Global Cement News

Belarus: A new dry 1.8Mt/yr cement line has been commissioned at Kostyukovichi in Belarus. Architecture and Construction Minister Anatoly Nichkasov presided over the opening ceremony for the joint Belarusian and Chinese project, which was constructed by the Chinese company CITIC Construction. Director of OAO Belarusian Cement Plant Vladimir Kiselev said that the launch of a further cement manufacturing line in July 2012 would raise domestic output to 3Mt/yr. He also noted that it would create 154 new jobs.

Since 2007 CITIC has been implementing an investment programme in Belarus to modernise cement mills and manufacturing lines, including building three new cement mills and modernising the power supply for three existing ones. In April 2012 a cement line was commissioned at OAO Krasnoselskstroimaterialy with a capacity of 1.8Mt/yr. OAO Krichevtsementnoshifer will have a similar line to be completed by 1 July 2012. Loans from China Export and Import Bank are the main source of funding.

Colombia: Cementera San Marcos has started operations in Yumbo, in the Valle del Cauca region of Colombia.

The company is a project of the Cobo family that partnered with Otoya and Armitage, and a consortium of the Solarte brothers. The Cobos already own a limestone mine. Manager Fernando de Francisco estimates that the Colombian cement market currently stands at 0.95Mt/month, with Cementera San Marcos aiming at a 1.5% share.

Meanwhile Miguel Angel Rubacalva, president of Holcim Colombia, expects market growth in 2012. In 2011 Holcim Colombia saw a 19.8% increase in sales, with operating income rising by 103.3% from US$20,000 to US$40,300. Holcim plans to increase the capacity of its plant at Nobsa, Boyacá by 5%.

Zimbabwe: Increased cement demand in the local market has lead to Lafarge Cement Zimbabwe upgrading its revenue forecast for the year to 31 December 2012 to US$62m from an initial forecast of US$60m. At the company's annual general meeting managing director Jonathan Shoniwa said that increased capacity utilisation and cement demand had resulted in the revenue forecast adjustment.

In 2011 the company recorded a revenue of US$50m following a refurbishment exercise that increased capacity utilisation from 75% to 90% against a 19% decline in exports culminating from an increased focus on local demand. Shoniwa said that turnover in the four months to 30 April 2012 had risen by 35.2% to US$21.9m, with the operating margin having improved to 14% from 10% year-on-year.

Since Zimbabwe's economy 'dollarised' in January 2009, when US dollars were permitted to be used in parallel to the existing currency, cement demand for individual home projects increased as people focused on improving and building residential houses. According to Shoniwa, cement demand in the country is currently up by 28% predominantly due to retail construction. With the construction industry currently operating at below 40% capacity, the focus by the company will continue to be on the domestic market and increasing market share.

Lafarge Cement Zimbabwe has a capacity of 0.45Mt/yr. US$4.5m is expected to be spent on upgrades by the company in 2012.

Saudi Arabia: Southern Province Cement (SPC), the Kingdom of Saudi Arabia's biggest cement firm by market value, and Chinese engineering company Sinoma have signed a US$188m contract for the installation of a third production line at SPC's plant in Tahama.

The turnkey contract will be executed over a period of 24 months. Once completed, the third production line will have a clinker capacity of 5000t/day. SPC said that it will use its own funds to finance the project. In early March 2012, the Saudi company announced that the second production line at the Tahama plant started commercial production, bringing SPC's total capacity to 23,000t/day.

SPC, one of the nine listed cement companies operating in the Kingdom, is based in Abha, southwestern Saudi Arabia. It operates factories in Jazan, Bisha and Tahama.

Two trends have put the squeeze on the Indian cement industry this week. Firstly it emerged that producers were slashing prices ahead of the coming monsoon season. Then the Centre for Monitoring Indian Economy (CMIE) proclaimed that it expected cement prices to rise by 5.9% in the 2013 financial year.

Producers cutting prices in May, before the monsoon, is important because it suggests that overall cement demand is already down. Once the rains come demand will go down even more. A slowdown in construction, particularly in infrastructure projects, a labour shortage and a sand shortage have all been blamed. Looking ahead however, as the CMIE has done, suggests that prices have to go up due to the increase in railway freight charges announced in March 2012 and the excise duty hike announced in the Union Budget 2012-13. All that remains in the middle are the profit margins that the cement industry has become accustomed to.

Back in January 2012 Fitch Ratings predicted a 'negative outlook' for the Indian cement industry in 2012, based on overcapacity and higher interest rates. Now it seems that total capacity utilisation is down in 2012 compared to 2011, from 76.2% to 71.3%. Throw in the railway and duty increases and one might be tempted to feel that Fitch went easy on the subcontinent.

Yet, the cement producers have already found one silver lining in the monsoon season. Industry sources were soon reported as using price increases in the country's south zone and price decreases in the north zone as evidence that cartel-like behaviour couldn't possibly be happening. In a country as large as India perhaps they should have added the words 'nationally coordinated.' Despite the price drops, prices in the cities have been reported at an all-time high due to supply shortages - a situation that may be familiar to some consumers in Saudi Arabia.