Displaying items by tag: Production
Pakistan powers forward
11 January 2017The All Pakistan Cement Manufacturers Association (APCMA) struck a triumphant note this week as it announced that its industry has over 26Mt/yr of capacity upgrades in the pipeline. Its chairman Sayeed Saigol concluded in a press release that the country’s growth trend required ‘massive’ investment and that its producers were working on it.
Graph 1 – Local and export cement despatches in Pakistan, 2008 – 2016. Data source: APCMA.
Graph 1 shows how the local industry has changed since 2009. At this time exports hit a high of over 11Mt, constituting 34% of all cement despatches at the time. Since then though exports have fallen to below 6Mt or 14% of despatches, as local despatches have started to increase. Although local despatches have risen each year, the growth rate was below 1% in 2011. In 2016 it was over 14%.
Much has changed since 2010. At this time production capacity hit a high of 45Mt/yr in the 2009 – 2010 Pakistan financial year, according to APCMA data, but then utilisation sunk to below 73%, its lowest rate in over a decade. Pakistan’s cement producers sought a way out by exporting their cement. Export volumes subsequently exploded to a high of nearly 11Mt in 2008 – 2009 from next to nothing at the turn of the millennium.
The effects of this had particular repercussions in eastern and southern Africa as local producers suffered against seaborne imports. In 2012 the outgoing chief of South Africa’s PPC summarised the problem by saying that imports were not a threat to African expansion, provided that a cement plant was not built within 200km of a port. Rightly or wrongly cement from Pakistan was vilified by the African press and then legislated against. South Africa even implementing anti-dumping duties to howls of derision from Pakistan.
Funnily enough though the APCMA has recommended that Pakistan’s government do exactly the same thing against imports of cement from Iran. Industry scare stories about Iranian cement being sold illegally in Pakistan have circulated since at least 2012. Iran’s nuclear deal in 2015 must have worried the local industry, as the prize for Iran was the lifting of international sanctions making it easier for one of the world’s largest cement producers to start exporting its product. However, president-elect Trump’s disdain for the Iran deal may put those worries to rest if the deal is ‘cancelled’.
Back to the present, the Pakistan cement industry appears to be booming. One motor is the China–Pakistan Economic Corridor, a collection of infrastructure projects worth US$54bn. There is some disagreement at this point about how the usage levels of cement breakdown, with the chief executive of Thatta Cement placing it at 60% for infrastructure and 40% for housing but with other commentators placing it at 70% for housing and 30% for infrastructure. If the latter is true then Pakistan’s cement producers may receive an even bigger payday. The emphasis on housing shouldn’t be underestimated though as the country’s production capacity per capita, below 200kg/capita, is low by international standards. Either way, things are looking good for the local producers.
Belarus: The Belarusian government has reduced its national plan for the production, consumption and export of cement from 2017 to 2020. The national cement production target has been set at 4.5Mt in 2017, 4.7Mt in 2018, 4.9Mt in 2019 and 5.1Mt in 2010, according to local media. During this period it is anticipated that the country’s cement production capacity will fall to 5.9Mt/yr from 5.4Mt/yr. Exports of cement are forecast to reach 1.6Mt in 2017, 1.7Mt in 2018 and 2019 and 1.8Mt in 2020. Consumption of cement is planned to be 3.3Mt/yr in 2017, 3.4Mt in 2018, 3.5Mt in 2019 and 3.6mt in 2020. The country produces cement from three state-controlled integrated plants.
Senegal introduces new cement tax
10 January 2017Senegal: The government of Senegal has introduced a tax of US$4.84/t of cement with effect from 2 January 2017. The tariff will apply to cement from the country’s three cement plants run by Ciments du Sahel, Sococim and Dangote, according to the Quotidien newspaper. Vendors are expected to pass the cost onto consumers with higher prices.
Cement production rose by 10% year-on-year to 5.15Mt in the first 10 months of 2016 from 4.68Mt in the same period in 2015 at the Ciments du Sahel and Sococim plants, according to data from the Directorate of Forecasting and Economic Studies (DPEE), reported upon by the African Press Agency. The increase has been attributed to a 25% surge in exports, although local sales have also risen slightly.
Cement sales and production continue to fall in Puerto Rico
22 December 2016Puerto Rico: Cement production has fallen by 30% year-on-year to 756,000 bags in the first eleven months of 2016 from 1.08M bags in the same period in 2015. Cement sales fell by 13% in the same period, a faster rate of decline than 8.5% in 2015 and 9.8% in 2014, according to local press. The decline has been attributed to a lack of funding supporting infrastructure projects and a slowdown in the residential construction sector.
Sibirsky Cement’s production falls by 19% to 3.1Mt in 2016
21 December 2016Russia: Sibirsky Cement’s production has fallen by 19% year-on-year to 3.1Mt/yr in 2016. It has blamed the fall on a reduction of market demand in the Siberian Federal District. Cement consumption in the region is expected to fall by 14% in 2016.
US clinker production stagnates in third quarter of 2016
25 November 2016US: Clinker production has fallen slightly to 20.5Mt in the third quarter of 2016 from 20.6Mt in the same period of 2015 according to preliminary data released by the United States Geological Survey (USGS). Portland and blended cement shipments fell by 3.7% to 26.4Mt from 27.4Mt. However, for the first nine months of the year both clinker production and cement shipments have risen. A full report for September 2016 will be published by the USGS in early December 2016.
Cement consumption in Russia falls by 10.9% so far in 2016
22 November 2016Russia: Cement consumption has fallen by 10.9% year-on-year to 44.3Mt in the first nine months of 2016 from 49.8Mt in the same period in 2015. The biggest decreases occurred on the Central, Volga, Siberian and North-Western federal districts, according to data from the Russian Cement Association (CMPRO) and the Russian Construction journal. Cement production has fallen by 10.9% to 43.5Mt from 48.9Mt. The falls in consumption and production have been blamed on a poor construction market although the residential sector picked up slightly in the third quarter of 2016.
Japan relies on cement exports
02 November 2016Two of Japan's largest cement producers have reported reduced domestic cement sales in the country this week. First, Taiheiyo Cement revised its forecast for its 2017 financial year, ending on 31 March 2017, bringing its estimated net sales down by 2.3%. Then, Ube Group reported that its cement sales had fallen by 7.2% year-on-year to US$1.05bn in the first half of its financial year. Both producers blamed poor weak demand locally, but Ube also cited a poor export market.
Graph 1: Domestic and export cement sales in Japan, 2006 - 2015. Source: Japanese Cement Association.
This last point is interesting because it differs from the latest data released by the Japanese Cement Association (JCA). As can be seen in Graph 1 JCA figures show that exports of cement have been rising since 2013. So far this trend looks likely to continue in 2016. Ube's different experience may arise from its market mix and its distribution of cement plants and transport infrastructure. Both of its cement plants are based in the south of the country. Commentators have attributed the boost in exports to the devaluation of the Yen in 2015 as well as strong brand perception overseas. Unfortunately, this overall rise in exports has been matched by a fall in domestic sales at the same time and this is causing a headache for the major producers. Production too has started to drop since 2014 (Graph 2).
Graph 2: Cement production in Japan, 2006 - 2015. Source: Japanese Cement Association.
Japan's cement market is dominated by four producers - Taiheiyo Group, Mitsubishi Materials, Ube Industries and Sumitomo Osaka Cement - which hold nearly three quarters of the nation's production capacity between them. According to Global Cement Directory 2016 data, Taiheiyo Cement and its subsidiaries is the market leader with over 30% market share with the other three holding 10 - 20% each.
Graph 3: Cement production capacity share in Japan (Mt). Source: Global Cement Directory 2016.
Taiheiyo's downgraded forecast follows poor first quarter results, in which its net sales for its cement business fell by 16% to US$1.19bn. This follows a slight rise in net sales for its cement business in its 2016 financial year due to a boost in sales from its overseas subsidiaries, particularly in the US, that surpass a fall in domestic sales. Sales volumes were 14.7Mt domestically and 4Mt in exports in 2016. Mitsubishi Materials has posted a similar picture with cement sales and profits rising in 2016 before suffering in the first quarter of 2017. Mitsubishi Materials blamed the poor market on a delay in construction work mainly due to labour shortages and sluggish growth in demand from the public sector. Ditto Sumitomo Osaka Cement.
As highlighted by such decision as Tokyo Cement's move to resume exporting clinker to Sri Lanka in early 2015, Japan's cement industry is working hard to compensate for falling demand at home. Increasing exports in Asia Pacific among other massive exporters such as China, Vietnam and South Korea is impressive, although the prominent foothold by Japanese companies in the recovering US market may offer some advantage here. On-going weak demand in China though cuts out one major market for Chinese exporters. However, being a major exporter in a region of major cement producers must be a concern. Although commentators such as Ad Ligthart dismiss the chances of China flooding the world with cheap cement, if they are wrong and Japan continues its reliance on exports it may find itself in deep water. The other risk is if the US authorities decide to get tougher on foreign exports it may knock out one more market for Japanese exports. Too much reliance on exports is always dangerous. In this context, it’s no surprise that Japanese cement producers are blaming the government for insufficient infrastructure spending.
Chinese cement production picks up in 2016
31 October 2016China: Cement output grew by 2.6% year-on-year to 1.77Bnt in the first nine months of 2016, according to data from the National Development and Reform Commission (NDRC). This is compared to a 4.7% drop in output that was noted for the same period in 2015 compared to 2014. Figures from the National Bureau of Statistics (NBS) show that property sector investment rose by 5.8% year-on-year in the first nine months of 2016, a faster rate than earlier in the year, supported by interest rate cuts and lower deposits.
Uzbekistan: Ahangarancement has increased its cement production by 6% year-on-year to 1.42Mt in the first nine months of 2016. Clinker production grew by 3.8% to 1.02Mt and cement sales volumes grew by 6.1% to 1.42Mt, according to the Trend News Agency. Ahangarancement, based at Ahagaran in Tashkent, is the second largest cement producer in the country. It is owned outright by Russia’s Eurocement.