September 2024
Siam Cement Group’s profit down by 8% in 2014 29 January 2015
Thailand: Siam Cement Group (SCG) has posted a smaller net profit for 2014 than 2013, although it expects earnings to rise substantially in 2015, largely due to cement demand from the government's planned infrastructure projects, said president and chief executive Kan Trakulhoon.
SCG's net profit in the fourth quarter of 2014 was US$271m, up by 11% from the same quarter in 2013, as greater margins for petrochemicals helped offset losses incurred from high inventories. However, for the entirety of 2014, SCG's net profit was down by 8% at US$1.03bn.
Trakulhoon said that cement demand would rise by an estimated 6% to 42Mt in 2015. "Our forecast is based on GDP growth of around 4% in 2015 and we expect demand for cement to start rising in the second half of the year," said Trakulhoon. With greater demand at home in 2015, SCG sees cement exports to other Asean countries falling to 4Mt, down from 4.4Mt in 2014.
SCG plans to issue up to US$91.9m in bond debt in April 2015. The bond issue will be separated into two tranches, worth US$45.9m each, of three- and four-year bonds. "The money raised by the bonds is expected to be used up by the company's investment plans in 2015," said SCG. It also aims to raise the ceiling of its bond issuance by US$1.53bn to US$7.66bn, with the funds used to finance expansion in Thailand and throughout Southeast Asia.
According to its five-year plan for 2013 - 2018, SCG has set aside US$6.13 – 7.66bn in its budget for investment expansion such as mergers and acquisitions. More than US$1.53bn is to be spent in 2015 on investment in mostly Asean countries. "We will still focus on cement and construction material products, as we see a great opportunity in 2015 when the Asean market becomes a single and bigger market," said Trakulhoon. SCG spent US$1.38bn on investment in 2014, down slightly from US$1.53bn in 2013.
UltraTech buys Jaypee’s Madhya Pradesh cement plants 29 January 2015
India: Jaiprakash Associates (Jaypee Group) has announced that it will sell two cement plants in Madhya Pradesh State to UltraTech Cement. The assets comprise cement plants and grinding facilities in Bela and Sidhi with a total capacity of 4.9Mt/yr, along with an associated 180MW power plant to supply them.
UltraTech will pay US$740m in non-convertible debentures (loan certificates) and shares worth US$16m for the facilities. It will also assume a net debt and negative working capital of US$128m associated with the businesses. This puts the overall value of the transaction at US$628m.
The sale is part of Jaypee's programme to pay-down debt. It has sold assets worth US$3.6bn in pursuit of this aim. This includes some US$1.6bn of assets in its cement business. However, it said that it remains India's third-largest cement producer, with a capacity of 22Mt/yr.
Jaypee's largest previous cement divestment was also to UltraTech. In 2014, it sold a 2.4Mt/yr cement plant in Kutch and a 2.4Mt/yr grinding plant in Wanakbori, both in Gujarat State, for US$620m. The deal was closed in June 2014. In September 2014, Jaypee announced the US$60m sale of its 1.5Mt/yr grinding plant in Panipat to Shree Cement. It also sold its 74% stake in Bokaro Jaypee Cement Limited, a cement joint venture with the Steel Authority of India (SAIL) to Dalmia Cement for US$115m.
What is fuelling US cement growth? 28 January 2015
The Portland Cement Association (PCA) put out a positive forecast for residential housing in the US last week. PCA Chief Economist and Group Vice-President Edward J Sullivan announced that housing starts will increase by 20% to 1.2 million units in 2015 from around 950,000 units in 2014. Strong gains are also expected for 2016.
This is relevant because in previous forecasts growth has been pinned on residential construction demand where there was a lag in demand following the recession in 2008. The PCA has not said whether this improves on its last forecast from late 2014. At that time the US cement market in 2014 was expected to grow by 8% despite a late start to the building season and weaker than expected housing start figures. The latest release suggests that the PCA has become more optimistic about the number of houses being built.
Interestingly, Sullivan pointed out that the focus is on family homes, with high student debt levels excluding the millennial generation born in 1980 - 2000 and with the baby boomers now leaving the market. As an aside, it is worth mentioning that specifying millennials in relation to housing starts is pertinent outside the US also. In the UK, for example, age of first time house buyers has been steadily rising in recent years. This has implications for the construction market and the cement industry alike.
Back in the US, demographic trends are on the side of the cement producers, led by a rising population. Cement demand growth of around 8% is expected in 2015 and 2016. Forbes placed Houston, the location of last week's 2nd Global Well Cem Conference, as America's fastest-growing city. Census data show that it saw a population growth of 392,742 inhabitants in the metropolitan Houston area between 1 July 2010 and 1 July 2013. Put another way this amounted to an extra 10,909 people moving into town each month (!) during this period. That calls for a lot of cement as these people demand houses and infrastructure.
Unfortunately the fly in the ointment here is that the global price of oil has been falling since mid-2014 and Houston's growth is dependent on the oil industry and its associated industries. By extension the cement industry in Texas, the US's biggest producing state, is also vulnerable. Houston may be an extreme example but the PCA is already wondering what the implications of low oil prices will have on the US construction industry as a whole. To this end, Sullivan is set to forecast that short-term gains could be made in the housing market if the oil price stays low but it could have a negative effect if the low prices continue.
One question is whether the US housing market is already experiencing this boost yet. If it is, housing starts and cement production in 2014 may have been artificially stimulated by cheap oil. In this case cement production growth in the US over the next few years may be slower than expected. We'll have to wait and see what Sullivan predicts but in the meantime it might be worth delaying buying that nice new house in Houston.
RHI gets US$11.6m refractory order from Lafarge 28 January 2015
Canada: Austria's Radex-Heraklith Industriebeteiligungs (RHI) has received a US$11.6m order from Lafarge in Canada. RHI will deliver materials for the expansion of Lafarge's cement plant in Exshaw, Alberta. The cement industry comprises 12% of RHI's sales.
US: Haldor Topsoe, a catalysis producer, and FLSmidth, a supplier of equipment and services to the global cement and minerals industries, have signed a cooperation agreement that marks the beginning of a joined global effort to commercialise a new catalytic filter bag technology.
"Developing this product has been a combination of the very best that Topsoe and FLSmidth have to offer from an R&D perspective," said Bjerne S Clausen, CEO of Haldor Topsoe.
The product has been designed over the last four years and will carry the brand name EnviroTex catalytic filter bags. It is capable of removing dust, volatile organic compounds and nitrogen oxides in one integrated and cost-effective process. The patent-pending catalytic filter bags use three layers of filter fabric. Each layer contains a tailored catalyst optimised for the removal of specific kinds of compounds from the off-gas that passes through it.
As part of the agreement between FLSmidth and Topsoe, the new product will be manufactured at FLSmidth's bag production facilities in Georgia, USA. The filter bags will then be catalysed and assembled at Topsoe's catalyst production site in Houston, Texas. Topsoe's production site will be expanded with a new production line dedicated to the production of EnviroTex catalytic filter bags. The goal is to complete construction of this facility by the end of 2015.
Cement producer in Crimea unreasonably increases prices 28 January 2015
Russia: The Federal Antimonopoly Service (FAS) has found that the 'Stroiindoustria' Bakhchisaray cement plant in the Crimea violated antimonopoly law by 'unreasonably' raising prices of cement. In April – May 2014 Bakhchisaray increased prices for its different product brands by an average of 45%. FAS established that the company had the dominant position on the cement market in the Crimea Federal District.
Completing the investigation, the antimonopoly body did not reveal any economic, technological or other justifications for the increased prices of the company products. The case against Bakhchisaray was initiated following an inspection of the largest producers of construction materials in the Crimea Federal District to verify whether prices complied with the antimonopoly law.
Semen Indonesia appoints Suparni as CEO 28 January 2015
Indonesia: Semen Indonesia has appointed its operational director Suparni as its new CEO. The state-owned company has taken the decision after receiving 69.6% votes from 76.1% its overall shareholders, according to The Jakarta Post. Suparni replaces Dwi Soetjipto, who has joined the oil and gas company Pertamina. The shareholders also appointed Rizkan Chandra to the board of directors.
India begins coal block allocation process 27 January 2015
India: The Coal Ministry has begun the process of allotment of mines to central and state public sector units, starting with the allotment of 36 coal blocks.
The Supreme Court had in September 2014 scrapped all but four of 218 coal blocks allocated by the government over the past two decades, in a tougher-than-expected ruling that sank shares of companies that have invested heavily in projects around the concessions. Most power, steel and cement companies that won blocks have until end-March to return them and the government then plans to auction them off. The previous practice of selective allocation was ruled illegal and arbitrary by the court.
Coal secretary Anil Swarup said that the ministry has started the process of coal allocation. "Today, we are issuing a notification for the allotment of 36 coal blocks. More mines will be added subsequently depending on the requirement. It will depend on the request we receive from state entities or the public sector undertakings in terms of allocation of coal blocks," said Swarup. He added that the ministry would issue guidelines for the coal blocks and those firms that already have coal linkages will have to surrender them. Once the linkages are surrendered then more coal will be made available to state-owned Coal India Limited. Coal India accounts for about 80% of the country's total output. Coal fuels 60% of the country's power production.
"Out of 101 mines, we are looking at 98 mines, as the coal ministry has examined them and it was discovered that there were three blocks in a 'No Go' area. Out of 98 mines, 36 blocks are going for allocation. 42 mines are auctioned, 23 blocks are in schedule II and 23 blocks are in schedule III. The remaining 16 will be auctioned in the future," said Swarup. Around 167 bidders have requested to visit the coal block site.
Coal India plans to engage an external consultant to examine various structures and implementation models to auction the coal linkages. The consultant would examine various structures and implementations models for the auction of coal linkages / LoAs (Letter of Assurances) or other such market-based mechanisms and to recommend the optimal structure that would meet the requirements of all the stakeholders.
Italy: Italcementi and Italian brake systems maker Brembo have joined forces in a project to produce cement-based brake pads with low ecological impact. The research is funded by the 'Life' programme of the European Union and is being conducted by Brembo, Italcementi and the Mario Negri Institute, which for many years has been committed to biomedical research and the impact of pollutants on the environment and health.
The 'Cobra' project was launched at the end of 2014. Some 41 researchers with varying skills and experience will work within the project in the next four years. The novel brake pad production technology will be based on an innovative hydraulic binder composition instead of phenolic resins, at comparable braking performance. State-of-the-art brake pads are constituted by thermosetting phenolic resins, which are suitable for friction and relatively high contact temperature applications. Moreover, reinforcing and filling constituents, about 90% in mass, are incorporated into the polymeric matrix.
The raw materials involved in the hydraulic binder production will allow less energy consumption (75 - 83MJ/kg phenolic resin compared to 3 - 9.4MJ/kg cement) and water consumption (94 - 282L/kg phenolic resin compared to 1.7 - 5.1L/kg cement). In addition, the technology will avoid the emission of aerosols and secondary ultrafine particulate, PM0.1 in particular, generated by traditional phenolic-resin-made pads during braking.
Norm Sement reaches its designed capacity 27 January 2015
Azerbaijan: The largest cement plant in the South Caucasus, Norm Sement, situated in Garadagh District of Baku City, has reached its design capacity, according to Norm Sement's CEO Hasan Yalcinkaya. The plant has 5000t/day of clinker production capacity and 2Mt/yr of cement production capacity. Yalcinkaya said that 2014 was successful for the company and Azerbaijan's cement industry as a whole.
"We managed to successfully complete our projects," said Yalcinkaya. "The cement plant was inaugurated by the president of Azerbaijan Ilham Aliyev on 21 July 2014. "Since that time, the plant has been working very efficiently and has started to produce its own clinker. We have reached our design capacity. So, I can say that 2014 has been successful. 510,000t of cement was produced, while clinker production was at the level of 471,000t in 2014. We were able to cover about 20% of the market for just six months since the beginning of clinker production. We plan to increase our market share with the production of high-quality cement and rendering high-quality services to our clients in the consumer market."
Yalcinkaya further noted that, in 2014, Azerbaijan's domestic demand for cement stood at around 4.3Mt and in 2015 year demand will be at least on the same level. "Currently, about 60% of the market is provided by local producers," said Yalcinkaya. "About 40% of cement is imported from neighbouring countries." He said that the local production plants are fully capable of meeting the market requirements. "Our goal is to reduce cement imports as much as possible," said the CEO.
"To date, we have invested US$326m in the new plant," said Yalcinkaya. "We have several projects on efficiency and production improvements, in particular the expansion of the product range. We will continue to improve our efficiency and reduce energy consumption. We also plan to invest in the production of cement for oil wells."
According to Yalcinkaya, oil well cement production will be developed in 2015. "This is exactly the product that we can easily export to oil producing countries, for instance, to Kazakhstan and Russia," said Yalcinkaya. "Once we develop this product, we will start to export it."