Displaying items by tag: Brazil
Brazil: Votorantim Cimentos has inaugurated a new cement plant at Primavera in Pará state. The US$258m plant has a production capacity of 1.2Mt/yr. It will serve the North and Northeast regions of Brazil.
“This plant in Primavera is part of Votorantim Cimentos’ major investment plan. Despite the challenging situation in Brazil, we are moving forward with our long-term vision and our confidence in the development of the country,” said Walter Dissinger, CEO of Votorantim Cimentos. Construction of the plant also included a social investment programme in the local area that invested US$3m towards a local library, schools and a health centre.
The new operation is part of the company’s expansion plan, which will increase its global capacity to approximately 59Mt/yr by the end of 2018, in line with the company’s plan of geographic diversification. This expansion plan adds to investments of US$3.6bn made between 2007 and 2015, which resulted in a 94% increase in global production capacity.
The investment plan to 2018 also includes expansions at Charlevoix in the US, Sivas in Turkey and a new cement plant at Yacuses in Bolivia. The company is also expanding in the San Luis region of Argentina.
Brazil: Jose Otavio Carneiro de Carvalho, president of the National Union of the Cement Industry (SNIC), estimates that the Brazilian domestic market will decrease by 12% in 2016, according to the Folha newspaper. SNIC data shows that cement sales fell by 11% year-on-year to 61Mt/yr for the June 2015 to May 2016 period from 69Mt in the previous year. Sales so far in 2016 have fallen by 14% to 23Mt for the January to May 2016 period from 27Mt from the previous year. SNIC have suggested that demand will only resume from 2017 and that companies may be holding back investment to ensure it.
Brazil: InterCement’s sales have fallen by 28% year-on-year to Euro454m for the first quarter of 2016 from Euro637m in the same period in 2015. Its cement and clinker sales volumes fell by 11.2% to 6.03Mt from 6.79Mt. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) fell by 36.2% to Euro77.9m from Euro122m. The group blamed the falling sales on construction market contraction in Brazil and negative currency effects in certain territories.
The Brazilian-based cement producer reported sales volumes declines in most countries it operates in. Cement and clinker sales volumes fell by 17% to 2.27Mt in Brazil, by 34.8% to 0.73Mt/yr in Portugal and by 7.1% to 1.41Mt in Argentina. However, volumes rose by 26.3% to 0.37Mt in Mozambique and by 2.8% to 0.32Mt/yr in South Africa. Overall sales volumes declines were attributed to the political instability, economic problems in Brazil and decreased exports from Portugal to Algeria due to issues with import licences.
Update on Brazil
25 May 2016LafargeHolcim has officially opened a new cement line at its Barossa cement plant in Brail. It is unfortunate timing given that the Brazilian cement industry has not had an easy time of it of late. The wider economy in the country has been in recession since it was hit by falling commodity and oil prices and gross domestic product (GDP) fell by 3.8% in 2015. The International Monetary Fund (IMF) has predicted currently that the GDP will fall by a similar amount in 2016. Alongside this, the Petrobras corruption inquiry has enveloped construction companies and led to the suspension of president of Dilma Rousseff. The Instituto Brasileiro de Geografia e Estatística (IBGE) reported that the national construction industry contracted by 7.6% in 2015.
Graph 1: Brazilian cement production from 2011 to 2015. Source: SNIC.
Graph 2: Brazilian cement production by quarter from 2015 to March 2016. Source: SNIC.
Graph 1 summarises, with National Union of the Cement Industry (SNIC) data, what happened to cement production in 2015. It fell by 9.6% to 64.4Mt in 2015 from 71.3Mt in 2014. Unfortunately, as Graph 2 shows, the downward production trend is accelerating into 2016. Production fell by 5.76% year-on-year to 15.6Mt in the first quarter of 2015 from 17.1Mt in the first quarter of 2014. Now, production has fallen by 11% to 13.9Mt in the first quarter of 2016. April 2016 figures also appear to be following the same trend.
Amidst these conditions Votorantim somehow managed to hold its cement business revenue up; increasing it by 6% to US$3.82bn in 2015. Despite this its cement sales volumes fell by 6% to 35Mt. As a result, Votorantim announced plans to temporarily shutdown kilns and plants and sell off selected concrete assets. Cimento Tupi reported that its cement and clinker sales volumes fell by 23% to 1631Mt in 2015 from 2119Mt in 2014. It blamed the fall of the ‘retraction’ of the cement market and a wide-scale maintenance campaign it had implemented on its kilns. Its revenue fell by 26% to US$98.8m from US$134m.
LafargeHolcim pulled no punches when it blamed challenging conditions in Brazil for dragging its financial results down globally in 2015. It didn’t release any specific figures for the country but it described its cement volumes as falling ‘significantly’ with competition and cost inflation adding to the chaos. This has gotten worse in the first quarter of 2016 with volumes further affected. Its cement sales volumes in Latin America fell by 10.7% year-on-year for the period principally due to Brazil. Companhia Siderúrgica Nacional (CSN) has reported an 8% rise in production to 531,000t in the first quarter of 2016 and an 8% rise in sales volumes to 571,000t in the same period. This was partly achieved by the ramp-up of production at its new plant at Arcos in Minas Gerais.
In the wider cement supplier sector the knock-on from falling cement demand has hit refractory manufacturer Magnesita. Its revenue fell by 17% year-on-year to US$66.9m for the first quarter of 2016. This was due to falling steel production in various territories and the negative effects of the construction market in Brazil hurting its cement customers.
It is unsurprising that companies like LafargeHolcim commissioned new capacity in Brail a few years ago given the promise the market seemed to hold. Both the CSN project at Arcos and Holcim’s Barroso project were announced in 2012 near the height of the market. Both are also based in Minas Gerais, the country’s biggest cement producing state. Predicting both the drop in the international commodities markets and a local political crisis would have been hard to predict. All these producers can do now is sit back and wait out the situation with their efficiency gains until the construction rates pick up again. Hopefully the first quarter results for Brazil’s two leading cement producers, Votorantim and InterCement, will not be too depressing.
LafargeHolcim opens new Barroso line in Brazil
24 May 2016Brazil: LafargeHolcim will strengthen its cement production network in Latin America today, with the opening of a new cement line at its cement plant in Barroso, Brazil. The group says that the construction of the new line at the existing Barroso site is part of the group’s strategy to reduce the cost per tonne of its cement, while improving quality and efficiency, in order to operate profitably in a low investment environment.
The new line in Barroso, which LafargeHolcim claims to be the most modern in Brazil, will increase operational efficiency and cost competitiveness based on its state-of-the-art technology. Equipment includes the world's largest vertical cement mill from Gebr. Pfeiffer and an FCB Horomill for raw materials. The plant’s total capacity will rise to 3.6Mt/yr and the new line will allow the total cost per tonne of cement to fall by around 25% from 2014 to 2017.
Eric Olsen, CEO of LafargeHolcim, said, “The opening of Barroso is key to our strategy in Brazil and will allow us to further improve our cost structure while we continue to supply our customers with our high-quality solutions.”
Brazil: Magnesita’s net operating revenue has dropped by 17% year-on-year to US$66.9m for the first quarter of 2016 from US$80.2m in the same period in 2015. The company’s sales volumes of refractory materials fell by 8.7% to 232,000t from 254,000t. Earnings before interest, taxation, depreciation and amortisation (EBITDA) fell by 12.8% to US$11.4m from US$13.1m. The company blamed the falling revenue on falling steel production in South America and Western Europe and on a poor construction market in Brazil negatively affecting its cement clients.
"2016 began with interesting prospects for Magnesita. While the world is mired with excess steel production, uncertainties surrounding the Chinese economy and substantial political turmoil in Brazil, we have begun to see green shoots coming out of the US (our most relevant market) and the first results of the array of self-help initiatives Magnesita has overtaken in the last few years,” said Octavio Pereira Lopes, Magnesita’s chief executive officer. He added that the quarterly drop in steel production in Western Europe was driven by a 39% drop in the UK due to capacity shutdown.
Brazil: Cement sales have fallen by 14.5% year-on-year to 13.9Mt in the first quarter of 2016 from 16.3Mt in the same period in 2015 according to the Sindicato Nacional da Indústria do Cimento (SNIC). Local cement companies estimate that sales and apparent consumption will fall by up to 13% in 2016.
A survey by SNIC shows the sales began falling in mid March 2014 due to problems in the construction industry. However, SNIC president José Otávio de Carvalho said that this is not the worst crisis faced by the cement industry. In 1982 cement consumption fell to 19Mt from 27Mt in 1982.
Brazil: Votorantim’s cement sales volumes fell by 6% year-on-year to 35Mt in 2015 from 37Mt in 2014. However, net revenue from the group’s cement business rose by 6% to US$3.82bn. The Brazilian industrial group blamed the loss of sales volumes on the poor economic situation in Brazil. However, its revenue rallied due to currency variations and growing sales outside of Brazil.
Overall across all business sectors Votorantim reported that its revenue rose by 11% to US$8.57bn. This was supported by higher metal prices in Brazil and positive effects from the consolidation of the group’s foreign operations. Net income dropped by 77% to US$103m
Martin Engineering launches Arcoplate worldwide
18 March 2016US: Martin Engineering has launched its bimetallic wear plate product Arcoplate around the world. Originally the wear plate was sold only in Brazil by the bulk handling products firm.
Martin Arcoplate uses a chromium carbide-rich metal alloy face plate with a steel back plate to resist gouging, erosion, temperature extremes and material build-up. It is marketed for excessive wear and material accumulation issues with bulk material handling. It is available in three grades. Alloy 1600 is designed for high abrasion and high impact applications. Alloy 1040 is engineered for moderate impact and cyclic temperatures up to 500°C. Alloy 8668 is suitable for extreme temperature applications, with cycles up to 700°C. Each derives its abrasion resistance from the M7C3 carbides (1500 - 1800Hv), with an average of 60% carbide dispersed through a softer, tougher matrix.
Arcoplate is manufactured by Alloy Steel International in Malaga, Australia.
Magnesita revenue rises by 18% to US$937m in 2015
11 March 2016Brazil: Magnesita’s revenue has risen by 18% year-on-year to US$937m in 2015 from US$796m in 2014. Its net loss decreased to US$294m in 2015 from US$27m in 2014. The company described 2015 as a year ‘marked by a challenging economic environment globally.’ It noted a drop in steel production in the US due to high imports, currency effects and the poor economy in Brazil.
The manufacturer’s production volumes of refractories fell by 6.9% to 958,000t in 2015 from 1.03Mt in 2014. However, its sales revenue from its refractories business rose by 15.6% to US$816m from US$706m. Although the majority of Magnesita’s refractory sales were to the steel industry, its sales volumes to other industries, including cement, fell faster in 2015 by 11.7% to 133,000t. This decrease was mainly attributed to the decline of the Brazilian cement industry and by lower demand for cement in Venezuela. Despite this, sales volume growth of 15% was reported in Middle East and Africa led by Saudi Arabia and Egypt.