Displaying items by tag: coronavirus

Qatar: Qatar National Cement Company recorded a profit of US$27.5m in the first six months of 2020, down by 32% year-on-year from US$18.8m over the corresponding period of 2019. Sales were US$79.8m, down by 23% from US$104m. The company attributed the decrease to a decline in demand due to the coronavirus outbreak.

Spain: Total domestic cement consumption was 6.19Mt in the first half of 2020, down by 17% year-on-year from 7.41Mt in the first half of 2019. Interempresas News has reported that the coronavirus lockdown caused consumption in the period to decrease. June consumption rose by 5.2% to 1.34Mt from 670,000t in June 2019.

Oficemen president Victor García Brosa said, “In June 2020 many of the works paralysed during the confinement, for example real estate developments, were resumed, but the monthly positive data should not make us think of a recovery in the sector." He added, “We continue to insist that construction is the driving force for the employment that our country needs right now and cannot continue to be forgotten by the administration. Other sectors such as the automotive or tourism sectors already have contingency plans activated, while ours continues to be largely forgotten, even though it could generate a significant volume of jobs.”

China: Asia Cement China has estimated a 40% - 45% year-on-year decline in profit in 2020 due to lower sales volumes and selling prices. Dow Jones Newswires has reported that this is due to the impacts of the coronavirus outbreak on cement demand outside of China. The company is active in several countries including Thailand, Taiwan and South Korea.

Argentina: Employees of two companies hired by LafargeHolcim subsidiary Holcim Argentina to carry out maintenance work at its suspended 2.4Mt/yr integrated Malagueño plant in Córdoba Province have taken up residence at the Hotel Uruguay in the resort town of Villa Carlos Paz, causing the hotel to lock down because they did not have the proper certification from the Centro de Operaciones de Emergencias (COE) provincial coronavirus lockdown authority.

The El Diario de Carlos Paz newspaper has reported that the workers, from Olavarría and San Nicolás, Buenos Aires Province, planned to remain locked down in the hotel for fourteen days. Due to their lack of COE certification, Villa Carlos Paz security locked down the hotel while coronavirus tests are carried out. Holcim Argentina manager of corporate affairs Belén Dagher said, “Following our application in June 2020, the COE and the Municipality of Malagueño gave us the authorisation for the arrival of the workers. The companies hired the hotel, and negative coronavirus tests for all workers were sent to the relevant authorities.” He added, “We are making a special space for them to stay at the plant.”

Holcim Argentina is carrying out essential maintenance work on the Malagueño plant, which is scheduled to reopen in mid-to-late 2020.

Colombia: Cementos Argos Colombia says that it has delivered facemasks and biosafety kits containing thermometers, floor charts and a digital health-monitoring app to 23,000 of its customers across Colombia. The company said that the initiative was undertaken, “In the hope of strengthening the commitment to the continuation of the sector operations in biosafety conditions, and the revitalization of the economy.”

Regional vice president Tomás Restrepo said, “At Argos, we have the firm intention of being the best allies to our customers. In this context it becomes more relevant than ever to work hand-in-hand for the health and wellbeing of our strategic allies and to contribute directly to the safe continuity of the construction, the recovery of the industry and the health of the economy.”

Data is starting to emerge from South American countries for the first half of 2020 and it’s not necessarily what one might expect. Countries had different trends in play before the coronavirus pandemic established itself and then governments acted in their own ways with mixed results. Here’s a brief summary of the situation in the key territories.

Graph 1: Cement sales in selected South American countries in first half of year, 2018 – 2020. Source: Local cement associations and national statistics offices. Note: Colombian data is for January – May for each year.

Brazil’s cement sector looked set to become the big loser as global events seemed poised to dent the recovery of cement sales since a low in 2018. This didn’t happen. The Brazilian national cement industry union’s (SNIC) preliminary data for the first six months of 2020 shows that sales grew by 3.7% year-on-year to 26.9Mt. This is above the growth rate of 3% originally expected. Indeed, the monthly year-on-year growth rate in June 2020 was 24.5%. SNIC is not wrong in describing this kind of pace as being ‘Chinese.’ All this growth has been attributed to the home improvement market as people used their lockdown time to renovate their homes, renovations and maintenance in commercial buildings during lockdown and growing work on real estate projects. The government’s decision to implement weak lockdown measures clearly helped the sector but this may have cost lives in the process.

SNIC’s president Paulo Camillo Penna pointed out that producing and selling cement could co-exist with fighting coronavirus. However, trends such as a slowing real estate sector, less large construction projects and mounting input costs are all seen as potential risks in the second half of 2020. What SNIC didn’t link to the wider fortunes of the local cement industry was the economic consequences of coronavirus. The World Bank, for example, has forecast an 8% fall in gross domestic product in Brazil in 2020 due to its coronavirus, “mitigation measures, plunging investment and soft global commodity prices.”

Peru, in contrast to Brazil, implemented a strong lockdown early in March 2020. Unfortunately, it didn’t seem to work as well as hoped possibly due to informal and structural issues such as reliance on markets, the informal economy and residential overcrowding. This means that production and sales of cement are significantly down without any public health benefit. Both production and despatches fell by about 40% to around 2.9Mt in the first half of 2020 with close to total stoppages in April 2020. In terms of coronavirus, Peru is at the time of writing in the top 10 worldwide for both total cases and deaths, behind only Brazil in South America. It should be pointed out though that Peru’s testing rate is reportedly high for the region and this may be making its response look dire in the short term. All of this is particularly sad from an industrial perspective given that Peru was one of the continent’s strongest performers prior to 2020. One consolation though is that the economy is expected to recover more quickly compared to its neighbours.

Argentina started 2020 with a downward trend in its local market. Cement sales had been falling since 2017, roughly following a recession in the wider economy. Throw in a strong lockdown and sales more than halved at its peak in April 2020. So far this has led to a drop of 31% to 3.83Mt for the first half of 2020 compared to 5.51Mt in the same period in 2019. Unfortunately, a recent spike in cases in Buenos Aires has led to renewed lockdowns in the capital. Due to this unwelcome development and the general economic situation Fitch Ratings has forecast an overall decline in cement sales volumes of 25% for 2020 as a whole.

Finally, Colombia’s cement production fell by 24% year-on-year to 3.90Mt in the first five months of 2020 from 5.14Mt in the same period in 2019. April 2020 was the worst month affected. The country’s lockdown ended on 13 April 2020 for infrastructure projects and on 27 April 2020 for cement production and residential and commercial construction. On 5 May 2020 Cementos Argos said that domestic demand was at 50% of pre-lockdown levels. Data from DANE, the Colombian statistics authority, shows that local sales fell by around a third year-on-year to 0.71Mt in May 2020 from 1.06Mt in May 2019.

Most of the countries examined above follow the pattern of reduced cement production and sales in relation to the severity of the lockdown imposed and the resulting intensity of the coronavirus outbreak. Stronger lockdowns suppressed cement production and sales in the region of 20 – 40% in the first half of the year as governments shut down totally and then released industry and commerce incrementally. The exception is Peru, which has suffered the worst of both worlds: a severe lockdown and a severe health crisis. Local trends have continued around this, like the recovery in Brazil in the construction industry and the general recession in Argentina.

SNIC’s president has said that making and selling cement needn’t be exclusive with public health measures. He’s right but Brazil’s surging case load is an outlier compared with most of its continental neighbours and the rest of the world. Cement sectors in countries with growing economies like Peru and Colombia are expected to bounce back quicker than those with stagnant ones like Argentina. The risk for Brazil is what its government health strategy will do to the construction sector in the second half of 2020.

Germany: HeidelbergCement has estimated sales of Euro4.32bn in the second quarter of 2020, down by 13% year-on-year from Euro4.97bn in the corresponding quarter of 2019. The figure is 11% higher than the average market expectation of Euro3.91bn.

The company said, “With the COPE action plan, the company has already launched a comprehensive bundle of measures in February 2020 that focuses on cost savings and maintaining liquidity. These measures took effect especially in the second quarter of 2020 and made a significant contribution to the fact that cost savings largely offset the burden on earnings caused by the Covid-19-related decline in revenue.”

Russia: Siberian Cement has reported a 4% year-on-year rise in total cement production across its five integrated cement plants to 2.2Mt in the first half of 2020 from 2.1Mt in the same period in 2019. Angarskcement increased production by 9% to 289,000t from 265,000t, Iskitimcement by 8% to 454,000t from 420,000, Krasnoyarsk Cement by 2% to 295,000t from 289,000t and Topkinsky Cement by 1% to 1.0Mt from 990,000t, while Timlyuycement kept production level at 165,000t. The group shipped 101,000m3 of concrete over the period, down by 21% due to the impacts of the coronavirus lockdown on demand.

Vice president Gennady Rasskazov said, “The first half of 2020 turned out to be a difficult period. In April 2020, which traditionally opens the high construction season in Siberia, construction collapsed and demand fell by 20% from April 2019 levels. We closed this gap on a half-year basis due to increased sales after construction resumed. However, the situation remains difficult, it is almost impossible to predict its development.”

Ireland/UK: Quinn Building Products has said that rigid social distancing and sanitation practices introduced in response to the coronavirus in March 2020 have become the ‘new normal’ for its 800 employees across nine sites. The measures include: 22-person-capacity socially distanced team meeting areas, overflow break and lunch marquees; 24/7 cleaning services from AAA Pristine Clean; and socially distanced floor marking and directional signage.

The company said, “Our dedicated teams have done an outstanding job on designing and implementing these changes and their work has allowed us to reopen all of our production facilities in past weeks. We are also working with all our customers, contractors and suppliers to ensure we can safely service customer needs.”

France: The government has given a 90% guarantee for a Euro200m loan taken by process technologies and automation specialist Fives from six banks. The company said that the loan, “allows Fives to secure its required liquidity in a time when the Covid-19 crisis has slowed down the business activity in many of its markets. It will also contribute to finance the group’s technological and commercial developments to prepare the future and confirm its positioning as a key player in the industry of the future.”