0Mt, compared to annual growth of 15 - 20% since 2010.

The Daily Star newspaper has reported that this was due to decreased cement demand, with sales falling to 65,000t in April 2020 from 125,000t in March 2020 on account of the start of the nationwide coronavirus lockdown. Premier Cement managing director Amirul Islam said, “We are not getting the benefits we expected from the government. The sector’s capital is gradually running out, so all kinds of discretionary tax cuts are needed to save this industry.”

Bangladeshi cement producers import raw materials from Thailand, Vietnam and China.

Japan: Taiheiyo Cement recorded a net profit between 1 March 2020 and 30 June 2020, the first quarter of the 2021 financial year, of US$30.6m, down by 42% year-on-year from US$52.6m in the first quarter of the 2020 financial year. Sales fell by 3% to US$1.88bn from US$1.94bn. The company said that the coronavirus outbreak affected sales in all regions.

Philippines: Eagle Cement recorded a net profit of US$26.5m in the first half of 2020, down by 61% year-on-year from US$68.0m. Sales also fell, by 44% to US$120m from US$214m.

Chief executive officer (CEO) Paul Ang said, “These are very difficult times but we remain confident that the economy will recover from this pandemic and emerge stronger. The government’s steady push for the completion of major infrastructure projects and the private sector’s readiness to bounce back offer encouraging signs for our company’s prospects moving forward.” He added, “More aggressive strategies in pricing and marketing will be undertaken in the remaining half of the year.”

Argentina: Loma Negra’s first-half net profit declined by 68% year-on-year in 2020 to US$14.2m from US$44.4m in the 2019. Sales fell by 30% to US$215m from US$306m. The company said that business was “impacted by the increasing complexities of the Covid-19 pandemic,” but that a strong recovery in bagged cement sales beginning in May 2020 was an indicator of general growth to come in the second half of the year.

India: Shree Cement recorded a profit of US$49.6m between 1 April 2020 and 30 June 2020, up by 2.1% year-on-year from US$48.6m in the corresponding quarter of the previous financial year. Sales fell by 23% to US$311m from US$406m due to the impacts of the coronavirus lockdown, which ended during the quarter, on cement demand.