September 2024
Trinidad & Tobago: The directors of Trinidad Cement have advised shareholders reject an offer by Cemex to take over the company. The cement producer issued a circular to its shareholders in late December 2016 advising them that the offer by Cemex’s subsidiary Sierra Trading was ‘not fair’ from a financial point of view. Cemex released plans in early December 2016 to present an offer and take-over bid to Trinidad Cement’s shareholders that would, if successful, give it control of the company. The value of the offer was placed at US$89m and it expires on 10 January 2016.
Kenyan cement consumption growth slows in third quarter of 2016 05 January 2017
Kenya: Growth in consumption of cement has slowed to 5.3% in the third quarter of 2016 from 11% in the same period of 2015. The slowdown in growth mirrors a fall in growth in the construction sector, which grew by 9.3% in the third quarter of 2016 compared to 15.6% in the same period of 2015, according to data from the Kenya National Bureau of Statistics. It attributed the fall in growth in part to a ‘considerable’ reduction in civil work on the Standard Gauge Railway from Mombasa to Nairobi as it nears completion.
Petron Engineering to build silos for Shree grinding plant 05 January 2017
India: Petron Engineering Construction has received a letter of intent to build silos and other miscellaneous work at Shree Cement’s cement grinding plant near Cuttack in Orissa. The contract is valued at just under US$5m, according to Accord Fintech. In September 2016 Petron received letter of intent from Shree Cement for civil work at cement plants in Aurangabad, Bihar and Gulbarga, Karnataka with a contract value of just under US$7.5m.
Cross River state secures licences to set up cement plant 05 January 2017
Nigeria: The government of Cross River state has secured operational licenses from the Federal Government to build its own cement plant and limestone quarry in the Akamkpa region of the state. George O’Ben-Etchi, Commissioner for Solid Minerals Development, made the announcement following a meeting with the Solid Minerals Development Board, according to the Daily Trust newspaper. The plant and quarry are intended to compliment the state’s Superhighway project.
Lucky Cement says all of its cement plants are operational 05 January 2017
Pakistan: Lucky Cement says that all of cement plants in Pakistan are operating as normal. The plants are not facing any unscheduled shutdown and sales and cement dispatches are progressing as per the company’s regular routine.
The cement producer made its comments in response to a news story in the Nation newspaper alleging that a district authority had shut down Lucky Cement’s Pezu plant near Darru Pezu in the Khyber Pakhtunkhwa province in early January 2017 due to breaches of environmental regulations.
Amendment: This story was amended following comment from Lucky Cement.
A few days ago my family faced a financial crisis caused by demonetisation. The family piggy bank holds a number of one-pound sterling coins. However, the Bank of England is set to introduce a new 12-sided one-pound coin in March 2017 and withdraw the old type circular coin by the end of October 2017. Unfortunately the piggy bank in question is of the variety that can only be opened by smashing it. There followed various attempts to extract the coins via the narrow opening.
Now just imagine if a country of over 1.25bn inhabitants and a gross domestic product of US$8.7tr faced a similar problem. Well, you don’t have to imagine it because India’s demonetisation plan to remove 500 and 1000 rupee banknotes from circulation started in November 2016. Some commentators reckoned that the banknotes represented nearly 85% of its currency by value. Indian citizens then had until the end of December 2016 to take the old bank notes to a bank to have them exchanged. The government has said that the plan was conceived to cut corruption, increase tax revenue and reduce cash hoarding. However, critics have attacked the policy for unduly penalising the poorest members of society as they struggle to move from using cash to electronic methods.
That’s the background. Global Cement is interested in cement markets. Although its early days yet some reactions and data are starting to emerge. Ambuja Cement launched a marketing campaign in December 2016 to help its customers cope with a cashless business environment. The initiative has included working with a bank to operate a helpline assisting people in opening bank accounts as well as putting out the message in various media including sending one million text messages. Clearly, at least one of India’s major cement producers is taking the problems caused by demonetisation seriously.
Alongside this, various reports have trickled out since November 2016 trying to work out the effects of the financial transition on the cement industry. Firstly, the India Cements reported in mid-November 2016 in a financial report that demonetisation had not impacted its cement sales. Deutsche Bank Markets Research then predicted that the policy would reduce cement demand by up to 20% for the last few months of 2016 and then reduce growth by 3% in the first three months of 2017. Its analysts reckoned that the residential sector would suffer the most and that although infrastructure spending might offset this a little, reduced taxation from a punctured property market would also adversely affect infrastructure funding. A report in the Hindu newspaper in early December 2016 feared that cement demand might be reduced by up to 50% in November 2016. It also raised the concerns of the managing director of Shiva Cement who said that contractors were finding it difficult to buy raw materials and pay wages.
Now in early January 2017 the India Ratings and Research credit ratings agency released a research note predicting that cement production growth was likely to fall to 4% for the 2017 financial year ending on 31 March 2017 from a previous estimate of 6%. It reported that production growth rose by only 0.5% year-on-year in November 2016 following a growth rate of 4.3% from April to November 2016 and rates of 5.5% and 6.2% in September and November 2016 respectively. It added that the housing sector constitutes around 65% of cement demand and that this share is likely to fall.
After a strong start to the year the Indian cement industry was looking forward to a growth rate above 5% in its 2016 - 2017 financial year. The figures aren’t out yet and the year isn’t finished but it is looking likely that demonetisation, a direct government policy, has smashed demand for cement in India in the short term.
Global Cement would be interested to hear from any readers in India for their comments on demonetisation and its effect on the cement industry – This email address is being protected from spambots. You need JavaScript enabled to view it.
Sinoma subsidiary ordered to pay back US$8.3m tax rebate 04 January 2017
China: Sinoma Hanjiang Cement, a subsidiary of China National Materials Company (Sinoma), has been ordered to pay back a US$8.3m tax rebate by the Tax Office of Hantai District, Hanzhong City in Shaanxi. A notice issued by the office said that the cement producer failed to meet the requirements for the rebate, according to ET Net News agency. The office decided to disqualify Sinoma Hanjiang from the entitlement due to its policies regarding rebate and exemption of value-added tax for products and labour services involving comprehensive utilisation of resources. Sinoma said that the extra cost is expected to decrease its profit in 2016.
Polish cement producers to meet sales forecast in 2016 04 January 2017
Poland: The Polish cement industry is expected to meet a sales forecast of 15.8Mt made by the Polish Association of Cement Producers (SPC). Jan Deja confirmed the prediction based on data for November and December 2016 from the Central Statistical Office (GUS) and the weather at this time in comments made to the Polish News Bulletin. He added that 2016 had seen a 'significant' drop in investments and that a boom in residential construction had compensated for a decline in infrastructure development. However, tenders for infrastructure projects have been launched suggesting that sales might reach up to 16.5Mt in 2017.
Bestway considers bid for Dewan Cement plant 04 January 2017
Pakistan: Bestway Cement says it is considering making a bid for Dewan Cement's north plant and related assets. It joins Lucky Cement, Fecto Cement, Kohat Cement and a Chinese company in expressing interest in Dewan Cement, according to the News International newspaper. Bestway added that the final outcome will depend on due diligence and the bidding process.
Vietnam: Ha Tien is to close its cement grinding plant in the Thu Duc district of Ho Chi Minh City following failed attempts to move the plant. The cement producer was ordered to cease all operations at the plant by 31 December 2016, according to Vietnam News. The plant reduced its production capacity to 1Mt/yr from 1.7Mt/yr in 2015 following accusations of air pollution. Ha Tien attempted to move the plant to District 9 in 2016 but the proposal was turned down by city planners.