September 2024
Egypt: Misr Beni Suef Cement has delayed the installation of a coal mill at its Beni Suef plant to the third quarter of 2017. Farouk Mostafa, managing director of the company, said that the delay has been caused by a shortage of US Dollars needed to pay to import the mill and its spare parts and general currency variations with the Egyptian Pound that has raised prices, according to Daily News Egypt. The mill was originally planned for December 2016.
Update on Brazil 25 January 2017
“One of the worst moments in its history.” That’s how Paulo Camillo Penna, the newly appointed president of SNIC - the Brazilian National Union of Cement Industry - described his industry last week. Few people are likely to be envying his position at the moment. As Camillo Penna went on to explain, domestic sales of cement fell by 11.7% year-on-year to 57.2Mt in 2016. He added that following capacity utilisation rates of 70% in 2015 and 57% in 2016 that he expected the rate to fall below 50% in 2017. When he said it was bad he wasn’t kidding.
Graph 1: Brazilian cement sales from 2011 to 2016. Source: SNIC.
Graph 2: Regional Brazilian cement production from 2014 to 2016. Source: SNIC.
Graph 1 illustrates how stark the decline in cement sales has been since the growth period at the start of the 2010s. Sales have fallen by 15Mt since 2014 in a country that has a production capacity of 88Mt/yr. Graph 2 presents a regional picture of sales. Note in this graph the sharp drops in sales (21%) in the southeast region of Brazil, an area that contains the key cement producing states of Minas Gerais and Rio De Janeiro. The decline in the northeast region including the state of Bahia, another key cement producing state, has been less extreme but it is still over 15%.
Votorantim, the country’s largest cement producer by production capacity, reported that its cement sale volumes fell by 6% to 26Mt in the first nine months of 2016, with declines in Brazil offset by business in other countries like the US. Its sales revenue also fell, by 7% to US$3.03bn. InterCement’s cement and clinker sales volumes fell by 16% to 11.8Mt in the first half of 2016 and its sales fell by 31% to Euro898m. As it described it, ‘the political and economic instability in Brazil in the first half, impacting on unemployment, investment and government spending, ultimately retracted the construction activity, compressing cement consumption.’ To compound these problems newly opened production capacity also ‘intensified’ competition. Later in 2016 InterCement’s parent company Camargo Corrêa was reported to be in talks to sell a minority stake in Argentina’s Loma Negra to pay off its debts from the cement business in Brazil. Finally, from an international perspective, LafargeHolcim’s global results for the first nine months of 2016 were negatively impacted by ‘challenging’ conditions in Brazil amongst other countries. It laid out an environment of reduced sales volumes and falling prices, although it said that it had used cost cutting to fight this.
Politically, the fallout from the Petrobras bribery scandal is continuing to shake out in the construction industry. In October 2016 it was revealed that the Brazilian Development Bank BNDES had frozen loan payments to construction firms involved in overseas projects worth up to US$7bn, including Camargo Corrêa. The Brazilian economy is expected to grow modestly, at a rise of 0.5% gross domestic product (GDP) in 2017 after dropping in 2016 although this forecast was falling towards the end of 2016. More hopeful news came from the São Paulo state construction union, SindusCon-SP, that in December 2016 released a report forecasting that the construction industry’s output could rise by 0.5%. However, this was dependent on economic reforms.
The question for Camillo Penna and the rest of the Brazilian cement industry is: where exactly is the bottom of the curve? SNIC forecast that cement sales will contract by a further 5 – 7% in 2017 and this is below the 11.7% drop experienced in 2016. So, does SNIC think that the industry is starting to hit against a bedrock of demand that economic headwinds can’t shift? In this kind of environment it seems likely to expect increased merger and acquisition activity. The merger of Brazil’s Magnesita and Austria’s RHI refractory companies that was announced in the autumn of 2016 may just be the start.
ThyssenKrupp to build cement plant in Algeria 25 January 2017
Algeria: ThyssenKrupp’s Industrial Solutions has been awarded a contract by Société des Ciments de Sigus, part of Groupe Industriel des Ciments d’Algérie (GICA), to build a cement plant at Sigus, in the Wilaya of Oum El Bouaghi, near Constantine. The plant will have a clinker production capacity of 6000t/day. Operation is planned to start in early 2019. No exact value for the order was disclosed but it was placed above US$100m.
GICA has launched several projects to increase its cement production capacity from 12Mt/yr to 20Mt/yr by 2019. ThyssenKrupp previously received an order from GICA in 2013 to build a 6000t/day cement plant.
Eagle Materials revenue up by 5% to US$933m in first nine months of 2017 financial year 25 January 2017
US: Eagle Materials revenue has risen by 5% year-on-year to US$933m in the first nine months of its financial year to 31 March 2017 from US$891m in the same period in the previous year. Its net earnings rose by 43% to US$162m from US$113m. Sales from its cement division rose by 7% to US$359m from US$335m. However, sales volumes fell slightly to 3.89Mt. Sales volumes of cement from its joint-venture in Texas grew faster than wholly-owned plants, despite cement prices falling as production shifted from oil well cement to construction-grade cement over the past year.
Siam Cement Group Building materials Division’s sales fall by 4% to US$4.9bn in 2016 25 January 2017
Thailand: Siam Cement Group’s Building Materials division’s sales revenue fell by 4% year-on-year to US$4.9bn in 2016. Its profit fell by 17% to US$241m. It blamed the falling sales and profit on increased competition, falling earnings before interest, taxation, depreciation and amortisation (EBITDA) and increased depreciation expenses. Overall, across the group’s chemical and packaging division, sales revenue fell but profits rose in 2016 driven by the chemical business.
Roongrote Rangsiyopash, the president and chief executive officer of Siam Cement Group, said the company is focusing on expansion strategies within the Association of Southeast Asian Nations (ASEAN) region. Its 1.8Mt/yr cement plant in Myanmar started commercial production in early 2017 and a cement plant in Laos is undergoing commissioning.
Cemex announces successful take-over bid of Trinidad Cement 25 January 2017
Trinidad & Tobago: Cemex’s indirect subsidiary Sierra Trading has successfully made its offer and take-over bid for Trinidad Cement. The subsidiary received the Foreign Investment License from the Trinidad & Tobago Ministry of Finance confirming that all terms and conditions of an amended offer made in January 2017 had been accepted.
Cemex increased its offer to buy a controlling stake in Trinidad Cement in mid-January 2017 with a value of up to around US$100m. However, the directors of Trinidad Cement recommended twice that its shareholders reject the offer. Although Cemex has passed the threshold required to take control of Trinidad Cement its share offer will remain open in Jamaica for local shareholders until 7 February 2017 due to local legislation.
Tajikistan increases cement production to 2Mt in 2016 25 January 2017
Tajikistan: Tajikistan increased its cement production to 2Mt in 2016, an increase of 0.5Mt from 2015, according to the Minister of Industry and New Technologies. This is due to new cement plants opening in Vahdat, Bobojonghafourov and Yovon, according to the Asia-Plus news agency. The country now intends to export its excess to neighbouring countries. In 2016, Tajikistan exported cement to Afghanistan, Kyrgyzstan and Uzbekistan. Small volumes of cement were also exported to Russia.
Taiwan Cement’s chairman dies from fall 25 January 2017
Taiwan: Leslie Koo, the chairman of Taiwan Cement, has died from injuries sustained from a fall. Koo, aged 62 years, died on 23 January 2017 following suffering head injuries from falling down stairs at a hotel in Taipei whilst attending a wedding, according to the Tapei Times newspaper. He had led Taiwan Cement since 2003.
Nelson Chang has been appointed as the acting chairman of Taiwan Cement. Chang is Koo’s brother-in-law. He has also been appointed temporary chairman of two subsidiaries: China Synthetic Rubber and Taiwan Prosperity Chemical.
Metso announces new distribution model in Italy 24 January 2017
Italy: Metso has changed its distribution model in Italy in 2017, appointing three exclusive distributors to cover the country. Righini and Frantoparts FP will handle the exclusive distribution of all Metso stationary crushing and screening machines. Righini will cover the provinces of Valle d'Aosta, Piemonte and Liguria. Frantoparts will cover the remaining provinces. Scai will be the exclusive distributor of the mobile equipment for the whole of Italy.
"These three distributors are already our long-term partners with proven expertise and service capability. We are confident that they are the right partners for us for many years to come," said Angel Luis Garcia, Metso's Distribution Business Manager for Spain & Italy.
Philippines: Holcim Philippines’ Bacnotan and Norzagaray cement plants have won awards for energy efficiency at the 2016 Don Emilio Abello Energy Efficiency Awards. The plants won Awards of Recognition for representing the Philippines in the Association of Southeast Asian Nations (ASEAN) Competition Best Practice for Energy Management in Buildings and Industries. The La Union plant was cited for its use of alternative fuel and raw materials to reduce its coal consumption, while Bulacan was recognized for its best practices in energy management through process improvements.
Plants operated by Holcim Philippines in Misamis Oriental and Davao City picked up awards for energy efficiency in 2015. In 2014, the company’s Bulacan plant was elevated to the Hall of Fame for receiving the Outstanding Award for three consecutive years.
The Don Emilio Abello Energy Efficiency Awards, run by the Department of Energy, recognise firms that significantly reduce their energy consumption. Participating companies submit consumption reports that are evaluated by energy officials from the public and private sector. The award is a tribute to Emilio Abello, the former Meralco chairman and chief executive officer.