Displaying items by tag: data

Argentina: Data from the Association of Portland Cement Manufacturers (AFCP) shows that total cement despatches grew by 23% year-on-year to 12.1Mt in 2021 from 9.87Mt in 2020. Cement consumption rose at a similar rate to despatches. However, exports fell by 13% to 115,000t in 2021 from 132,000t in 2020. Annual cement despatches have previously fallen in consecutive years since 2018. This trend started to change in the autumn of 2021.

The cement output data for December 2021 is out for China and we’re starting to see the effects of a rather tough autumn. Lower coal supplies, consumer prioritisation for energy supplies, higher input costs and a slowing real estate market all contributed to a reduction in output.

Graph 1: Cement output by quarter in China, 2019 –2021. Source: National Bureau of Statistics of China.

As can be seen in Graph 1 above, output took off after the shock of the coronavirus outbreak receded at the start of 2020. This then continued until mid-2021 when things changed. Overall cement out was 2.36Bnt in 2021, an annual drop of nearly 1.2% compared to 2.39Bnt in 2020. Note that the 2021 output figure is about average for China’s annual output since it hit a high of nearly 2.5Bnt in 2014. However, the months from September 2021 onwards have seen output drops of above 10% year-on-year. It’s been from a high base but if it were to continue it could signal a more ominous trend. As the China Cement Association (CCA) describes it, cement output started to slow from May to August 2021, in part due to seasonal factors and repeated local outbreaks of Covid-19 around the country. This trend then started to accelerate for the reasons mentioned above.

Looking at energy first, coal future prices in China hit a near-decade high in October 2021 due to a variety of market disruptions. This looked set to worsen at the start of January 2022 when the country’s biggest overseas supplier, Indonesia, banned exports for a month due domestic shortages. However, data has since emerged this week from the National Bureau of Statistics showing that Chinese coal production grew by 4% year-on-year to 4.07Bnt in 2021, with faster monthly growth, as the industry ramped up output to meet demand.

On the real estate market, the CCA views it as having run ‘hot’ and then ‘cold’ in 2021. At the start of the year the government introduced new government regulations (its so-called three red lines of policy) to reduce borrowing in the sector. The real estate market subsequently declined, not withstanding certain hot-spots. In the western press this process has been symbolised by the fortunes of Evergrande and its debts of over US$300bn. It started missing bond payments in September 2021 before formally defaulting in December 2021. As the Financial Times newspaper reported in a summary on the situation, in late December 2021, Evergrande said that work at 92% of its projects, which number in the hundreds across China, had resumed. Separate data though showed that its housing sales had slumped by 99% year-on-year in the same month. The newspaper has compared the Chinese government’s approach to Evergrande to its handling of conglomerate HNA Group, which was eventually declared bankrupt in 2021 after a slow disintegration. In its opinion the government may try to control the collapse of Evergrande through a series of quiet interventions over a long period. However, Evergrande’s debts appear to be double those of HNA Group’s and there may be further risks from other companies in the real estate sector. All of this presents risks to local cement output.

To round up, Chinese cement output in the second quarter of 2022 is the figure to watch to assess how well the industry is coping with its current issues. Production is likely to slow in the first quarter due to seasonal factors such as the New Year holidays, winter shutdowns and the hangover from the problems in the autumn. Once the spring arrives then we may have a glimpse of how cement companies are coping with coal supplies, the real estate market and all the rest.

And finally... Global Cement Weekly invites readers to explore Austria-based W&P’s virtual tours of three of its plants. The presentation is a fancier version of the panorama photo applications one can find on most smartphones but with some added mapping and visualisation settings. It’s a fantastic addition to the set of community outreach tools a cement company can use. Check it out here: https://alpacem.com/360/

US: The United States Geological Service (USGS) reported total cement deliveries of 89.7Mt in the first 10 months of 2021, up by 3.5% year-on-year from 86.7Mt in the corresponding period of 2020. Imports over the period totalled 13.8Mt, up by 17% from 11.8Mt.

10-month clinker production was 65.1Mt in 2021, up by 0.5% from 64.8Mt in the first 10 months of 2020.

Canada: France-based Fives FCB has secured a contract to upgrade the grinding unit at Ciment Québec’s Saint Basile integrated plant in Quebec. The supplier will install two FCB Horomill grinding workshops with FCB TSV 5000 THF classifiers, FCB aerodecanters and flash dryers and Fives TGT process filters. It said that its mills met the customer’s specifications: namely zero water use; minimum power consumption; data processing; and full automation with rapid recipe change.

Ciments Québec president and chief executive officer Luc Papillon said “After a thorough technical review of the various technologies available today for cement grinding, we have selected the Horomill, being confident that it is the best adapted solution for our multiple cements portfolio and our quest to reduce our cement environmental footprint.”

UltraTech Cement, Taiheiyo Cement, Cimtogo and the Chinese Cement Association (CCA) have all been talking about the same thing recently: energy prices.

India-based UtraTech Cement reported this week that coal and petcoke prices nearly doubled in the second quarter of its current financial year, leading to a 17% rise year-on-year in energy costs. Japan-based Taiheiyo Cement released a statement earlier in October 2021 saying that due to mounting coal prices it was planning to raise the price of its cement from the start of 2022. It principally blamed this on increased demand in China and a stagnant export market. It added that it was ‘inevitable’ that prices would rise further in the future. Meanwhile in West Africa, Eric Goulignac, the chief executive officer of Cimtogo, complained to the local press that the reason the company’s cement prices were going up was due to a 250% increase in the cost of fuels for the Scantogo plant and an increase in the price of sea freight of over US$35/t for transporting gypsum and coal.

Other places where the cost of energy has been biting cement producers include Turkey and Serbia. In the former, Türk Çimento, the Turkish Cement Manufacturers' Association, warned in June 2021 that the price of petcoke had nearly tripled over the previous year. Whether it was connected or not, the Turkish Building Contractors Confederation (IMKON) organised a strike in September 2021 due to high costs. The confederation claimed that the price of cement had tripled over the last year. In Serbia electricity prices have risen sharply in recent months in common with much of Europe. Local press reported comments last month from President Aleksandar Vučić saying that an unnamed cement producer had warned of a 25% rise in the price of cement if electricity prices remained high. In the UK the Energy Intensive Users Group (EIUG), a network of lobbying groups for heavy industry including cement, has been holding talks with the government on how to cope with growing energy costs. Finally, in the US, Lhoist warned in September 2021 that is was going to increase the cost of all of its lime products from the start of November 2021 due to increasing gas prices. These are just some of the reactions by cement and lime producers to the current global energy market. No doubt there are many more.

The current global energy crunch has widely been attributed to the waking up of economies following coronavirus-related dormancy in 2020 with supply failing to meet demand. Gas prices have risen to record highs and this has promoted electricity producers to switch to coal in the US, Europe and Asia. This in turn has put pressure on industrial users as both electricity and coal prices have grown and governments have taken action in some cases to protect domestic users. In Europe price pressure has lead to reductions in ammonia and fertiliser production. Power cuts have been reported in China and India.

In China a variety of factors have converged to create a crisis. These include shutting down coal mines on environmental and safety grounds, anti-corruption measures and even promoting mine closures to facilitate clean skies for national events such as the Communist party’s 100th anniversary. Disruption to import sources such as a ban on Australian coal on political grounds, flooding in Indonesia and a renewed coronavirus outbreak in Mongolia can’t have helped either. Thermal coal futures traded on the Zhengzhou Commodity Exchange hit a high of US$263/t on 15 October 2021 marking a 34% rise through the week and the largest weekly growth since trading started in 2013. The International Energy Agency estimates that coal demand in China grew by over 10% year-on-year in the first half of 2021 but coal production increased by just over 5%.

Industrial users have suffered as energy supplies have been rationed and producers asked to cut output. In September 2021 cement output fell by 12% year-on-year to 205Mt from 233Mt in September 2020. This is the lowest monthly figure for September since 2011. It’s also not the usual direction of double-digit rate of change that the Chinese cement sector is used to. The CCA attributed this mainly to energy controls, power shortages and high coal prices in Jiangsu, Hunan, Zhejiang, Guangdong, Guangxi, Yunnan, Shandong and elsewhere. Cement output for the first nine months of 2021 is still ahead of 2020 at 1.77Bnt compared to 1.67Bnt but it’s been slipping noticeably since July 2021.

This will leave energy users, including cement producers, watching the weather forecasts rather closely this winter. Should the Northern Hemisphere suffer a cold one then energy prices such as coal will reflect it. Industrial users may also become subject to energy rationing in many places. The knock-on effect of this then will be higher cement prices. However bad the winter does turn out to be though we can expect more cement companies trying to explain bashfully why their prices are going up. On the plus side any producer that can diversify its energy mix through solar, alternative fuels or whatever else is likely to be doing so soon if they are not already.

Argentina: Members of the Argentinian Portland Cement Producers’ Association (AFCP) dispatched 8.79Mt of cement in the first nine months of 2021, up by 32% year-on-year from 6.66Mt in the first nine months of 2020. Domestic consumption also rose by 32% to 8.7Mt from 6.6Mt. In 2020, full-year cement sales totaled 9.8Mt.

Companhia Siderúrgica Nacional (CSN) Cimentos was confirmed this week as the agreed buyer for Holcim’s Brazilian cement business for US$1.03bn. The deal includes five integrated cement plants, four grinding plants and 19 ready-mix concrete facilities. CSN is now poised to become Brazil’s third-largest cement producer by production capacity after Votorantim and InterCement. Or second place if you believe CSN’s cheeky claims about a competitor’s idle capacity!

Figure 1: Map of cement plants included in CSN Cimentos’ deal to buy LafargeHolcim Brazil assets. Source: CSN Investor Relations website.

CSN originally started out in steel production and this remains the major part of its operations to the present day. In 2020 it reported revenue of US$5.74bn. Around 55% of this came from its steel business, 42% from mining, 5% in logistics and only 3% came from its cement segment. CSN’s path in the cement sector started in 2009 when it started grinding blast furnace slag and clinker at its Presidente Vargas Plant at Volta Redonda in Rio de Janeiro state. It then started clinker production in 2011 at its integrated Arcos plant in Minas Gerais. Not a lot happened for the next decade, publicly at least, as the country faced an economic downturn and national cement sales sunk to a low in 2017. From around 2019, CSN Cimentos then started talking about a number of new proposed plant projects elsewhere in Brazil, dependent on market growth and an anticipated initial public offering (IPO). These included plants at Ceará, Sergipe, Pará and Paraná and expansion to the existing units in the south-east. Then CSN Cimentos agreed to buy Cimento Elizabeth for US$220m in July 2021.

It is worth noting that the Holcim acquisition is subject to approval by the local competition authority. For example, the Cimento Elizabeth plant and Holcim’s Caaporã plant are both in Paraíba state and within about 30km of each other. If approved, this would give CSN Cimentos two of the four integrated plants in the state, with the other two operated by Votorantim and InterCement respectively. CSN also stands to pick up four integrated plants in Minas Gerais from Holcim to add to the one it holds at present. Although this would seem to be of less concern due to the high number of plants in the state.

Holcim has made a point of saying that its divestment in Brazil is part of its strategy to refocus on sustainable building solutions with the proceeds going towards its Solutions & Products business following the Firestone acquisition that completed in early 2021. It has also stated previously that it wants to concentrate on core markets with long term prospects. In this context a major steelmaker like CSN diversifying into cement is a contrast. Both industries are high CO₂ emitters so CSN is hardly moving away from carbon-intensive sectors. Yet the two have operational, economic and sustainability synergies through the use of slag in cement production. This puts CSN Cimentos in company with Votorantim in Brazil and JSW Cement in India, two other steel manufacturers that also produce cement. Whatever else happens at the 26th United Nations Climate Change conference (COP26) in November 2021, it seems unlikely that global demand for steel or cement is likely to be significantly reduced. CSN Cimentos is now going to resume its IPO of shares to raise funds for the Holcim acquisition.

Acquisitions are all about timing. The CSN Cimentos-Holcim deal follows the purchase of CRH Brazil by Buzzi Unicem’s Companhia Nacional de Cimento (CNC) joint-venture earlier in 2021. As mentioned above, the cement market in Brazil has been doing well since it started recovering in 2018. The coronavirus pandemic barely slowed this down due to weak lockdown measures compared to other countries. The current run of sales growth may be tapering off based on the latest National Cement Industry Association (SNIC) figures for August 2021. Rolling annual totals on a monthly basis had been growing since mid-2019 but this started to slow in May 2021. Annual sales will be up in 2021 based on the figures so far this year but after that, who knows? A CSN investors’ day document in December 2020 predicted, as one would expect, steady cement consumption growth in Brazil until at least 2025, based on correlated forecast growth in the general economy. Yet fears of inflation, rising prices and political uncertainty ahead of the next general election in late 2022 may undermine this. InterCement, for example, cancelled a proposed IPO in July 2021 due to low valuations amid investor uncertainty. CSN Cimentos may encounter similar issues with its own planned IPO or face over-leveraging itself when it picks up the tab for LafargeHolcim Brazil. Either way, CSN decided to take the risk on its path to becoming Brazil’s third largest cement producer.

US: The US Geological Survey (USGS) recorded a 0.8% year-on-year increase in total US cement shipments in the first half of 2021 to 50.4Mt from 50.0Mt in the first half of 2021. Domestic deliveries constituted 85% of the total at 42.6Mt, against 7.75Mt of imports (15%). Clinker imports were 1.23Mt, with a total value of US$81.6m. Turkey was the lead exporter of clinker to the US in 2020 at 470,000t (38%), followed by Saudi Arabia with 466,000t (38%) and Canada with 276,000t (22%).

It’s time for a macroscopic view of the Chinese cement sector this week with the release of the half-year financial results by some of the larger Chinese cement producers. On the national level the picture so far in 2021 has been one of continued recovery from the coronavirus lockdowns at the start of the year and then a slowing market as state controls on real estate speculation started to take effect. However, poor weather in the spring and mounting raw material prices appear to have compounded the effects of the real estate regulations, leading to price falls.

Cement output data from the National Bureau of Statistics of China in Graph 1 shows that local production took a knock in the first quarter of 2020 due to the coronavirus pandemic and this strongly recovered in the same period in 2021. The market recovered fast in mid-2020 and so the year-on-year growth for the second quarter was less in 2021. Output on a monthly basis remained ahead year-on-year from April 2020 and stayed ahead until May 2021. However, output in June 2021 was behind the figure in June 2020 and the figure for July 2021 was behind both July 2020 and July 2019.

Graph 1: Cement output by quarter in China, 2019 – mid-2021. Source: National Bureau of Statistics of China.

The Chinese Cement Association (CCA) was lamenting falling cement prices at the start of July 2021. It blamed the situation on slowing infrastructure development in some regions, increasing government restrictions on real estate development, especially poor mid-year weather and higher input prices such as for steel. China Resources Cement (CRC) expanded upon the point about increasing real estate regulations in its financial results for the first half of 2021 explaining that the Chinese government has been promoting a policy that aims to ensure that “residential properties are not for speculation” including controls on the financing of real estate. Later in mid-August 2021 the CCA reported that prices were recovering in east and central-southern regions although the situation remained poor in Guizhou province with shipments down to 60% of normal levels. Production control measures are expected to be implemented to stabilise the situation.

Graph 2: Sales revenue of large Chinese cement producers in first half of year, 2019 – 2021. Source: Company reports.

On the corporate side the sales revenue from some of the large Chinese cement producers mostly show the usual gap-tooth pattern that coronavirus has created everywhere as the market recovered. Notably Anhui Conch managed to avoid falling sales year-on-year in the first half of 2020. However, the CCA’s observation above about rising input costs is visible in the falling profits of some (but not all) of the companies covered here. For example, Anhui Conch’s net profit fell by 7% year-on-year to US$2.32bn in the first half of 2021. It blamed this on a significant rise in the price of raw coal. CRC also reported falling profits attributable to increased production costs.

CNBM reported an increase to cement and clinker sales volumes of 7.6% to 177Mt and concrete sales volumes by 13.4% to 52Mm³. It noted that, “In the first half of 2021, the national cement market showed the characteristics of high price level fluctuation adjustment.” From January to April 2021 local fiscal policy boosted demand for cement but from May 2021 continuous heavy rainfall and increasing bulk commodity prices slowed infrastructure project development. Anhui Conch’s cement and clinker sales volumes for both production and trading grew by 11.5% to 208Mt. It reported stable market demand in eastern, central and southern regions but noted falling prices in the west.

Looking ahead, two issues, among many, to consider are carbon trading and imports. The former has been coming for a while and was launched formally online nationally in mid-July 2021 for the power generation industry. The carbon price was nearly Euro7/t in late July 2021 in China compared to around Euro53/t in the European Union. Cement and steel are expected to join the Chinese national scheme in the next phase although analysts believe that issues such as data gathering, permit allocation rules, accounting standards, sector reduction targets and related financial support all need to be improved before this can happen. Imports are a connected issue and it has been interesting in recent months to hear financial analysts point out the risks, for example, of major exporting nations such as Vietnam relying on China so much. The CCA reckons that China imported 33.4Mt of clinker in 2020, an increase of 47% year-on-year, with 60% of this derived from Vietnam. With the Chinese government trying to tackle cement production overcapacity and meet growing environmental targets, imports look set to become a ‘hot ticket’ issue. In this context it is telling to see talk from the CCA of ensuring standards for imports such as verified carbon emissions. Naturally, the imports that could be trusted the most will probably be the ones from plants that Chinese cement producers have built themselves overseas. As waste importers into China found out previously, relying heavily on one market with strong state controls carries considerable risks. Cement exporters in South-East Asia take note.

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.