Displaying items by tag: coronavirus

Trinidad & Tobago: Trinidad Cement says it has no plans to raises its prices at the current time. However, it reserves the right to do so in the future if its production costs change, according the Trinidad Guardian newspaper. The subsidiary of Mexico-based Cemex said that it had suffered ‘significant’ losses due to government coronavirus-related regulations. It has not sold cement to the local market since early May 2021 with the exception of three construction projects due to the request of the government. The cement producer added that its silos and warehouses were fully stocked and that it was ready to start supply when it is given permission to do so.

Cement shortages at retailers has been reported in June 2021. Cement importer Rock Hard Cement announced earlier in the month that it was set to raise its prices in July 2021 due to increasing prices around the world and volatile shipping rates.

India: The South Indian Cement Manufacturers’ Association has supplied 200 oxygen concentrators to the Chief Minister Relief Fund (CMRF) to help in the fight against the Covid-19 outbreak in Andhra Pradesh. United News of India has reported the value of the donated items as US$273,000.

India: Ratings agency ICRA has forecast a 25% year-on-year decline in cement sales during the first quarter of the 2022 financial year to 30 June 2021. Domestic cement demand fell by 4% year-on-year and by 35% month-on-month in April 2021, according to the Press Trust of India. The agency said that this was due to the spread of the Covid-19 outbreak to rural areas and the imposition of numerous regional lockdowns. Pent-up demand is expected to drive a gradual recovery in the second quarter from July 2021. Costs for cement companies increased by 5% nationally year-on-year in April 2021. Increased fuel, power and transport costs all contributed to the rise.

US: The Portland Cement Association (PCA) Market Intelligence Group has released its Spring 2021 Regional Forecasts for the Northeast, Central, West, and Southeast regions. Residential construction has been identified as the main driver of consumption growth in most regions.

The Pacific sub-region of the West is forecast to grow by 1.1% year-on-year in 2021, while the Mountain sub-region will drop by 0.7% following strong growth in 2020.

The West South Central sub-region is expected to rise by 2.3% and the West North Central by 1.2%. In the former this will be supported by residential demand and a recovery in the oil well cement market. The PCA added that he sub-region maintains very strong construction fundamentals given demand from strong in-migration and an expanding tax base.

The PCA noted that the Northeast had been hit ‘hard’ by the coronavirus pandemic but that cement consumption still grew by 0.6% in 2020. In 2021 the association has forecast growth of 0.1%. Although residential construction is expected to drive demand the association said that the region is expected to lag behind national trends in public cement consumption given, “state fiscal conditions and the characteristics of the region.”

Finally, the PCA forecasts that cement consumption in the South Atlantic sub-region will be ‘strong’ with growth of 6.8% in 2021 and 2.1% in 2022. Demand in the East South Central sub-region is also expected to be positive with consumption growth of 7.6% in 2021 and 1.9% in 2022.

Trinidad and Tobago: Rock Hard Cement says it intends to raise the price of its imported cement in July 2021 due to increasing prices around the world and volatile shipping rates. It added that it expected prices to stabilise in 2022, according to the Trinidad Express newspaper. Cement shortages have been reported at retailers in the country. This has been attributed to local manufacturer Trinidad Cement stopping production in early May 2021 dye to government coronavirus-related health regulations.

Paraguay: Cartes Group subsidiary Cementos Concepción says that construction of its San Lázaro, Concepción, cement plant is 70% complete and on track for a commissioning date in August 2022. The La Nación newspaper has reported that the total investment value of the project is US$200m. President José Ortiz said that two issues had been overcome in staying on schedule, namely the Covid-19 outbreak and low flow of the river on which the new plant will be situated, both of which presented logistical problems. Work also continues on the establishment of a dedicated power plant for the plant at Vallemí.

Another week and it’s another commodity story related to the effects of coronavirus. This time the Indian press and financial analysts have started to notice a shift in the fuel mix of some of the major producers from petcoke to coal. UltraTech Cement moved to 30% petcoke and 60% imported coal in the fourth quarter of its 2021 financial year that ended on 31 March 2021. This compares to a reported mix of 77% and 10% in the previous year according to Mint. Dalmia Bharat reduced its share of petcoke to 52% in the fourth quarter from 70% in the third quarter, while its coal mix was 35 - 40% in the fourth quarter.

Price is the driver here. UltraTech Cement’s chief financial officer Atul Daga summed the situation up in an earnings call in late January 2021. Essentially, he said that fuel represented about 13% of total costs for cement producers in India and that both the cost of coal and petcoke nearly doubled from June 2020 to January 2021. However, coal is seen as the cheaper option, hence the move towards it in the fuels mix ratio. The petcoke market meanwhile has suffered due to reduced oil refinery output due to, you guessed it, the effect of coronavirus on global markets in 2020. Scarcity in the US market has particularly affected the decisions on buyers for Indian cement companies since this is the key source of their imports. Demand for petcoke from Latin America and the Mediterranean hasn’t helped either. Both petcoke and coal markets are expected to stabilise in the second half of 2021. Diesel prices have also risen recently causing UltraTech Cement’s power and fuel costs to increase by 28% year-on-year to US$356m and logistics costs, including freight expenses, to rise by 25% to US$449m in the fourth quarter of its 2021 financial year.

With this in mind it’s interesting then, that for some analysts at least, fuel prices have been seen as more worrying for cement producer profits than the latest round of coronavirus-related lockdowns from India’s second wave of infection. Fitch Ratings for example, warned that the impact of mounting fuel costs would continue to be seen in the quarter to June 2021 but that it would subside due to the switch in fuel mix and price rises passed to end consumers. On the lockdowns, it forecast that localised restrictions, with cement plants being allowed to continue operating in most states, would cause a far less pronounced drop in cement demand than during the first national lockdown.

Graph 1: Monthly cement production in India, January 2019 – April 2021. Source: Office of the Economic Adviser.

Graph 1 above shows that the crisis the Indian cement sector faced during the first lockdown, when production crumbled by 85% year-on-year to 4.3Mt in April 2020. The following recovery saw production reach its second highest ever figure at 32.9Mt in March 2021. It’s too soon to tell what’s happening from the national figure but that dip in April 2021 is not looking good so far.

One benefit from unstable fuel prices is that it builds the economic case for cement producers to raise their alternative fuels substitution rates. UltraTech Cement, for example, reported that its ‘green’ energy rate grew to 13% in its 2021 financial year from 11% in 2020. With a target of 34% by its 2024 financial year, this is an ideal opportunity for a change for both UltraTech Cement and other producers.

Colombia: Grupo Argos has formed an alliance with five other Colombian companies to boost the number of women and young people in work. The alliance will focus on creating sustainable and competitive job opportunities. The participants say that they will jointly offer 6000 mentorship places. Youth and female unemployment respectively rose to 25% and 31% nationally during the on-going Covid-19 outbreak. Grupo Argos said that it is part of its corporate social responsibility to take action to create quality work.

Egypt: Suez Cement, part of Germany-based HeidelbergCement, has begun its first round of staff inoculations against Covid-19 at its plants and offices. Government medical staff supervised the sessions, which the company said were well attended.

Human resources director Sherry Bishara said, "I am pleased to take this opportunity to thank the Ministry of Health and Suez governorate Preventive Medicine Directorate for their collaboration in providing the vaccine and medical staff needed for administering the vaccine for staff and also to thank the group's medical service for facilitating the campaign.”

Vietnam: Vicem recorded 9.72Mt of cement production in the first four months of 2021, up by 12% year-on-year from 8.67Mt in the first four months of 2021. The Viet Nam News newspaper has reported that the company is targeting 22.0Mt of cement in 2021, corresponding to a 1% rise year-on-year. Chair Bui Hong Minh said that the growth signals the success of Vicem’s coronavirus pandemic prevention measures at meeting their aim of maintained operational stability.