Displaying items by tag: lockdown

India: Tata Chemicals has resumed full production of salt and sodium bicarbonate at its Mithapur site in Gujarat. It said that production levels have been matched to market demand for soda ash and cement. The 1500t/day integrated cement plant at the industrial complex manufactures two varieties of cement under the brand name Tata Shudh. Tata Chemicals has also resumed the operations at its chemical plants at Mambattu-Nellore in Andhra Pradesh, Sriperumbudur in Tamil Nadu and Cuddalore in Tamil Nadu). Operations at the company’s various production sites were scaled down in late march 2020 in response to the Indian coronavirus lockdown.

Philippines: LafargeHolcim’s sale of its 86% stake in Holcim Philippines to San Miguel Corporation for US$2.15bn has fallen through after the Philippines Competition Authority (PCC) failed to approve the deal within 12 months of its conclusion. Reuters News has reported that the agreement, dated 10 May 2020, covered the exchange of four integrated plants and one grinding plant. LafargeHolcim has been divesting assets to pay off debt. The sale of its Holcim Philippines stake would have completed its withdrawal from the South-East Asia market, where its operations across Indonesia, Malaysia, Singapore and the Philippines had been valued at US$4.90bn.

LafargeHolcim has said that three of its four integrated Philippines cement plants have been able to resume operations following the lockdown due to the coronavirus outbreak. It says that it will ‘focus on strengthening operations in the Philippines.’

UK: The government has encouraged construction work to resume from 11 May 2020. Foreign Secretary Dominic Raab said, “Those who can’t work from home - thinking particularly the construction and manufacturing sectors - we are encouraging to go back to work now.” The advice follows the Prime Minister Boris Johnson’s speech of 10 May 2020, in which he announced the easing of the nation’s coronavirus lockdown as it moves into its second phase. Johnson said that a second spike in infections would lead to a return to full lockdown.

India: Construction has stalled in Tamil Nadu because consumers are reportedly unable to buy cement. The supply chain has been disrupted because police have shut shops across the state following breaches of social distancing rules after the partial easing of the coronavirus lockdown.

Ramco Cements Managing Director Arrakundal Dharmakrishnan said, “We have instructed our dealers that they must follow social distancing norms.”

In neighbouring Telangana, chief minister Kalvakuntla Rao has extended the lockdown period to 29 May 2020, subject to a review on 15 May 2020 that may result in the resumption of construction works and the re-opening of non-essential shops.

Colombia: Cementos Argos’ first quarter profit was US$1.00m, down by 73% year-on-year from US$3.76m in the corresponding period of 2019. Sales fell by 0.2% to US$545m from US$547m. The volume of cement it sold fell by 6.1% to 3.62Mt from 3.86Mt in the corresponding period of 2019. The company launched RESET, a savings initiative in response to the coronavirus outbreak, which aims to save between US$75.0 and US$90.0m in 2020.

Cementos Argos’ CEO Juan Esteban Calle said, “Given the US$154m-strong cash position of the company, the saving initiatives within RESET, the support from our stakeholders, and the passionate commitment of our more than 7000 employees, we firmly believe that Argos is fully prepared to face the current market conditions.”

Colombia’s coronavirus 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.

India: The Federation of Indian Chambers of Commerce and Industry (FICCI) has asked the government to restart home and road building to help cement producers. The Press Trust of India newspaper has reported that all construction work has stalled since 25 March 2020 due to the coronavirus lockdown. The FICCI believes that Indian cement demand is currently set to decline by 10-12% year-on-year. To relieve the sector, the FICCI urged the Indian government to lift the lockdown in metropolitan areas in order to allow the continuation of residential construction, which accounts for 60-65% of cement demand.

To protect domestic producers from any import dumping post-crisis, the FICCI has suggested that Indian cement sales should be subsidised. It also requested a ‘relaxation of environmental emission norms’ until mid-2022 ‘to save the industry from additional capex expenses.’

Philippines: Holcim Philippines’ first quarter profit declined by 29% year-on-year to US$9.91m in 2020 from US$13.9m in 2019. Revenues over the period were US$144m, down by 10% from US$160m in the corresponding period of 2019.

The Manila Times reported that Holcim Philippines attributed the declines to ‘softer prices’ and ‘lower volumes in March.’ The latter was due to the government-implemented enhanced community quarantine (ECQ) in Luzon, which suspended construction in the capital. The company's Visayas and Mindanao cement plants continue production, but have faced a drop in demand due to various local lockdown measures.

Holcim Philippines says that it is ‘shifting its focus to providing food and medical supplies.’

The headline from the cement section of FLSmidth’s first quarter results summed up what may be the current situation for many companies supplying the sector: “service relatively stable – cautious on capex.” The general picture across both its mining and cement businesses was ‘significantly’ increased demand for local resources, remote support and digital products. On the mining side FLSmidth pointed out that it was impossible to assess the impact of coronavirus on its business because of the difference between government policies. Some places continue lockdowns or impose additional restrictions but others are starting to ease them. This point has ramifications for multinational cement producers and other suppliers too. It seems likely to continue during the coming months as lockdowns ease at different rates in different countries.

On cement specifically, FLSmidth provided a good global view of what the pandemic and government responses are actually doing to the industry. It reports that around 80% of the world's cement plants (excluding China) are currently in operation with some operating at reduced capacity. It described the market for services as ‘relatively stable’ in the first quarter but that cement consumption was being reduced by lower construction activity, plant shutdowns and restricted access to sites leading to reduced demand for technical services and commissioning. By region it identified the biggest impact to its business from coronavirus in India and the Middle East. Generally, it says that cement producers are suspending capital investments until the impact of coronavirus on economies is clearer. There has been some good news though, with the supplier noting that several of its customers have been looking for services that can reduce their operational costs.

The European Commission tackled this pervading sense of uncertainty in its roadmap towards lifting coronavirus containment measures that was published on 15 April 2020. The Committee for European Construction Equipment (CECE) was keen to share this with its members this week, pointing out how the European Union (EU) plans to lift border controls and re-start economic activity.

The plan is to ease travel restrictions between border regions for cross-border and seasonal workers, and then between European areas with low coronavirus infection rates. External borders can later be reopened with access by non-EU residents to the EU scheduled for a second stage. To re-start economic activity the EU recommends, again, a phased approach focusing on sectors that are ‘essential’ to facilitate economic activity such as transport. The commission says it will also create a rapid alert function to identify supply and value chain disruptions, relying on existing networks such as Enterprise Europe Network (EEN), clusters, chambers of commerce and trade associations, small and medium enterprise (SME) envoys and more. Whether the EU can actually coordinate a return to normality following its poor response in aiding Italy at the start of the European outbreak of coronavirus remains to be seen. Yet, its historical roots as an economic community dating back to the Treaty of Rome in 1957 suggests it may be more successful when coordinating technical aspects of trade.

Detailed above are the views and plans of just one supplier and one continental organisation, although they are both prominent. The takeaway from this is that uncertainty is a major problem so far for the cement industry in the wake of the coronavirus outbreak. Companies have faced a cash crunch in the short term as economies slowed down and they are reluctant to release cash until the future becomes clearer. Large parts of the cement industry and its suppliers are very international, which exposes it to even more uncertainty. Different countries enforcing different restrictions and different easing strategies at different times create a major headache for everyone and a block to investment. Making cement is undeniably an essential industry and this realisation by legislators can be seen in some countries that at first shut down their plants before understanding that they needed them open after all! Suppliers should benefit from this too, although at reduced activity levels. We don’t know what kind of recovery will come – hopefully one releasing plenty of pent up demand. Yet one thing is certain. The work of the regional cement associations and those representing suppliers is going to be crucial in the coming months.

India: Both Germany-based HeidelbergCement and Aditya Birla subsidiary UltraTech have responded to the government’s partial lifting of the coronavirus lockdown for rurally-located continuous industries by resuming ‘partial operations in some production facilities.’ Orient Cement subsidiary CK Birla said, “We are in the process of partially resuming our operations at our plants in Karnataka and Maharashtra.” Producers require the permission of the relevant state government to restart plants. In Telangana, where the government has not lifted the lockdown, CK Birla’s facilities remain shut.

The Economic Times newspaper has reported that ‘limited transportation facilities, higher than usual inventory and stricter rules regarding labour safety’ have added a note of caution to resumed operations. Shree Cement managing director Hari Mohan Bangur said, given the continuation of restrictions on construction in cities, “We expect just 10% of normal consumption, with hopes of a gradual increase.”

Malaysia: The Cement and Concrete Association of Malaysia (CCA) has praised the government’s decision to grant an exception to cement plants in order to allow production to resume in the third phase of the country’s lockdown, beginning on 28 April 2020. The Straits Times newspaper has reported that the current and previous stages of the lockdown have exacerbated the cement sector’s losses over the past two years.

The CCA said that the development ‘will have a multiplier effect on the economy.’ CCA chair Datuk Yeoh Soo Keng said that 100,000 jobs ‘depend either directly and indirectly on cement production,’ including many ‘in small and medium enterprises’ that will not survive the outbreak without it. “Cement is the fundamental building material of our country’s wealth,” he added. The CCA thanked the government for the ‘welcome reprieve’ and urged it to allow ‘related sectors to slowly and gradually resume operations, for the industry to effectively function.’