September 2024
Vietnam cement and clinker exports drop by 16.6% to 11.3Mt in first nine months of 2016 20 October 2016
Vietnam: Vietnam’s exports of cement and clinker fell by 16.6% year-on-year to 11.3Mt in the first nine months of 2016. The value of the exports fell by 17.2% to US$429.3m. The Philippines, Bangladesh, Taiwan and Mozambique were among major importers of Vietnamese clinker and cement in the nine-month period, according to data from the Ministry of Industry and Trade. Local cement producers have faced competition from those in Thailand and China.
Jaypee Cement to return coal blocks to ministry 20 October 2016
India: Jaypee Cement is seeking approval from the Ministry of Coal to return two captive coal blocks, which it previously won by auction in 2015. The company has told the ministry that it does not require the coal blocks as it has sold off the attached cement plants, a ministry official told the Economic Times newspaper. The official added that Jaypee Cement could be barred from bidding for other coal blocks for one year and that bank guarantees equivalent to a year’s revenue from the mines could be seized. The two blocks are Majra in Maharashtra and Mandla South in Madhya Pradesh.
Orient Cement agreed to purchase three cement plants from Jaiprakash Associates for US$292m in early October 2016.
Lining tomorrow’s kilns 18 October 2016
As mentioned last week, there were a number of big news stories, one of which was the planned merger between RHI and Magnesita. On 10 October 2016 both companies announced that they were combing to form a ‘leading’ refractory company with complementary assets and a completion date penned in for 2017. As Informed’s Mike O’Driscoll presents a good overview of the two companies and the general implications of the merger we will focus on the cement industry aspects of the merger here. It is worth noting here that the new company will be established in the Netherlands but its shares will be listed in London. O’Driscoll reckons that had the UK voted to stay in the European Union the new company would have been based in London.
Comparing like-with-like for RHI and Magnesita is difficult because Magnesita doesn’t publish figures on its refractory sales to the cement industry. However, RHI produced 443,000t of refractory materials in 2015 for its Industrial Division, including the cement and lime industries, and Magnesita produced 151,000t for its Industrial Division at the same time. As can be seen in Graph 1 RHI produces nearly three times as much refractory as Magnesita in this area. Sales volumes for RHI have fallen over the last five years and Magnesita’s sales hit a high in 2013. Total revenue for RHI, across all business lines, was US$1.95bn or about double that of Magnesita.
Graph 1: Refractory sales volumes to industrial divisions for RHI and Magnesita, 2011 – 2016. Sources: RHI and Magnesita financial reports. Note: Figures for Magnesita are calculated from percentages.
RHI reported that 12.6% of its revenue in 2015 came from the cement and lime industries. It pointed out that this sector of its business benefited from the growing construction industry in North America. Elsewhere, it had a tough time in most of its territories, with the exception of Indonesia where its revenue grew due to a major contract won in the lime segment. Over the last five years RHI’s revenue from its cement and lime customers dipped to a low in 2013 before recovering year-on-year since then.
However, the situation has deteriorated during the first half of 2016 with revenues from the cement and lime industries falling by 13% year-on-year. China was blamed as the biggest single factor, with business down by roughly a quarter as a result of the downturn in the construction industry, falling property prices and lower investment activities. One interesting point that RHI made at this time was that, “the globally weak economic situation and regional excess capacities are causing a decrease in repair volume.” Another was the importance the refractory producer placed on Africa and on Nigeria and Algeria in particular. This seems to belie the petrodollar woes Nigeria has experienced recently and the scaling back by Dangote Cement of its international expansion plans.
Magnesita reported that sales volumes for its industrial segments sector, including cement, dropped by 11.7% year-on-year to 133,000t in 2016. It blamed the shortfall on the declining cement industry in Brazil with problems in Venezuela also contributing. In contrast to RHI though it reported growing sales in the Middle East and Africa, notably in Saudi Arabia and Egypt. Sales revenue actually rose by 10.2% to US$145m due to favourable exchange rates on sales outside of Brazil.
In the first half of 2016 the negative trend in Brazil continued for Magnesita with sales volumes falling by 22% in its so-called ‘established’ markets. This was compensated for by Bolivia, Mexico, Argentina and the Middle East, Africa and the Commonwealth of Independent States territories. Sales volumes for its industrial segments sector rose slightly by 1.1% to 75,200t in the first half of 2016. Again, sales revenue grew on the back of exchange rates.
As with mergers between large producers in the cement industry, if global growth is stagnating, then mergers offer an alternative way for refractory companies to compensate. However, LafargeHolcim’s promise of savings and synergies has withered to periodic news bulletins of what assets the group is planning to sell next. One question to pose is whether the merger of RHI and Magnesita will herald a similar drip-drip of assets disposals in coming years or whether it will usher in a new era for the refractory industry. A large part of this will depend on the health of the steel industry, as well as minority markets such as cement.
Italy: Italcementi will start temporary lay-offs for workers at its Scafa and Monselice cement plants when unemployment benefits end on 31 January 2017. The plans were announced at a meeting on 14 October 2016 following agreements signed in December 2015 at the Ministry of Labour by trade union representatives and Italcementi’s workers, according to the Il Sole 24 Ore newspaper. The cement producer has confirmed that the on-going reorganisation at its plants are related to poor market conditions and not the acquisition of Italcementi by HeidelbergCement.
Slovenia: LafargeHolcim will pay Euro270,000 in compensation to farmers in the Zasavje region, who claimed that pollution damaged their land. LafargeHolcim settled with the farmers before a long running court case ordered three other companies to pay up to Euro1.17m each, according to the Slovenian Press Agency. The farmers presented measurements showing permitted emissions had been exceeded by 10-fold or in some cases even 100-fold between 1991 and 2002, alongside evidence of declining yields and animal reproduction rates, as well as damage to orchards and forests. The other companies involved in the case were the Termoelektrarna Trbovlje (TET) thermal power plant, the Steklarna Hrastnik glassworks and the TKI chemicals factory.
Tajikistan starts to export cement to Uzbekistan in 2016 18 October 2016
Tajikistan: Tajikistan began to export cement to Uzbekistan in 2016, according to the Ministry of Industry of Tajikistan. 162,000t of cement were sent to the neighbouring country in the first nine months of the year. Cement has also been sold to Afghanistan. Previously Tajikistan exported cement only to Afghanistan and Kyrgyzstan with the majority going to the former. Cement production in Tajikistan has increased by 37% year-on-year to 1.51Mt in the first nine months of 2016.
Nigeria: A Federal High Court in Lagos has adjourned legal action by Dangote Cement against Ibeto Cement until 1 November 2016 pending a decision of the Court of Appeal. Dangote Cement is alleging that Ibeto Cement evaded paying taxes on imports of cement to give itself a ‘unfair’ advantage in 2008, 2009 and 2010, according to the National Mirror Newspaper. It is also seeking an injunction against the Ibeto Cement and other defendants in the case from importing cement into the country unless approved by the appropriate authority under the current tax rules.
However, the Federal Government is alleging that Dangote Cement is attempting to minimise its competition. Other defendants in the case also include: IBG Investments Limited, Derima Venture Limited, the Federal Republic of Nigeria, Attorney General of the Federation, Federal Ministry of Finance, the Federal Ministry of Trade and Investment, the Board of Customs and Excise, the Federal Inland Revenue Services and the Nigerian Port Authority.
India: UltraTech’s net profit has risen by 27% year-on-year to US$209m for the first half of its 2017 financial year from US$164m in the same period of the previous year. Its sales revenue grew slightly by 1% to US$2.08bn from US$2.06bn. However, its sales revenue fell by 13% year-on-year to US$967m for the quarter that ended on 30 September 2016 from US$1.11bn.
In a results presentation the cement producer said that the industry had been hit by low cement demand, low capacity utilisation rates and rising operating costs, including petcoke prices in the latest quarter. It added that its capacity utilisation had fallen by 6% to 70% in the first half of its financial year from 76% a year earlier as its production capacity grew to 66.25Mt/yr from 63.05Mt/yr. Its sales volumes grew by 4% to 24.4Mt from 23.5Mt, with a particular boost in exports.
Doug Oberhelman to retire from Caterpillar in March 2017 18 October 2016
US: Chairman and CEO Doug Oberhelman will retire from Caterpillar on 31 March 2017. The company’s board of directors has elected Jim Umpleby, currently a Caterpillar Group President with responsibility for Energy & Transportation, to succeed Oberhelman as CEO.
Umpleby, a 35-year veteran of the company, will join the Caterpillar Board of Directors and become CEO effective 1 January 2017. He joined Solar Turbines in San Diego, California in 1980. Solar, a wholly owned subsidiary of Caterpillar, is a manufacturer of industrial gas turbine systems. Early in his career, he held numerous positions of increasing responsibility in engineering, manufacturing, sales, marketing and customer services. Umpleby lived in Asia from 1984 to 1990 with assignments in Singapore and Kuala Lumpur, Malaysia. The Caterpillar Board of Directors elected Umpleby a Caterpillar Vice President and President of Solar Turbines in 2010. He was named Group President and a member of Caterpillar’s Executive Office, effective from January 2013.
KHD appoints Gerold Keune as chief executive officer 18 October 2016
Germany: The Supervisory Board of KHD Humboldt Wedag International has appointed Gerold Keune as chief executive officer. He replaces Johan Cnossen who resigned with immediate effect for personal reasons in March 2016.