Displaying items by tag: Import

India: Adani Group subsidiary HDC Bulk Terminal has concluded an agreement with the ports authority of Haldia Dock Complex for the construction of a new terminal at Berth 2 of the Port in West Bengal. The facility will have a handling capacity of 3.74Mt/yr, and will receive bulk solids including raw materials for Adani Group’s cement subsidiaries in the state. The total cost of the terminal’s construction will be US$37.4m. Work will begin before April 2023.

Armenia: The tariff on cement imports has been reduced by 35% to US$22/t, from US$34/t previously, following changes to import rules by the government. Imports of clinker will be subject to no tariffs.

News.am has reported that seven-month cement imports to Armenia rose by 1.7% year-on-year in the period up to 31 August 2022, to 84.7Mt from 83Mt. The cause of the growth is variously the cancellation of an income tax refund on mortgages from 1 July 2022, the increased immigration of Russian citizens into Armenia and the growth of tourism.

US: Total US cement shipments grew by 4% to 52.4Mt in the first half of 2022 from 50.4Mt in the same period in 2021. Data from the United States Geological Survey (USGS) shows that local shipments and imports rose by 3.5% to 44.1Mt and 7% to 8.31Mt respectively. The largest sources of imports of cement and clinker were Turkey at 4.57Mt, Canada at 2.19Mt, Mexico at 1.28Mt, Greece at 1.23Mt and Vietnam at 0.94Mt. The largest cement producing states in the reporting period, in descending order, were Texas, California and Missouri.

Bangladesh: The high rate of the US Dollar against the Bangladeshi Taka is forcing local cement producers to raise their prices despite an increase in imports of volumes of raw materials. The country imported 5.12Mt of clinker, granulated slag, limestone, gypsum and fly ash in July and August 2022, a rise of 34% year-on-year, according to the Daily Star newspaper. Golam Kibria, the general manager of Premier Cement, said that the negative currency exchange effect was the main cause of local price rises for cement since the cost of raw materials on international markets had remained stable in recent months.

The country imported 36.1Mt/yr of raw materials for cement production in the 2021 – 2022 financial year. These materials mostly came from Thailand, Vietnam and China through ports in Chattogram and Mongla. This compares to imports of 16.8Mt in the 2017 – 2018 financial year.

Sri Lanka: Insee Cement has broken ground on its construction of a 45,000m³-capacity storage facility at Hambantota International Port. When commissioned in early 2023, the facility will store ground granulated blast furnace slag (GGBFS) for use in Insee Cement's cement production. Daily News has reported the cost of the facility's construction as US$3m. At 17,300m², the Hambantota storage facility will be the largest warehouse at any port in Sri Lanka.

Insee Cement chair and CEO Nandana Ekanayake said "Hambantota Port is a vital link in our raw materials supply chain. Insee Cement has been using this port since 2018 and so far we have cleared around 1.7Mt of bulk cargo through the port, of which we did a little over 1Mt in 2021. Today, we laid this foundation as another step to strengthen our partnership with Hambantota International Port Group." Ekanayake concluded "We see great potential in developing channels through Hambantota International Port and we will double our investment in the future."

Fuels procurement and costs have been weighing on the minds of Indian cement producers since the start of the Russian invasion of Ukraine in February 2022. Two news stories this week show some of this. The first concerns recent imports of petcoke from Venezuela. The second covers the closure of captive power plants due to domestic shortages of coal.

At the same time, as the financial results for cement companies for the first quarter of the Indian 2023 financial year have been released, one constant has been hefty hikes in power and fuel costs. Graph 1 below gives a rough idea of the jump in costs major producers have been contending with. One point to note is that, possibly, the larger cement companies may have been better at slowing down the cost inflation from fuel. However, the prevalence of waste heat recovery installations and alternative fuels usage may also be a factor here. Finally, the company approved to buy Ambuja Cement and ACC, Adani Group, also runs India’s biggest coal trader. It will be interesting to see in the medium term how this might affect the fuel costs for its new cement division.

Graph 1: Comparison of Power & Fuel costs for selected Indian cement producers in first quarter of 2022 and 2023 financial years. Source: Company financial reports.

The Venezuelan story demonstrates the greater lengths that Indian cement producers are now going to secure fuel supplies. Reuters reports that cement companies imported at least 160,000t of petcoke from the South American country between April and June 2022 and that more was on the way. JSW Cement, Ramco Cements and Orient Cement are among them. The Venezuelan oil industry has been under US economic sanctions since 2019 but byproducts such as petcoke are not covered by this. Its petcoke has apparently been discounted by 5 - 10% below the price of US alternatives.

Indian cement producers have been prepared to risk US sanctions further by importing coal from Russia. The Business Standard newspaper, using data from Coalmint, reported that Russia became India’s third largest source of coal imports, at 2.06Mt, in July 2022. Before the war it was the sixth-largest source of coal to the country. Again, Reuters covered how cement companies were doing this in July 2022, when it revealed that UltraTech Cement had used India-based HDFC Bank to purchase coal using Chinese Renminbi, not the US Dollar as is more common for international purchases of commodities. In a conference call for the release of its first quarter results, UltraTech Cement’s chief financial officer Atul Daga confirmed the purchase and described it as “opportunistic.” He added that, “If something more surfaces, we will pick it up.” As the data for July 2022 shows, it may or may not be UltraTech Cement that is buying Russian coal right now but other parties in India certainly are.

Some of the wider economic implications about India buying Russian coal in the face of US and European sanctions include whether any retaliation might be forthcoming and a general sign that the dominance of the US Dollar as the world’s reserve currency is not guaranteed. The former seems doubtful given the size of India’s markets. Yet if the sanctions against Russia drag on then a shift in the global economic status quo becomes more likely, especially if opportunistic purchases become regular ones.

The situation facing captive power plants illustrates one more turn of the screw on energy costs for industrial manufacturers. 30% of captive power plants in India are reportedly closed due to the high cost of coal or an inability to even import it. Although it is worth noting that it is unclear whether, proportionally, more or less of these are serving cement plants. As N Srinivasan, the vice-chairman and managing director of India Cements told the Business Standard newspaper, “Most of our plants have coal based captive power generation. The cost of captive generation is now more than the grid cost. Hence, we shut down all captive power units and resorted to grid power.”

The International Energy Agency (IEA) forecast in July 2022 that Indian coal demand would grow by 3% year-on-year to 1.16Bnt in 2023 due to expanded electrification and economic growth. In its view, global coal demand will be driven principally by China but also by India to a lesser extent. However, unhelpfully, it added that uncertainty was also rising with ongoing developments in the war in Ukraine having a prominent effect. This is unlikely to assist Indian cement producers and their fuel buyers who will be asking themselves: how long will the current situation last and can the prices be passed on to consumers? There is one small silver lining in the current group of economic storm clouds hanging over cement producers at least. The second quarter of the Indian financial year is monsoon season, when economic activity slows down. It won’t slow the trend down but it may reduce the fuel bill a little.

Burundi: The government is preparing to allow imports of cement into the country for a designated period in an effort to tackle rising prices. The cabinet announced the plan following a difference being recorded between reference prices and the actual market price, according to the East African newspaper. The measures will also allow for sugar imports. Local cement producer Burundi Cement Company (BUCECO) has called for the government to start a price review first before relaxing import rules. It wants to increase its prices due to growing raw material and transport costs.

India: India imported 2.03Mt of coal from Russia in July 2022, making the widely sanctioned nation its third largest source of coal that month. The figure represents a 10% month-on-month increase from 1.85Mt-worth of Russian coal imports in June 2022. The Economic Times newspaper has reported that the single largest importer of thermal coal in July 2022 was UltraTech Cement, with 170,000t.

Peru: Cement production grew by 7% year-on-year to 6.4Mt in the first half of 2022 from 6Mt in the same period in 2020. Data from the Association of Cement Producers (ASOCEM) shows that cement exports rose by 15% to 98,000t and clinker exports fell by 8% to 289,000t. Cement and clinker imports fell by 69% to 150,000t and 40% to 549,000t respectively.

Pakistan: Cherat Cement and Lucky Cement are among three companies to have imported 10,000t of coal from Afghanistan in the two-month period up to 11 July 2022. Asian News International has reported the other company was Fauji Fertilizer Power Station.

The local coal price in Afghanistan was US$188/t on 11 July 2022.