Displaying items by tag: data

The Gambia: Bai Lamin Jobe, the Minister of Trade, says that the country has a cement capacity utilisation rate of 23%. Local producers have a capacity of 1.9Mt/yr but national demand is only around 0.4Mt, according to the Foroyaa newspaper. He added that the country imported 0.39Mt in 2018 in answers to members of the National Assembly.

It was also revealed that Jah Multi Industries is building new silos at its import terminal. Jah Cement is also planning to upgrade its terminal into a grinding plant. Construction work started in 2018 and it is expected to be completed by late 2019.

US: Data from the United States Geological Survey (USGS) shows that national shipments of Ordinary Portland Cement (OPC) and blended cement rose by 1.3% year-on-year to 85.3Mt in 2018 from 84.2Mt in 2017. Imports rose by 10% to 12.4Mt from 11.3Mt. Overall, shipments rose by 2.3% to 97.6Mt. The top clinker producing regions in 2018 were Texas, California, Missouri and Florida. The country imported 15.1Mt of cement and clinker from, in order of descending volume, Canada, Turkey, China, Greece and Mexico.

Afghanistan/Pakistan: The share of exports of cement from Pakistan to Afghanistan fell to 24% in the first eight months of the current 2019 Pakistan financial year compared to 48% in the 2018 period. The Cement Manufacturers And Export Association has blamed this on Afghanistan opening its market to imports from other countries including Iran, according to the Frontier Star newspaper. It has urged the government to take measures to cut local production costs and force anti-dumping tariffs on Iranian cement imports.

The association said that the cement industry in Punjab and Khyber Pakhtunkhwa has been most affected by the decline in exports to Afghanistan. Exports from these regions fell by 16% year-on-year in the first nine months of the current Pakistan financial year to February 2019.

Nepal: Dhruba Raj Thapa, president of Cement Manufacturer Association of Nepal (CMAN), has warned that the industry is worried about new investments in cement production given that the country has become self sufficient in the commodity. Clinker imports have stopped due to increased domestic production, according to the Republica newspaper. He added that cement produced locally is sufficient to meet local demand until 2029. He then warned that if investment in the sector continues producers might have to reduce their production capacity by half.

Data from the Department of Industries shows that 114 cement factories, both government-owned and private, have been registered so far with an estimated investment of over US$1.8bn. However, Tara Prasad Pokharel, the general secretary of CMAN, said that only 68 registered industries are currently in operation.

Cement price rises by the major Chinese cement producers boosted sales revenue and profits in 2018. This is quite a trick, given that overall cement sales in the country have fallen by 11% year-on-year to 2.17Bnt in 2018 from a high of 2.45Bnt in 2014.

Graph 1: Cement sales in China, 2009 – 2018. Source: National Bureau of Statistics China.

On the corporate side most of the major Chinese producers issued positive profit alerts towards the end of 2018 and this has been followed up by (mostly) glowing financial reports. Data from the National Development and Reform Commission in February 2019 showed that the profits of local cement companies more than doubled to US$64bn in 2018 compared to 2017. As mentioned above, this has been fueled by price rises. In December 2018 the average price of cement was 10.6% higher than in December 2017.

This has translated into a 19% year-on-year rise in sales revenue at China National Building Material Company (CNBM) to US$32.6bn in 2018 from US$27.4bn in 2017 and its profit grew by 44% to US$2.09bn from US$1.46bn. Anhui Conch’s performance was even better. Its revenue grew by 70.5% to US$19.1bn from US$11.2bn. However, differences emerge between the two companies in terms of cement sales volumes. CNBM’s sales volumes fell by 2.4% to 323Mt. However, Anhui Conch’s sales volumes increased by 25% to 368Mt. This may not be in line with the government’s plans to scale down production but it does fit the industry consolidation model, as the company acquired Guangdong Qingyuan Cement in 2018. The results from other producers such as China Shanshui Cement, West China Cement, Tianrui Cement and China Resources Cement all tell similar tales.

If the figures from the National Bureau of Statistics China (NBS) above are accurate then this is a drop of over 300Mt of cement sales over four years. This is more than the cement sales of every other country except India. Indeed, it’s more cement than some continents make! It marks the deceleration of the Chinese industry since 2014 and represents a major achievement. However, whether it is enough remains to be seen. After all, sales of over 1500kg/capita are still way above the consumption curve for developed Western-style economies. Yet, imports of cement to China from Vietnam rose in 2018, suggesting that the price rises are being driven by shortages of cement!

China is undoubtedly an exceptional case, as its economic star has blossomed in the last few decades and it has literally built itself into history. Yet one might expect its consumption to be around 1Bnt/yr, a per-capita level more similar to Spain and Italy prior to the financial crash. In other words, even if the recently observed 5% year-on-year contraction is maintained, the Chinese industry would only reach this (still very high) level by the mid 2030s. However, continued national development, mega-infrastructure projects, a shift to more exports and China’s unique market could hold the consumption per capita figure higher.

Meanwhile, Chinese producers are commissioning more and more projects outside of China. Notably, CNBM saw its cement sales everywhere except for the Middle East and China. Success abroad is not guaranteed. The story in the years to come will be the balance between projects at home and those abroad.

Pakistan: The All Pakistan Cement Manufacturers Association (APCMA) has reported that cement exports during first eight months of the current Pakistani fiscal year, from 1 July 2018, saw growth of 52.3% year-on-year compared to the same period of the prior fiscal year. Exports were 4.65Mt compared to 3.05Mt.

In February 2019 exports were up by 69.1% year-on-year at 0.51Mt. The southern part of the country, particularly the Sindh region, fared considerably better than the national picture, as cement exports from the region increased by 185% to 0.35Mt in February 2019. Local consumption in the region was also higher, albeit less dramatically, with sales of 0.67Mt as compared to 0.61Mt a year earlier. However, plants in the north continued to suffer, with exports falling by 16% to 1.86Mt over the eight-month period from 2.21Mt a year earlier. In February 2019 exports from the north declined by 8.7% to 0.17Mt

Among other factors, the export of cement to India has been suspended due to a 200% increase in the import duty, as the Indian government had announced to de-list Pakistan from the status of ‘Most-Favoured Nation.’ The APCMA also said that rain in almost all parts of Pakistan had also affected construction activities.

US: Apparent cement consumption grew by 3% year-on-year to 100Mt in 2018 from 97.4Mt in 2017, according to estimates from the United States Geological Survey (USGS). Production of Ordinary Portland Cement and masonry cement rose by 2% to 87.8Mt from 86.1Mt. Imports of cement increased by 14% to 14Mt from 12.3Mt. Texas, California, Missouri, Florida, and Alabama were, in descending order of production, the five leading cement-producing states and accounted for nearly 50% of US production.

The USGS said that construction spending increased ‘modestly’ during the year, largely owing to somewhat higher spending in the residential and public construction sectors. The non-residential private building sector declined slightly. The leading cement-consuming states continued to be Texas, California, and Florida. Production of cement remained below capacity, in part reflecting both the technical and environmental issues in returning long-idle kilns to full production at some plants, and the availability of imported cement in coastal markets.

Kenya: Cement production fell by 8.5% year-on-year to 5.64Mt in 2018 from 6.16Mt in 2017. Data from the Kenya National Bureau of Statistics also shows that consumption decreased by 5% to 5.49Mt from 5.79Mt. This follows drops in production and consumption since 2016. Local cement producers, including East African Portland Cement (EAPCC) and ARM Cement, have reported on-going financial difficulties since 2018.

Algeria: La Société des Ciments de Tébessa produced 0.6Mt of cement in 2018. This compares to 0.53Mt in 2013, according to the Algeria Press Service. Company president Djamel Benhafid said that the cement producer has made environmental improvements, including installing new filters. It has also commissioned a sewage treatment unit to provide alternative fuels for its plant.

Cementos Molins’ financial results took a tumble this week, in part due to the poorly performing Argentinian economy. A decrease in sales in Mexico was also to blame but rampant inflation in Argentina caused the Spanish cement producer problems.

Cementos Molins owns a 51% stake in Cementos Avellaneda, with Brazil’s Votorantim Cimentos owning the remainder. Molins took pains in its financial report to point out that the aggregate rate of inflation had been 109% in mid-2018. Accordingly, its income and earnings in 2018 would have been much better if the economy had been in a better state. As it was, its income fell by 24% year-on-year to Euro134m and its earnings before interest, taxation, depreciation and amortisation (EBITDA) dropped by 30% to Euro30.3m. Adjusted for negative inflationary effects these should have risen by 43% and 31% in 2018.

Graph 1: Construction activity in Argentina (year-on-year growth, %). Source: El Instituto Nacional de Estadística y Censos de la República Argentina (INDEC).

Graph 2: Monthly changes in cement despatches in Argentina (year-on-year growth, %). Source: Asociación de Fabricantes de Cemento Portland (AFCP).

The other major local producers, Loma Negra and LafargeHolcim Argentina, are owned by Brazil’s InterCement and Switzerland’s LafargeHolcim respectively. Both companies are due to present their financial results later this week but the signs were not looking good earlier in the financial year. In its third quarter results Loma Negra said that the general economy was dragging on cement demand. Construction activity data from El Instituto Nacional de Estadística y Censos de la República Argentina (INDEC) showed that growth nosedived in mid-2018. This corresponds roughly with falling year-on-year cement despatches. Loma Negra noted that the depreciation of the Argentine Peso was hitting its bottom line and that its cement sales volumes dropped by 6.2% to 1.61Mt in the third quarter of 2018 from 1.72Mt in the same period in 2017. Despite this, its net revenue grew by 42.3% in the nine months to the end of September 2018.

Understandably, much of the talk in Loma Negra’s third quarter earnings call was about the effects of local currency depreciation with questions about how the expenditure for its L’Amalí plant expansion project was split between different currencies or how fuel costs were being affected. More revealing though was information about Loma Negra’s plans to reduce production capacity as national demand falls. Chief executive officer (CEO) Sergio Faifman said that the production cost at L’Amalí would be US$15/t less than the national average and that its Olavarría and Barker integrated plants would be first in line for production cuts given their closeness to L’Amalí.

Holcim Argentina reported ‘significant’ growth until May 2018 in its third quarter report. From here its sales fell and it expected zero growth for the year as a whole. It blamed this on the state of the general economy, the lower attractiveness of mortgages in the residential sector and problems with infrastructure project financing. Its sales volumes of cement rose by 6.4% year-on-year to 2.54Mt in the first nine months of 2018 from 2.39Mt in the same period in 2017. Holcim Argentina also has an upgrade project underway, at its Malagueño cement plant near Córdoba. Once completed by the end of 2019, the project is expected to increase the unit’s production capacity by 0.73Mt to over 3Mt/yr.

The problems facing the Argentine cement producers are clearly due to the poor general economy. The government took a US$56bn loan from the International Monetary Fund (IMF) in mid-2018 to shore up the situation. Since then the Argentinean Peso seems to have stabilised against the US Dollar and inflation has settled. At this point the question is whether this is the bottom of the economic trough. The other thing to note is that Argentina has faced economic problems at the same time as Turkey. Although Turkey has a much bigger cement industry, both countries are prominent cement producers in their regions.

The sad thing though is that the local cement market was facing shortages in late 2017, producers were investing in new production capacity and Loma Negra launched an initial public offering (IPO). All of this growth in the cement industry has been jeopardised by the general economy. Let’s hope it rebounds soon.