Displaying items by tag: Saudi Arabia
Saudi Arabian cement demand expected to fall in 2019
19 February 2019Saudi Arabia: Demand for cement is forecast to fall in 2019. A report by Al Rajhi Capital expects this due to reduced government spending on infrastructure projects and growing construction costs, according to Trade Arabia. Cement producers will focus on pricing rather than volume in this environment. Exports are also expected to increase. Local sales volumes of cement decreased by 13% year-on-year in 2018.
Yamama Cement sales fall due to low demand and high competition
15 February 2019Saudi Arabia: Yamama Cement’s sales fell by 30% year-on-year to US$139m in 2018 from US$199m in 2017. Its profit decreased by 82% to US$9m from US$51m. The cement producer blamed its performance on falling demand for cement and ‘fierce’ competition.
Hail Cement hit by fall in prices
07 February 2019Saudi Arabia: Hail Cement’s profits have been reduced by a fall in prices, weakened demand and ‘tough’ competition. Its sales rose by 19% year-on-year to US$52.3m in 2018 from US$43.9m. However, its total profit fell by 77% to US$3.2m from US$13.5m.
Qassim Cement appoints new chairman
30 January 2019Saudi Arabia: Qassim Cement has appointed Tarek bin Mutlaq Al Mutlaq as the chairman of the board of directors. It has also formed new executive and remuneration committees.
Lower cement demand reduces Qassim Cement sales in 2018
30 January 2019Saudi Arabia: Qassim Cement’s sales fell by 32% year-on-year to US$114m in 2018 from US$167m in the same period in 2017. Its profit decreased by 49% to US$37.4m from US$73m. It blamed the fall in sales and profits on lower cement demand and lower prices due to competition.
Update on Bangladesh
23 January 2019The Bangladeshi cement industry has been busy over the last month. Both Vietnam and Iran have marked up the country as a major destination for their exports. No change there, but Saudi Arabia has also started to join them as its producers have started announcing clinker export deals to the country. Alongside this there have also been production upgrades announced from MI Cement, Chhatak Cement and a Saudi-led partnership. Also, just before Christmas, Shah Cement inaugurated the world’s largest vertical roller mill (VRM) with a 8.1m grinding table, supplied by Denmark’s FLSmidth, at its Muktarpur plant in Munshiganj.
Md Shahidullah, vice president of the Bangladesh Cement Manufacturers Association (BCMA), described 2018 as a good year for the local industry to local media. Cement sales rose to 33Mt and consumption grew by 12% year-on-year.
The country has an integrated production capacity of 8.4Mt/yr from eight plants according to Global Cement Directory data. The main plants are Chhatak Cement and Lafarge Surma Cement. Locally produced clinker accounts for about 20% of the country’s needs, with the other 80% imported from abroad. Hence, the action is really with the grinding plants and the country has over 30 of them. A market report by EBL Securities in mid-2017 reckoned that local cement production capacity was 40Mt/yr but that actual production was around 32Mt in the 2016 - 2017 reporting year due to problems with power supplies and so on. Given the focus on grinding it’s interesting to note imports of clinker. These rose by 9% year-on-year to a value of US$518m in 2017 - 2018, the highest figure since 2014 - 2015. Not all of this may be consumption related since the local currency, the Taka, depreciated against the US dollar in 2017 and 2018.
Back in 2016 the market leaders were Shah Cement, LafargeHolcim Bangladesh, Bashundhara Group, Seven Rings Cement and HeidelbergCement. They accounted for about half of the market share. Of these LafargeHolcim Bangladesh saw its revenue nearly double year-on-year to US$101m from US$58m in the first half of 2018. Its profit did double to US$6.3m from US$2.7m. The company is a joint venture between LafargeHolcim, Spain’s Cementos Molins and other partners.
Bangladesh suits a grinding-based industry due to its high level of navigable waterways and low levels of limestone. In some respects though the country is a glimpse of what future cement markets might look like. Its lack of raw materials means it focuses on grinding and a clinker-rich world plays right into this. This creates an oversaturated market full of lots of companies due to the lower cost of setting up a grinding business or cement trading. In theory this should be great for end consumers and the general development of the country. After all Bangladesh has a high population, of 164 million, and a low gross domestic product (GDP) per capita, US$4561, and similarly low per capita consumption of cement. The downside though is that reliance on external raw materials. Any changes to exchange rates or material supply puts the entire industry at risk or puts prices in flux. In the meantime though the interest by Saudi exporters adds an interesting dynamic to a crowded market.
Tabuk Cement negotiates clinker export to Bangladesh
17 January 2019Bangladesh/Saudi Arabia: Tabuk Cement is in talks with the government of Bangladesh to export clinker to the country. The company’s clinker inventory will decrease by 1.2Mt once the arrangement is completed, according to Mubasher. The proceeds of the deal will be recorded in the company’s financial statement for the first quarter of 2019.
HeidelbergCement sale now on
16 January 2019More details from HeidelbergCement this week on its divestment strategy. It has sold its half-share in Ciment Québec in Canada and a minority share in a company in Syria. A closed cement plant in Egypt is being sold and it is working on divesting its business in Ukraine. Altogether these four sales will generate Euro150m for the group. Chairman Bernd Scheifele said that the company expects to rake in Euro500m from asset sales in 2018. It has a target of Euro1.5bn by the end of 2020.
In purely cement terms that is something like seven integrated plants. So the usual game follows of considering what assets HeidelbergCement might consider selling. The group offered a few clues in a presentation that Scheifele was due to give earlier this week at the Commerzbank German Investment Seminar in New York.
First of all the producer said that it was hopeful for 2019 due to limited energy cost inflation, better weather in the US, the Indonesian market turning, general margin improvement actions and sustained price rises in Europe. It then said that its divestments would focus on three main categories: non-core business, weak market positions and idle assets. The first covers sectors outside of the trio of cement, aggregates and ready-mix concrete. Things like white cement plants or sand lime brick production. Countries or areas it identified it had already executed divestments in included Saudi Arabia, Georgia, Syria and Quebec in Canada. Idle assets included depleted quarries and land.
The first obvious candidate for divestment could be the company’s two majority owned integrated plants in the Democratic Republic of Congo. These might be considered targets due to the political instability in the country. However, this is balanced by the potential long-term gains once that country stabilises. Alternatively, some of the plants in Italy seem like a target. The company had seven integrated plants, eight grinding plants and one terminal in 2018.
The presentation also pointed out the sharp rise in European Union (EU) Emissions Trading Scheme (ETS) CO2 emissions allowances, from around Euro5/t in 2017 to up to Euro20/t by the end of 2018. In late 2018 Cementa, a subsidiary of HeidelbergCement in Sweden, said it was considering closing Degerhamn plant due to mounting environmental costs. The group reckons it can fight a high carbon price through consolidation, capacity closure, higher utilisation, limited exports and pricing. It also pointed out that it is a technology leader in carbon reduction projects. It will be interesting to see how environmental costs play into HeidelbergCement’s divestment decisions.
Finally, a tweet by Sasja Beslik, the head of sustainable finance at Nordea, flagged up a few cement companies as being the worst companies for increasing CO2 emissions between 2011 and 2016. HeidelbergCement was 19th on the list after LafargeHolcim and CRH. Sure, cement production makes CO2 but it’s far from clear whether the data from MSCI took into account that each of these companies had expanded heavily during this time. In HeidelbergCement’s case it bought Italcementi in 2016. Cement companies aren’t perfect but sometimes there’s just no justice.
Saudi Arabian cement production drops by 10.5% to 42.1Mt in 2018
14 January 2019Saudi Arabia: Data from Yamama Cement shows that national cement production fell by 10.5% year-on-year to 42.1Mt in 2018 from 47.1Mt in 2017. Cement production fell at the majority of local producers with the notable exceptions of Saudi Cement, Southern Cement and others. Clinker production dropped by 3% to 48.3Mt from 49.9Mt. Local deliveries of cement decreased by 13% to 41Mt from 47.1Mt. However, exports of cement rose to 1.1Mt from 0.16Mt and exports of clinker increased to 3.2Mt from no exports in 2017.
Tabuk Cement appoints new general manager
09 January 2019Saudi Arabia: Tabuk Cement has appointed Ali bin Mohammed Al-Saif Al-Qahtani as its new general manager. It follows the resignation of Ali Bin Mohameha Al-Asmari. Al-Qahtani holds a bachelor's degree in Chemical Engineering from King Saud University and worked for a variety of companies including Saudi Aramco.