Displaying items by tag: coronavirus

Spain: Consumption of cement in the first eight months of 2021 was 9.58Mt nationally, up by 13% year-on-year from 8.48Mt in the first eight months of 2020. The Spanish Cement Industry Association (Oficemen) says that consumption remains 2% below pre-Covid-19 outbreak levels in the corresponding period of 2019. The El Economista newspaper has reported that the association has forecast full-year cement consumption of 14.6Mt in 2020, slightly below the full-year 2019 figure of 14.7Mt.

President José Cascajero said "These levels put us on the path to have a growth in future years that is hopeful. The recovery of infrastructure, which has returned to being the primary source of demand, and residential building, has allowed both consumption and expectations to be substantially improved since April 2021.”

In 2022, he forecast year-on-year demand growth of 3 - 5%, due in part to the positive impacts of the EU post-Covid-19 outbreak recovery fund. Cascajero warned of the increasing burden of rising electricity prices and CO2 emissions fees and called for ‘structural reforms’ to mitigate their drag on growth.

Oman: Raysut Cement has said that it will commission its upcoming 1Mt/yr Duqm plant, the country’s first clinker grinding plant, in late 2021. The cost of the project is US$30m. The company’s global capacity target is 10Mt/yr by 2022 and 22Mt/yr ‘in the near future.’ It operates the 3Mt/yr Salalah cement plant in Oman and holds minority stakes in three East African grinding plants.

Support services and business development chief Yousef Ahmed Alawi Alibrahim said “This has been a challenging year for manufacturing industries in general, but RCC has been able to negotiate the hurdles with effective planning focusing on health and safety.”

India: Cement companies produced 82Mt of cement in the three-month period ending on 30 June 2021, the first quarter of the 2022 financial year, corresponding to growth of 54% year-on-year. Production in the quarter declined by 12% quarter-on-quarter, due to the proliferation of new state Covid-19 lockdowns from April 2021 onwards. The Hitavada newspaper has reported that ratings agency ICRA forecast that full-year production will rise by 12% in the 2022 financial year, on account of pent-up demand, growing rural housing demand and a pick-up in infrastructure activity. It nonetheless estimated that production will remain 2% below pre-Covid-19 outbreak 2020 financial year levels, with continuing high costs due to rising fuel prices. In the first quarter of the 2022 financial year, coal prices more than doubled and petcoke prices rose by 98% year-on-year.

Nepal: The Cement Manufacturers Association of Nepal (CMAN) recorded average capacity utilisation across the local cement sector below 30% following the start of a national coronavirus lockdown that started in late April 2021. Despite the end of the Clockdown over the summer, demand is currently low due to an economic slowdown, according to the Kathmandu Post newspaper. It reported that three or four of the country’s 64 cement plants have shut down.

CMAN president Dhruba Thapa said, “There is a huge gap in output and demand in the market currently. Nepal's cement industry has a production capacity of 22Mt/yr, and this will rise to 25Mt/yr in the 2022 financial year. Demand reached around 9Mt in the 2021 financial year."

China: Sales revenue from China National Building Materials’ (CNBM) cement business grew by 3% year-on-year to US$9.26bn in the first half of 2021 from US$8.98bn in the first half of 2020.Adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) rose by 12% to US$3.02bn from US$2.70bn. The group’s cement and clinker sales increased by 7.6% to 177Mt. Its concrete sales volumes increased by 13% to 52Mm³. It reported that government fiscal policy boosted demand from January to April 2021 but that heavy rainfall and increasing bulk commodity prices in May 2021 slowed the progress of some projects.

Across all business lines, the group’s revenue grew by 14% to US$18.9bn from US$16.5bn in the same period in 2020. Adjusted EBITDA rose by 13% to US$3.98bn from US$3.51bn. Total revenue benefitted from particular gains from its New Materials and Engineering businesses. However, the Engineering businesses segment reported significant drops in earnings in the reporting period. Sinoma International reported that it faced ‘multiple challenges’ such as the coronavirus pandemic outside of China, rising raw material prices and negative currency exchange effects.

Turkey: Builders have declared a one-day ‘strike’ on 2 September 2021 to protest against high cement prices. The Turkish Builders Confederation (IMKON) told the government that, though the prices of all commodities rose following the onset of the Covid-19 pandemic, the cement price rise is disproportionate, according to the Dünya newspaper. Producers responded that they have recorded sharp increases in input prices. Electricity costs rose by 64% year-on-year in July 2021, while coal costs more than doubled over the same period.

Myanmar: An outbreak of Covid-19 in Panglaung township, where 57 new cases have been recorded since late August 2021, allegedly originated at a cement plant. The Shan Herald Agency has reported that the Nagar cement plant in Si Kip, Shan state was allegedly flouting Covid-19 safety regulations. 21 employees of the plant have tested positive in the latest outbreak of the virus.

Kenya: Cement producers recorded a 28% year-on-year increase in production in the first five months of 2021 to 3.35Mt from 2.65Mt in the first five months of 2020. The Business Daily newspaper has reported that the Kenya National Bureau of Statistics recorded a 27% increase in cement consumption to 3.35Mt from 2.64Mt. The increases follow a rise in infrastructure investment by the government, especially in the roads and dams segments. Increased credit requests by property developers also indicate a recovery in the private sector following the decline of the Covid-19 outbreak. Kenyan gross domestic product (GDP) growth is forecast at 6% in the 2021 full year.

Our latest look at South America starts by posing the question: how far can the market in Brazil keep growing? As Graph 1 shows below, cement sales skyrocketed through the coronavirus pandemic, due to a general recovery locally that started in 2018 and relatively weak lockdown measures compared to other countries. Rolling annual totals on a monthly basis from the National Cement Industry Association (SNIC) suggest that this growth period tailed off from May 2021. SNIC was also keen to point out that, despite nearly hitting nearly a 20% growth rate at one point, the sector was still 11% behind where it was before the lull that lasted from 2015 to 2018. As ever the association has an eye on potential risks. At present these include legislative reforms, price inflation and carbon pricing. It noted that Mexico, Colombia, Chile and Argentina all price carbon already but said that the country ‘has a great ally in the Brazilian cement industry’ on the issue.

Elsewhere the big story in Brazil has been the ongoing sale of Holcim’s local assets. The latest news at the start of August 2021 was that the bidders included CSN Cimentos, Cimentos Mizu, Cimento Apodi, InterCement and Votorantim. The first three companies were reportedly working in a consortium in an attempt to buy 10 production plants while InterCement and Votorantim were focusing on smaller bids to avoid the ire of the competition regulators. Aside from this, CSN Cimentos agreed to buy Cimento Elizabeth for US$220m in July 2021 and Companhia Nacional de Cimento (CNC), part of Italy-based Buzzi Unicem’s 50% subsidiary BCPAR, acquired CRH Brasil following approval by the regulators. Of note on the production side, Votorantim Cimentos started operation of a new production line at its Pecém grinding plant in Ceará in July 2021.

Graph 1: Cement sales in selected South American countries in first half of year, 2019 – 2021. Source: Local cement associations and national statistics offices.

Over in Peru the now familiar gap-tooth pattern of stunted growth in 2020 can be seen in the sector’s cement sales, but sales rebounded far stronger than comparable sized markets in Argentina and Colombia. Sales nearly doubled to 6.42Mt in the first half of 2021 from 3.33Mt in the same period in 2020 and were significantly higher than the 4.94Mt recorded in the first half of 2020. Imports are also worth watching. Combined cement and clinker importers nearly doubled from 0.76Mt in the first half of 2019 to 1.4Mt in the first half of 2021. Clinker imports made up about two thirds of this figure and the Association of Cement Producers (ASOCEM) noted in June 2021 that 88% of the imported cement came from Vietnam while about two thirds of the clinker came from Japan and Indonesia.

Away from the market data, both Cementos Pacasmayo’s and Unión Andina de Cementos’ (UNACEM) financial results bounced back in the first half of 2021. Cementos Pacasmayo attributed the rebound to sales of bagged cement to the self-construction sector and public sector reconstruction demand. UNACEM also noted the effect of the self-construction sector and said it expected its ‘solid’ cement despatches to continue for the rest of the year despite the risk of a third wave of coronavirus in the country and the messy presidential elections. Other stories of note so far in 2021 include new developments in Cementos Interoceanicos long-held plans to build a 1.0Mt/yr cement plant in Puno and a major upgrade planned to Yura’s integrated plant in Arequipa.

In Colombia local cement despatches grew by 34% year-on-year to 6.20Mt in the first half of 2021 from 4.61Mt in the same period in 2020. Cementos Argos reported major improvements in sales, sales volumes of cement and earnings due to the lockdown in 2020. However, a national wave of protests calling for social reform that started in the spring of 2012 forced the company to shut down its integrated Yumbo plant for over a month. This represented 18% of its national sales. The output of other plants in the country was also negatively affected by roadblocks created by the unrest. Cemex reported the same problems in the country.

Finally, Argentina’s cement despatches rose by 44% to 5.52Mt in the first half of 2021 from 3.83Mt in the same period in 2020. Loma Negra reported that its sales, sales volumes and earnings were all up by a similar rate. The subsidiary of Brazil-based InterCement started up the kiln on its new 2.7Mt/yr production line at the L’Amalí cement plant in Olavarría in June 2021 and commissioning of the new mill and despatch centre on the line were reportedly coming soon in early August 2021. Earlier in the year, in May 2021, Holcim Argentina inaugurated a new 0.5Mt/yr clinker production line at its Malagueño cement plant in Cordoba. These expansion projects were ordered long before coronavirus appeared so it will take a while to see their effects upon the local market. However, the government intervened in June 2021 when it persuaded some building materials producers to agree to reference prices in a bid to curb mounting inflation.

This is what recovery looks like so far in 2021 in the larger cement producing countries in South America. The Brazilian market’s growth phase may be waning after a furious period that even coronavirus wasn’t allowed to slow. Peru’s potential seems set to take off, Colombia’s rebound should have been greater (but it was dented by social unrest) and Argentina seems to be resetting to its usual level. Whatever else happens in the coming months the story to watch going forward will be which company picks up Holcim’s assets in Brazil.

India: Birla Corporation’s revenue rose by 42% year-on-year to US$237m in the quarter of 30 June 2021 from US$167m in the same period in 2020. Sales volumes of cement increased by 38% to 3.35Mt from 2.42Mt. However, it noted that its sales volumes were 8% lower than the same period in 2019. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) grew by 40% to US$47.6m from US$34.0m. The cement producer said, “Better management of the lockdown this year, both by the company and the [government] administration, helped mitigate the effects of restrictions imposed in the areas of operations of the company relative to last year.” It added that construction work had continued to be delayed on its new 3.9Mt/yr integrated cement plant in Mukutban, Maharashtra due to the second wave of coronavirus.