Global Cement Newsletter

Issue: GCW362 / 18 July 2018

Headlines


The US government proposed placing tariffs on cement this week as part of its slowly-escalating trade war against China. The latest list will face a 10% tariff from the end of August 2018 following a consultation period. Of relevance to the cement industry, it will include limestone flux, quicklime, slaked lime, gypsum, anhydrite, clinkers of Portland, aluminous, slag, supersulfate and similar hydraulic cements, white Portland cement, Portland cement, aluminous cement, slag cement, refractory cements, additives for cement, cement based building materials and more.

Graph 1: Imports of hydraulic cement and clinker to the US from China, 2012 – 2017. Source: United States Geologic Survey (USGS). 

Graph 1: Imports of hydraulic cement and clinker to the US from China, 2012 – 2017. Source: United States Geologic Survey (USGS).

 Graph 2: Major exporters of hydraulic cement and clinker (Mt) to the US in 2017. Source: United States Geologic Survey (USGS).

Graph 2: Major exporters of hydraulic cement and clinker (Mt) to the US in 2017. Source: United States Geologic Survey (USGS).

At face value it seems unlikely that the tariffs will do much direct damage to the cement sectors in either China or the US. United States Geological Survey (USGS) data reports that the US imported 2Mt of cement and clinker from China in 2017 out of a total of 13.6Mt of imports. China was the third-largest exporter of cement to the US after Canada and Greece. Given the mammoth size of the Chinese cement industry - it sold 2.3Bnt in 2017 according to National Bureau of Statistics of China - it is unlikely that losing this export stream will cause the sector to lose much sleep. If the exports are coming from smaller producers though it might well impact upon them disproportionally. Any potential shortfall in the US is likely to be met by any number of the world’s overproducing cement nations. Vietnam, Iran (!) and Indonesia are the first few candidates that spring to mind.

The other point to consider from the USGS data is that the value of the cement imported from China in 2017 was on the cheaper side. Altogether the value of Chinese imported cement came to US$132m in 2017. Yet it was the fifth cheapest for cost, insurance and freight per tonne out of 32 importing countries. Add a 10% tariff to that and it is still only the eighth cheapest. If these figures represent reality then it seems unlikely that tariffs will cause the Chinese imports to slow down much.

All of this pretty much fits the general impression of China as a country that produces the most cement in the world but it actually exports very little of it. Consultancies like Ad and Marcia Ligthart’s Cement Distribution Consultants have made a point of downplaying China’s export market in recent years due to a lack of deep water terminals for plants and a general inward focus. Yet the sheer amount of production capacity could have big implications if it ever does get properly connected to the sea.

Other products facing the new tariffs that have relevance for the cement industry include input materials like gypsum or secondary cementitious materials (SCM) like slag and fly ash. Gypsum isn’t likely to be a concern given the presence of established exporters in Canada, Spain, Thailand, Oman and the like. SCMs are more mercurial but don’t appear to be too intrinsic to the US market. Ferrous slag imports grew to 2Mt in 2015 according to USGS data but the main sources were Japan, Canada, Spain and Germany. Charles Zeynel of ZAG International at the Global Slag Conference 2018 posited that Chinese exports comprised up to 6Mt or 25% of the world market of traded international slag.

All of this suggests a symbolic nature to the US tariffs on Chinese cement and related products. Perhaps the real news story to have noted this week was the framework agreement signed between Denmark’s FLSmidth and China’s China National Building Material (CNBM), the world’s largest cement producer and one of its larger cement equipment manufacturers.

Typically many of the new cement plant projects Global Cement has reported upon recently involve a Chinese contractor that may or may not be using European engineering from companies like FLSmidth who previously would have been managing the build themselves. The point here is that new plants, production lines and upgrades at US cement plants might well be built by a Chinese company through its European partners. The new upgrade to Lehigh Hanson’s Mitchell plant in Indiana has been budgeted at US$600m. This is far more than the value of Chinese cement imported into the US in 2017.


Cameroon: Benoît Galichet has been appointed as the director general of Cimencam. He succeeds Pierre Damnon, according to the Agence de Presse Africaine. Galichet, a French national, is aged 47 years. He will oversee the commissioning of the cement producer’s new cement grinding plant at Nomayo and the continued promotion of the company’s ‘Multi-X’ cement product.

LafargeHolcim holds a 55% stake in Cimencam, the government holds a 43% stake and employees hold the remaining 2% share.


Germany: Bernd Scheubel retired from Refratechnik at the start of May 2018.

He started his career at the technical centre of Krupp Polysius (TKIS) in New Beckum. After five years working there as a mineralogist he joined Refratechnik in 1987, starting as a sales manager for South America. In 1998 he was appointed a member of executive management of Refratechnik Cement in Goettingen. In 2003 Scheubel joined the management board of Refratechnik Holding at Ismaning near Munich, the position he held until he retired.

The main focus of his work was the expansion of the international refractory business of Refratechnik in the Americas and East Asia, mainly in China. In addition he held positions at the executive boards of the World Refractory Association and the European Refractory Association.


Germany: Thomas Spitzenpfeil has been appointed as the chief financial officer of Schenck Process Group with effect from 1 October 2018. He will also join the management board of the company. Spitzenpfeil will be responsible for the company’s global finance and IT organisation and will work alongside Andreas Evertz, president and chief executive officer (CEO). He will replace Eric Jaschke as CFO, who has decided to leave the company at the end of 2018 for personal reasons.

Spitzenpfeil has 14 years’ experience as the CFO of large international businesses in the manufacturing sector. For the past eight years, he was the CFO of Carl Zeiss, the global technology group in optics and optic-electronics with 27,000 employees.

He started his career at Robert Bosch in 1990 and thereafter held various commercial roles at VIAG, Kodak and Hydro Aluminium/VAW-Aluminium. Prior to joining Carl Zeiss AG, he served for six years as the CFO of Zumtobel in Austria. At Carl Zeiss, his role comprised responsibility for finance and controlling, audit and risk management, consolidation and accounting, IT, digital innovation, financial services, facility management, logistics, central production and US shared services.

Jaschke joined the company in 1999 and held various roles with focus on local and international accounting and controlling responsibilities in Germany and Australia. He was appointed as CFO of Schenck Process in September 2015.


Germany: Schmersal Group has appointed Andreas Balack as the new manager of its South Germany sales region. The 44-year old holds over 20 years of sales experience with knowledge of the plastics processing sector. He previously worked as the deputy sales manager at a company selling safe automation technology. At Schmersal he manages a team of 25 people, comprising customer service employees, product managers and engineers.


Vietnam: The Vietnam Cement Industry Corporation (Vicem) exported the majority of its cement sales in the first half of 2018. The government-owned cement producer’s sales rose by 10.1% to 14.2Mt, according to the Viet Nam News newspaper. However, 11.7Mt of this figure was exported. The company’s cement and clinker production rose by 8.5% to 10.2Mt and 6.4% to 11.6Mt respectively.


Vietnam: The government of Quang Ngai has threatened to shut the Dai Viet-Dung Quat cement plant if it does not improve its dust emissions. 107 households living within 50m of the unit have been moved but more than 1600 households remain close to the site, according to the Vietnam News Agency. The 0.5Mt/yr cement plant started operation in 2015.


India: UltraTech Cement’s consolidated net sales rose by 27% year-on-year to US$1.3bn in the quarter that ended on 30 June 2018 from US$1.01bn in the same period in 2017. However, its profit after tax dropped by 30% to US$92m from US$131m.

The cement producer also said that it agreed to buy the cement assets of Century Textiles & Industries in the reported quarter and that it commissioned a 1.75Mt/yr grinding unit at its Manawar plant in Dhar District, Madhya Pradesh.


Peru: Cement production in Peru rose by 1.7% year-on-year to 4.8Mt in the first half of 2018 from 4.7Mt in the same period in 2016. Local despatches grew by 2% to 4.6Mt from 4.5Mt, according to data from Asociación de Productores de Cemento (Asocem). Clinker exports increased nearly six times to 0.6Mt from 0.1Mt.


Czech Republic: The Czech Cement Association reports that production grew by 2.5% year-on-year to 4Mt in 2017. Cement consumption grew by 3.5% to 3.95Mt in the same period, according to the Czech News Agency. Exports fell by 6.5% to 0.55Mt. The majority of this output went to Slovakia, a minority to Germany and the remainder to Poland and Austria. Imports increased by 19.2% to 0.55Mt, mostly coming from Slovakia and Poland.

Association members include Ceskomoravsky Cement, Cement Hranice na Morave, Cemex and Lafarge Cement. Each of these companies operates integrated plants locally.


Spain: Cementos Tudela Veguín has bid for a concession at the El Musel section of the Port of Gijón. The cement producer plans to build a dedicated terminal at the site, according to La Nueva España newspaper. Cementos Tudela Veguín has used the northern extension of the port since 2012. It processed 1.04Mt of cement and clinker at the site in 2017.


US: Air Products is preparing to build a new global headquarters in Lehigh Valley, Pennsylvania. The new site will be situation around 2km from its existing location in Allentown. Ground breaking is expected in March 2019 with occupancy scheduled for the summer of 2021. The new location will be the base for approximately 2000 Air Products employees with capacity for growth.

The decision to change headquarters has been taken to allow the company to modernise its facilities. The new headquarters site will include new administration offices, a research and development (R&D) facility, and an enclosed parking structure for employees.

Air Products operates an industrial gases business providing atmospheric and process gases and related equipment to manufacturing markets, including the cement and lime industries as well as refining and petrochemical, metals, electronics, and food and beverage sectors. Air Products is also a supplier of liquefied natural gas process technology and equipment.


China/Denmark: Denmark’s FLSmdith and China National Building Material (CNBM) have signed a framework agreement about future collaboration. Song Zhiping, chairman of CNBM Group and Thomas Schulz, Group chief executive officer (CEO) of FLSmidth signed the deal at FLSmidth’s headquarters in Denmark in July 2018.

"It was a pleasure to welcome the guests and to participate in such collaborative discussions about future opportunities to work together. Through this framework agreement, we see numerous benefits over the coming years for us and our customers, such as expediting our quotation response time, which will improve our delivery performance and increase productivity," said Schulz.

FLSmidth is an engineering company that provides machinery and connected services to the cement and mineral industries. CNBM Group is both the world’s largest cement producer and a leading cement plant construction company. The companies have worked together on projects previously, such as the Relizane cement plant order for ETHRB Group in Algeria.


Kyrgyzstan: Tianjin Cement Industry Design & Research Institute (TDI) has successfully ignited the kiln on a new clinker production line at Kyrgyzstan Southern Cement. The line has a clinker production capacity of 2500t/day.


Tajikistan: Tajikistan’s cement production rose by 39% year-on-year to 1.8Mt in the first half of 2018 from 1.3Mt in the same period in 2017. Of this total 0.7Mt was exported to neighbouring countries, principally Afghanistan and Uzbekistan, according to the Avesta news agency. The local cement industry is benefiting from government-backed infrastructure projects, a rise in domestic house building and a buoyant export market.

The country produced 3.1Mt of cement in 2017 and over 1Mt of this was exported. It has 13 cement producers with an estimated production capacity of 4Mt/yr. Local demand for cement is estimated to be 3 – 3.5Mt/yr.


China: The city of Tangshan ordered cement and steel plants to shut down for five days to prevent pollution. The directive followed a forecast of heavy smog in mid-July 2018, according to a source quoted by Reuters. Tangshan, an industrial city, is located in the northeast of Hebei province.


Nigeria: Ibeto Cement plans to hire China’s Sinoma to build two cement plants at Nkalagu and Effium respectively in Ebonyi State. The first plant will be built next to the former Nigerian Cement plant at Nkalagu, according to the Vanguard newspaper. It will have a production capacity of 9000t/day. The second plant, at Effium, will have a production capacity of 3000t/day, due to smaller local limestone deposits.

Ibeto Cement signed a deal with Milost Global to secure funding worth US$850m in May 2018. Previously, it entered into an agreement with Sinoma International Engineering in 2015 to build a new plant at Enugu.


Sudan: Fuel shortages and power cuts have reduced cement production by half. The Atbara Cement Plant reduced its production to 60,000t/month from 120,000t/month, according to Radio Dabanga. Production fell to 20,000t/month from 60,000t/month at Alsalam Cement, to 32,000t/month from 80,000t/month at El Takamol Cement, to 50,000t/month from 120,000t/month at North Cement and to 30,000t/month from 70,000t/month at Berber Cement. Parts of the country experienced fuel shortages in 2017 and this has continued in 2018, leading to problems far various industries.


India: Bharathi Cement plans to build new plants in Vizag and Mumbai. The new units are intended to meet market demand in the east and west of the country respectively, according to the Economic Times newspaper. The company hopes to raise its national market share to 5% from 4% at present with the new plants and from new products.


India: Ramco Cement has ordered three vertical roller mills from Germany’s Loesche. It has ordered two LM 41.2+2 CS type mills with two grinding rollers and two support rollers with a power range of 3000kW and a capacity of 130t/hr for two of its cement plants to grind the Portland Pozzolana Cement (PPC). The first mill will be installed at Kolaghat, West Bengal, where Ramco Cement is upgrading a grinding plant to 2Mt/yr from 0.95Mt/yr. The second mill will be used at a grinding plant in Gobburupalam, Visakhapatnam in Andhra Pradesh.

A third mill has been ordered for a newly-built plant at Haridaspur in Odisha. Here, a LM 46.2+2 CS type mill with a capacity of 3750kW will be used to grind PPC with a throughput of 165t/hr. This order also includes mill fans, bag-type filters and further auxiliary equipment. It will all be delivered by the end of 2018.


India: Dalmia Bharat has launched a fine blend composite cement product called Dalmia FBC. The product is a mix of slag and silica and it is intended to combine the properties of Portland Slag Cement and Portland Pozzolona Cement. The new brand was launched by BK Singh, Senior Executive Director, Group Marketing and Communications, Dalmia Bharat Group and Indrajit Chatterji, Executive Director Sales and Marketing (East) Dalmia Bharat Cement.


US: Lehigh Hanson’s Speed cement plant in Indiana will be converted into a distribution terminal. The decision follows an investment of US$600m towards upgrading the Mitchell cement plant in Indiana, according to the Evening News and Tribune newspaper. At present the Speed plant has a cement production capacity of 1Mt/yr and the Mitchell plant has a production capacity of 0.7Mt/yr. Following the upgrade the Mitchell plant will have a capacity of 2.8Mt/yr. Changing the focus of the Speed unit is expected to lead to the loss of 100 jobs. although half of these could be moved to Mitchell.


Germany: Two cement plants are installing selective catalytic reduction (SCR) units ahead of new environmental emissions limits that will start in 2019. CRH Opterra Zement’s Karsdorf plant has started a Euro23m upgrade project to its emissions systems. The plant will install SCR units on each of its production lines. Work on the upgrade is scheduled to be completed by the start of 2019.

Holcim WestZement is also installing a SCR unit purchased from Yara at its Beckum cement plant. The Euro14.2m project will start trial operation by the end of 2018.


Oman: Raysut Cement’s turnover grew by 14.5% to US$111m in the first half of 2018 from US$97.2m in the same period in 2017. However, its profit after tax fell by 85% to US$1.8m from US$12m. The cement producer also noted that it is expected to receive US$10m from insurance claims relating to a loss of a ship and other claims relating to Cyclone Mekunu.


US: Lehigh Hanson plans to spend US$600m on modernising and upgrading its Mitchell cement plant in Indiana. The project will increase production capacity and reducing energy usage and emissions per ton of cement produced. The project is the largest expansion and modernisation that the subsidiary of Germany’s HeidelbergCement has undertaken in North America.

Lehigh Hanson is working with the Indiana Department of Environmental Management (IDEM) to obtain the required air permits and anticipates the permitting process to be completed in the summer of 2019. The company is also working with the Indiana Economic Development Corporation regarding available business incentives. Construction is scheduled to begin in 2020 and completion of the new plant is anticipated by the end of 2022. Once finished the upgrades will create around 50 new jobs at the unit.

The cement producer has also worked with local and state officials to develop increased infrastructure surrounding the plant, which will support the expanded operation. This includes a road connecting the plant to a local highway, alleviating truck congestion from the centre of town. Overall logistics will also change to accommodate additional rail activity to handle increased cement shipments from the plant.


US: Sempertrans USA has officially opened its new Atlanta warehouse in Georgia. The event was attended by distributors and end-customers. The Sempertrans USA team which includes sales, customer service, technical management and finance moved into the new location in December 2017. At the beginning of June 2018 Sempertrans USA was able to process, cut and slit to order and distribute heavy-duty textile belts from the unit. Sempertrans belts from the site can be slit within 24 hours and then distributed across North America.

“Our North America Team is ready to tackle any challenge. From impact and abrasion resistant belt solutions, our wide product portfolio ensures safe and highly efficient conveying even under the most demanding conditions,” said Wes Tyre, Head of Sales North America.

Sempertrans is a conveyor belt manufacturer. Its portfolio includes textile belts and steel cord belts for applications in the cement, mining and steel industries as well as other applications such as ports, quarries and the chemical industry.


Brazil: Paulo Camillo Penna, the president of the National Union of Cement Industry (SNIC), has blamed a fall in national cement sales on a truck drivers strike. Despite forecasting growth a strike in May 2018 caused sales to halt for 10 days. Cement sales fell by 1.5% year-on-year to 25.4Mt in the first half of 2018 from 25.8Mt in the same period of 2017.

SNIC originally expected the local cement industry to grow its sales by 1 – 2% in 2018. However, the poor first half of the year and a slowdown in the country’s economic growth has led SNIC to revise its forecast downwards.


Cameroon: Cimencam, a subsidiary of LafargeHolcim, plans to start producing cement at its new Nomayos grinding plant in early 2019. The 0.5Mt/yr unit had an investment of US$41m, according to Agence Ecofin. Once the new plant is completed Cimencam will have a production capacity of 2Mt/yr in the country.


Pakistan: Maple Leaf Cement’s new production line at its Iskanderabad cement plant is expected to start production by mid-2019. It is building a new 7300t/day line at the site to increase its total production capacity to 18,000t/day. The cost is US$206m. Denmark’s FLSmidth is building the line. Approximately 66% of civil work has been completed and 14% of plant erection work was reported complete at the end of June 2018.


Kazakhstan: A new 1.2Mt/yr cement plant being built at Kerbulak in Almaty region is set to be commissioned in 2019. The joint Kazakh-Singaporean project has an investment of US$145m, according to Kazakh TV. The unit is located close to road and railway links. Once completed the plant is expected to supply the Almaty region and neighbouring regions.


Uzbekistan: Cement production fell by 5% year-on-year to 3.95Mt in the first half of 2018 from 4.2Mt in the same period in 2017, according to the Trend News Agency. The company set price controls for cement earlier in the year to support housing and infrastructure projects.


Malaysia: A US$70m contract with Lafarge Malaysia to supply cement for the East Coast Rail Link project has been suspended by China Communications Construction pending a government review. The deal was originally announced in March 2018. The cement producer said that the suspension is not expected to have any significant financial impact its operations in the period up to the suspension, as completed work shall be compensated for in accordance with the terms and conditions of the contract. However, going forward the company could not rule out any negative financial impact following the government review of the project.Lafarge Malaysia railway supply contract suspended


Kenya: The International Finance Corporation (IFC) is set to take over loans worth US$120m at ARM Cement. UK-government investor CDC Group, which owns a 41% stake in the cement producer, will also loan it US$20m, according to the Business Daily newspaper. The IFC loan is expected by mid-2019 and the CFC loan will arrive by the end of September 2018. The IFC has also proposed a US$50m equity investment in ARM Cement but chief executive Pradeep Paunrana wants to wait until his company’s share price returns to normal to avoid the company being undervalued.

The cement producer reported a loss of US$55m in 2017 due to poor demand in Kenya and Tanzania. It said it was undergoing a ‘significant’ review of its current operations, asset base and financing structure to address its problems.


UAE: India’s Shree Cement has completed its acquisition of Union Cement. Shree Cement has purchased a 97.61% in the company. It is the company’s first acquisition outside of India. Union Cement operates a cement plant Ras Al- Khaimah.


Vietnam: Tran Viet Thang, the former General Director of the Vietnam Cement Industry Corporation (Vicem), has been dismissed as a member of the Executive Committee of the Central Businesses Party Unit and member of the Executive Committee of Vicem's Party unit. He has been found guilty of several legal violations as well as breaking Communist Party of Vietnam rules, according to the Viet Nam News newspaper.

Thang was appointed as the head of government-owned Vicem in mid-2013. He is accused of raising company debts of US$175m by the end of 2016. He left the position in mid-2017. According to the Secretariat of the Communist Party of Vietnam, Thang signed documents and took decisions that he was not authorised to. His actions allegedly violated local corporate and bidding law, as well as rules for Communist Party members. He has been accused of damaging the reputation of Vicem and the Communist Party.

The punishment against Thang is part of an on-going crackdown in the country against corruption.


Italy: HeidelbergCement’s subsidiary Italcementi has rebranded CementirSacci and Cementir Italia as Italsacci and Cemitaly respectively. The move follows the integration of the companies into the group at the start of 2018.

The cement producers operate four integrated plants and two grinding plants. Italsacci runs plants at Tavernola Bergamasca, Greve and Cagnano Amiterno. Cemitaly runs plants at Spoleto, Arquata Scrivia and Taranto.

Italcementi now operates 10 integrated plants, one plant for special projects, 10 cement grinding plants, 113 concrete plants and 13 aggregate quarries in Italy. Its headquarters is based in Bergamo.