September 2024
Telangana state government signs deal for 2.7Mt of cement 25 November 2016
India: The Telangana state government has signed an agreement with 32 cement companies to procure 2.73Mt of cement to build residential housing. The government plans to build 260,000 double-bedroom houses for disadvantaged residents in the state, according to the Indo-Asian News Service. The Telangana Housing Corporation will implement the scheme.
Birla Corporation sales rise in first half of 2016 25 November 2016
India: Birla Corporation’s sales revenue has risen by 6.2% to US$280m in the first half of its financial year, which ended on 30 September 2016, from US$263m in the same period of 2015. Its net profit more than tripled to US$22.3m from US$7.04m. Sales from its cement division rose by 5.6% to US$256m from US$242m. No comment on the results was given but in August 2016 Birla completed its acquisition of Reliance Infrastructure for US$702m.
US clinker production stagnates in third quarter of 2016 25 November 2016
US: 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.
Larsen & Toubro lays off 14,000 workers 24 November 2016
India: Engineering firm Larsen & Toubro (L&T) laid off 14,000 employees between April and September 2016 or about 11% of its workforce. The reduction in its employees has been done to remove ‘redundant’ jobs, according to the New Indian Express newspaper. Both revenue and profit for the company as a whole and for its Heavy Engineering division rose for the first half of 2016.
East African Portland Cement chief accused of sexual harassment 24 November 2016
Kenya: Simon Peter Ole Nkeri, the chief executive officer of East African Portland Cement Company (EAPCC), has been accused of sexual harassment in a legal case by a manager at the company. Lucy Rimanto Molonket, the head of Sales and Marketing, alleges that Nkeri harassed her on 31 August 2016, according to the Business Daily newspaper. She then alleges that he texted her to apologise for his behaviour. Subsequently she says that she was transferred to a low profile job in September 2016. EAPCC chairman Bill Lay has defended Nkeri, saying that the company has transferred 11 of its managers to different positions following financial problems.
Grupo Cementos de Chihuahua offers to build Donald Trump’s wall 24 November 2016
US: Enrique Escalante, the chief executive officer of Grupo Cementos de Chihuahua (GCC), has said that his company is ready to help president-elect Donald Trump build his proposed wall on the border with Mexico. Escalante told Reuters in an interview that GCC was an ‘important’ producer that had to respect its clients wishes on both sides of the border. Trump campaigned in the US presidential elections on the pledge that he would build a wall along the 2300km border between the US and Mexico.
Global Oil Shale switches to cement plant project in Morocco 24 November 2016
Morocco: Global Oil Shale, a Finnish shale oil development company, intends to build a 1.6Mt/yr cement plant at Tarfaya for a cost of around US$100m. Previously the company had intended to develop shale oil resources at the site, according to the Challenge business newspaper. It intends to focus the plant’s output on the south of the country as well as using its position to target export markets in West Africa.
Second line at Nova Cimangola to start in 2018 24 November 2016
Angola: The second production line at Nova Cimangola’s plant in Luanda is expected to start production in mid-2018. Cimangola’s administrator Manuel Pacavira Júnior revealed details of the upgrade’s progress to the Jornal de Angola newspaper during a visit to the site by Secretary of State Kiala Gabriel. All the equipment for the clinker production stage of the project has been assembled and tests are scheduled to start in December 2016. The project has cost US$350m. Funding for the second phase of the upgrade project is still being gathered.
Cementos Argos sees sales fall in Colombia so far in 2016 24 November 2016
Colombia: Cementos Argos’ sales revenue in Colombia have fallen by 8.3% to US$629m for the first nine months of 2016 from US$686m in the same period in 2015. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) fell by 12.9% to US$171m and its cement sales volumes fell by 17.9% to 3.78Mt. It blamed this on a fall in demand for bulk cement in the country caused by a delay in infrastructure projects.
“The US, Honduras and Panama continue to drive the company’s results and offer great opportunities for growth, offsetting the slowdown in demand we faced in the Colombian market as a result of the delay in the start of the construction of the 4G projects during the second half of the year,” said Juan Esteban Calle, chief executive officer of Cementos Argos.
Overall the cement producer reported that its sales revenue rose by 13.1% to US$2.05bn, that its EBITDA rose by 13.8% to US$396m but that its cement sales volumes fell by 1.4% to 10.5Mt.
Indonesia faces overcapacity 23 November 2016
Holcim Indonesia inaugurated a new cement terminal in Lampung last week. Unfortunately, the spectre of industry overcapacity haunts the country at present and the subsidiary of LafargeHolcim may be late to the party. The Indonesian Cement Association (ASI) has been publicly warning the government of overcapacity since the end of the summer. Its first line of action has been to lobby for restrictions on producer permits to slow the growth of new plants.
ASI figures show that cement sales in September 2016 fell by 3.3% to 5.64Mt compared to August 2016 due to lower residential sector demand. Domestic cement sales rose by 2.95% year-on-year to 44.7Mt in the first nine months of 2016 and the ASI expects sales growth of 3 – 4% for 2016 overall. Yet, the risk of overcapacity is stark. Cement production capacity has nearly doubled from 59.3Mt/yr in 2012 to 92.7Mt/yr in 2016 but demand is projected to only reach 65Mt in 2016, leaving a production oversupply of 27.7Mt. Regional consumption has fallen in Jakarta, Banten and West Java, particularly in the first two. Elsewhere, it has grown, particularly in Central Java, as well as Yogyakarta and East Java to a lesser extent.
Initial Global Cement Directory 2017 research places active production capacity at 66.3Mt/yr suggesting that the ASI may be exaggerating the risk of overcapacity. The additional c30Mt/yr capacity arises from plants that have been proposed, that are actually under construction or that have been mothballed. However, the ASI data should be more accurate as it represents the local producers. Either way, capacity is growing faster than consumption as can be seen in graph 1.
Graph 1: Cement consumption and production capacity in Indonesia, 2012 – 2016. Source: Indonesian Cement Association, Global Cement Directory 2012 – 2017.
Semen Indonesia, the country’s largest producer, reported that its revenue fell very slightly to US$1.4bn in the first nine months of 2016 and its net profit fell by 8.4% to US$215m. It blamed this on a fall in sales volumes and prices due to rising competition. The other large producers have said similar in the past. Indocement, the country’s second largest producer after Semen Indonesia, saw its revenue fall by 11.9% to US$837m in the first nine months of 2016 and its profit fell by 2.2% to US$231m. LafargeHolcim described the market as affected by overcapacity and ‘a difficult competitive environment.’
Back in May 2016 a feature on the predicament facing the Indonesian cement industry in the Jakarta Post suggested that producers were building new capacity despite the risks of overcapacity to win market share. Cement producers are about to find out whether this will work or not. Meanwhile it seems unlikely that the measures the ASI is suggesting will do much to alleviate the looming crisis. Still, on the positive side, it’s looking like a good time to buy cement as a consumer.
For more information about the cement industry in Indonesia view the first part of the Association of South East Asian Nations (ASEAN) feature in the October 2016 issue of Global Cement Magazine