Displaying items by tag: SNIC
Update on South America
15 July 2020Data is starting to emerge from South American countries for the first half of 2020 and it’s not necessarily what one might expect. Countries had different trends in play before the coronavirus pandemic established itself and then governments acted in their own ways with mixed results. Here’s a brief summary of the situation in the key territories.
Graph 1: Cement sales in selected South American countries in first half of year, 2018 – 2020. Source: Local cement associations and national statistics offices. Note: Colombian data is for January – May for each year.
Brazil’s cement sector looked set to become the big loser as global events seemed poised to dent the recovery of cement sales since a low in 2018. This didn’t happen. The Brazilian national cement industry union’s (SNIC) preliminary data for the first six months of 2020 shows that sales grew by 3.7% year-on-year to 26.9Mt. This is above the growth rate of 3% originally expected. Indeed, the monthly year-on-year growth rate in June 2020 was 24.5%. SNIC is not wrong in describing this kind of pace as being ‘Chinese.’ All this growth has been attributed to the home improvement market as people used their lockdown time to renovate their homes, renovations and maintenance in commercial buildings during lockdown and growing work on real estate projects. The government’s decision to implement weak lockdown measures clearly helped the sector but this may have cost lives in the process.
SNIC’s president Paulo Camillo Penna pointed out that producing and selling cement could co-exist with fighting coronavirus. However, trends such as a slowing real estate sector, less large construction projects and mounting input costs are all seen as potential risks in the second half of 2020. What SNIC didn’t link to the wider fortunes of the local cement industry was the economic consequences of coronavirus. The World Bank, for example, has forecast an 8% fall in gross domestic product in Brazil in 2020 due to its coronavirus, “mitigation measures, plunging investment and soft global commodity prices.”
Peru, in contrast to Brazil, implemented a strong lockdown early in March 2020. Unfortunately, it didn’t seem to work as well as hoped possibly due to informal and structural issues such as reliance on markets, the informal economy and residential overcrowding. This means that production and sales of cement are significantly down without any public health benefit. Both production and despatches fell by about 40% to around 2.9Mt in the first half of 2020 with close to total stoppages in April 2020. In terms of coronavirus, Peru is at the time of writing in the top 10 worldwide for both total cases and deaths, behind only Brazil in South America. It should be pointed out though that Peru’s testing rate is reportedly high for the region and this may be making its response look dire in the short term. All of this is particularly sad from an industrial perspective given that Peru was one of the continent’s strongest performers prior to 2020. One consolation though is that the economy is expected to recover more quickly compared to its neighbours.
Argentina started 2020 with a downward trend in its local market. Cement sales had been falling since 2017, roughly following a recession in the wider economy. Throw in a strong lockdown and sales more than halved at its peak in April 2020. So far this has led to a drop of 31% to 3.83Mt for the first half of 2020 compared to 5.51Mt in the same period in 2019. Unfortunately, a recent spike in cases in Buenos Aires has led to renewed lockdowns in the capital. Due to this unwelcome development and the general economic situation Fitch Ratings has forecast an overall decline in cement sales volumes of 25% for 2020 as a whole.
Finally, Colombia’s cement production fell by 24% year-on-year to 3.90Mt in the first five months of 2020 from 5.14Mt in the same period in 2019. April 2020 was the worst month affected. The country’s 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. Data from DANE, the Colombian statistics authority, shows that local sales fell by around a third year-on-year to 0.71Mt in May 2020 from 1.06Mt in May 2019.
Most of the countries examined above follow the pattern of reduced cement production and sales in relation to the severity of the lockdown imposed and the resulting intensity of the coronavirus outbreak. Stronger lockdowns suppressed cement production and sales in the region of 20 – 40% in the first half of the year as governments shut down totally and then released industry and commerce incrementally. The exception is Peru, which has suffered the worst of both worlds: a severe lockdown and a severe health crisis. Local trends have continued around this, like the recovery in Brazil in the construction industry and the general recession in Argentina.
SNIC’s president has said that making and selling cement needn’t be exclusive with public health measures. He’s right but Brazil’s surging case load is an outlier compared with most of its continental neighbours and the rest of the world. Cement sectors in countries with growing economies like Peru and Colombia are expected to bounce back quicker than those with stagnant ones like Argentina. The risk for Brazil is what its government health strategy will do to the construction sector in the second half of 2020.
Brazil: The National Cement Industry Union (SNIC) has estimated a 3.7% year-on-year increase in total cement sales to 26.9Mt in the first half of 2020 from 25.9Mt in the corresponding six months of 2019. Export sales rose by 56% to 84,000t from 54,000t. Sales increased by 7.7% month-on-month in June 2020, however SNIC president Paulo Camillo Penna expressed worries about demand going forward into the second half of 2020.
“The cement industry is responsible for more than 70,000 jobs, generates an income US$4.94bn and an annual net collection of US$562m. We are very sensitive to the macroeconomic scenario and government stimuli. For this reason, the cement industry is anxiously awaiting the launch of the new government housing project, ’Casa Verde Amarela,’ which is expected to leverage the real estate and renovation market more strongly, and restarting works on 100,000 housing units,” said Penna.
Brazil reports 3.6% year-on-year sales rise in 2019
09 January 2020Brazil: Brazil has reported a growth in annual sales volumes for the first time since 2014. Producers sold 54.5Mt of cement – up by 3.5% from 52.8Mt in 2018 and exceeding SNIC president Paulo Camillo Penna’s January 2019 forecast of 3.0% growth. Penna has predicted a 3.6% increase to 56.5Mt in 2020. Valor newspaper has reported that Penna bases his assumption on favourable interest rates and low inflation of the Brazilian real as well as the government’s implementation of anticipated industrial policies favourable to production.
Update on Brazil – 2019
16 October 2019SNIC, the Brazilian national cement industry union, was being cautious this week but signs of improvement were there. Its cement sales data showed a 3% year-on-year rise to 40.5Mt for the first nine months of 2019 from 39.4Mt in the same period in 2018. SNIC President Paulo Camillo Penna was keen to pour cold water over the figures with a reminder that the truck driver’s strike and an economic slowdown in 2018 had unnaturally depressed industry sales. He didn’t want to ruin the party too much though. Comments followed about a National Confederation of Industry (CNI) survey forecasting growth for the next six months and market research supporting growing residential construction.
Graph 1: Cement sales in Brazil for Q1 – 3, 2014 – 2019. Source: SNIC.
As Graph 1 above shows the local industry has been through the wringer in recent years. Cement sales peaked in 2014 before the national economy was hit by falling commodity and oil prices that contributed to a recession as well as the Petrobras political crisis. At the start of 2017 Camillo Penna described the situation as the worst in the industry’s history. From the peak to the trough cement sales plummeted by 27%.
Camillo Penna’s caution now may have something to do with his previous prediction that the industry was going to recover from the second half of 2018. The sales may not have perked up but merger and acquisition activity did, with the European multinationals Buzzi Unicem and Vicat buying stakes in BCPAR (Grupo Ricardo Brennand) and Cimento Planalto (Ciplan) respectively. So far in 2019 it has been quietly optimistic but not without the odd hiccup. There have been a few new plant project announcements from Brennand Group, Votorantim and CSN Cimentos. Yet, InterCement converted its integrated Pedro Leopoldo plant in Minas Gerais to a terminal. Cimento Tupi reportedly ran into trouble with its investors when it tried to merge with its parent company following defaulting on loan payments in 2018. Notably, the country’s two cement associations also released a Cement Technology Roadmap to 2050 in April 2019. It plans to reduce specific CO2 emissions by over 30% from 2014 to 375kg CO2/t of cement in 2050 amongst other ambitions.
On the corporate side, Votorantim’s domestic sales rose by 3% year-on-year to US$771m in the first half of 2019 from US$745m in the same period in 2018. It attributed the growth to improved prices. Other news of note included the acquisition of a mortar plant in Belém, Pará state and plans to upgrade its clinker grinding unit at Pecém in Ceará. InterCement’s cement and clinker sales volumes rose by 6.8% to 4.04Mt from 3.78Mt. It declared that this was way ahead of the industry average of 1.5%. Sales revenue fell slightly, possibly due to high production overcapacity and competition on prices. Earnings were also reported as having improved in the second quarter partly due to a ‘significant’ reduction in its cost structure.
On the supplier side, refractory manufacturer RHI Magnesita reported that its margin recovery was ‘going quite well’ in Brazil during the first half of 2019. Stefan Borgas, RHI Magnesita’s chief executive officer (CEO) forecast that the margin in that country would help drive its business in the second half of 2019 and that the business was returning to the global average. RHI Magnesita also announced a Euro57.1m upgrade to its plant at Contagem, Belo Horizonte in Minas Gerais this week, including building a new regional headquarters for its South American business.
Everything seems to be coming together slowly for Brazil’s cement industry. Yet Camillo Penna and SNIC are right to be careful for another reason. The United Nations (UN) and various analysts are warning about the growing risk of global recession in 2020 based on indicators like the US yield curve. This could be especially devastating for an economy like Brazil’s that is heavily dependent on commodity markets. History may not repeat itself but the strength of that recovery may be tested sooner than anyone would like.
SNIC cautious about Brazilian cement sales growth so far in 2019
11 October 2019Brazil: Paulo Camillo Penna, the president of SNIC, the Brazilian national cement industry union, has expressed caution about growing cement sales so far in 2019. Data from SNIC shows that cement sales grew by 3% year-on-year to 40.5Mt in the first nine months of 2019 from 39.4Mt in the same period in 2018. Growth was driven by central and southern regions of the country, particularly in São Paulo. Exports grew by 22% to 90,000t from 74,000t. However, Paulo Camillo said that apparent growth in 2019 was partly due to a truckers strike in May 2018 that overly depressed the year’s sales. Despite this, he added that a survey of the construction industry released by the National Confederation of Industry (CNI) was showing slow but steady improvement.
Brazil swells year-on-year sales
09 September 2019Brazil: Brazil’s National Syndicate of the Cement Industry (SNIC) has released August 2019 sales figures of 5.10Mt, up by 3.0% year-on-year from 4.95% in August 2019. This corresponds to an equal apparent consumption of cement in the country of 5.10Mt, up by 2.9% year-on-year from 4.96Mt in August 2018. Besides rising demand, SNIC points to non-repeating depressing factors acting on domestic cement capacity a year ago, including a lorry drivers’ strike.
Brazil: Data from SNIC, the Brazilian national cement industry union, shows that sales rose by 1.5% year-on-year to 25.8Mt in the first half of 2019 from 25.5Mt in the same period in 2018. SNIC president Paulo Camillo Penna said that the growth was in line with SNIC’s forecasts and that more ‘robust’ growth was anticipated the second half of the year. He added that the growth in cement sales had been supported by the real estate market and that the industrial sector was also growing.
Brazilian cement a quarter higher in May 2019
11 June 2019Brazil: According to data from SNIC, the Brazilian national cement industry union, 4.6Mt of cement was sold in Brazil during May 2019. The figure is 27.6% higher compared to May 2018, with the large percentage increase due to the low base resulting from a truck drivers’ strike in May 2018. The first five months of 2019 recorded sales of 21.6Mt, a 5.6% year-on-year rise.
Brazil: Data from the National Union of Cement Industry (SNIC) shows that cement sales rose slightly to 12.7Mt in the first quarter of 2019 compared to 12.6Mt in the same period in 2018. Regional sales fell slightly to 6Mt in the southeast of the country including the major markets of Minas Gerais, São Paulo and Rio de Janeiro. However, most of the other regions reported growth, particularly the centre-west. SNIC president Paulo Camillo Penna said that March 2019’s performance was better than expected and that it was forecasting growth of 3% in 2019.
SNIC launches Cement Technology Roadmap for Brazil
11 April 2019Brazil: The National Union of Cement Industry (SNIC) and the Brazilian Portland Cement Association (ABCP) have launched a Cement Technology Roadmap to 2050. SNIC president Paulo Camillo Penna said that the document would help the local industry cut its carbon footprint in the medium and long term. The roadmap was developed with the International Energy Agency (IEA), the Cement Sustainability Initiative (CSI) of the World Business Council for Sustainable Development (WBCSD), the International Finance Corporation (IFC) of the World Bank and a group of academics led by José Goldemberg.
The roadmap intends to reduce specific CO2 emissions by over 30% to 375kg CO2/t of cement in 2050. Key actions to 2030 include strengthening national and international cooperation, promoting new cement standards, raising the clinker substitution rate, promoting the use of alternative fuels in compliance with the National Policy on Solid Waste (PNRS), sharing best practive in energy efficiency and promoting resaerch and development in new greenohuse has mitigation technologies.