September 2024
China cement news in brief 29 May 2013
National: China's cement output grew by 8.7% year-on-year in April 2013, rising from a 4% increase in the same month of last year, according to the latest statistics released by the National Development and Reform Commission (NDRC). In the first four months of 2013, the country's total cement output reached 641Mt, an increase of 8.4% year-on-year from the same period in 2012. Profits for the cement industry fell by 29.4% for the first quarter of 2013 to US$606m.
Regional: In southwest China, Chongqing Municipality produced 17.7Mt of cement over the first four months of 2013, a year-on-year increase of 11.2%, according to the local statistics bureau. Yunnan Province produced 28.4Mt of cement in the first four months of 2013, a year-on-year increase of 27.8%.
The central Hubei Province saw cement output slide by 2.6% year-on-year to 31Mt for the first four months of 2013. Hunan Province saw its cement output rise by 8.3% year-on-year to 9.33Mt in April 2013.
Eastern China's Jiangsu Province saw cement output grow by 15.1% year-on-year to 55.5Mt for the first four months of 2013.
Government: China has confirmed that it intends to release a blueprint for urbanisation in 2013, the state-run Xinhua News Agency has reported, citing officials with China's top economic planner. Officials with the NDRC said the urbanisation development plan is 'very important' and that the NDRC was leading the drafting. Shares in cement suppliers and other construction-related companies have already benefited from expectations of more housing and infrastructure projects.
Corporate: Chinares Cement has announced it is in discussion with Fujian Cement about setting up a joint-venture to build cement grinding lines, and to coordinate marketing and sales. No agreement has been reached yet.
Southern Province profit slides 29 May 2013
Saudi Arabia: Saudi cement producer Southern Province Cement (SPC), the nation's largest cement firm by market value, posted a US$71.6m net profit for the first quarter of 2013, down from US$75.8m a year ago. Without providing exact figures, the company attributed the decrease to lower cement prices.
The cement manufacturer registered an operating profit of US$72.7m for the first three months of 2013, down from US$76.8m in the first quarter of 2012.
Hail Cement loss deepens in 2013 29 May 2013
Saudi Arabia: Hail Cement has booked a US$3.7m net loss for the first quarter of 2013, more than double the loss of US$1.7m suffered in the first quarter of 2012. Without providing any exact figures, the company attributed the loss to higher expenses related to launching production, coupled with higher salary costs due to the growing number of employees.
Hail Cement, established in 2010, is yet to start commercial production. According to the current plans, this is expected by the end of the second quarter of 2013. In February 2013 Hail Cement said that its rotary cement kiln had started trial production and that the trial operations were expected to take three months.
San Miguel has big plans for Northern Cement 29 May 2013
Philippines: San Miguel Corporation has purchased a 35% stake in Northern Cement Corporation for US$72.1m and plans to finance the aggressive expansion of the company. San Miguel president Ramon Ang said the conglomerate would spend US$750m for the construction of new cement plants for Northern Cement, a company that is controlled by San Miguel chairman Eduardo Cojuangco.
Ang, who is also the chief of operations of San Miguel, said the company plans to expand the operation of Northern Cement by building three more plants at a cost of US$250m each.
Ang said that one plant would be built in the existing site in Pangasinan, another in Southern Luzon and a third in Cebu. Each plant will have a capacity of 2Mt/yr.
"All of these projects will happen within 2013 and are likely to be completed within two years," said Ang. "Eventually, San Miguel wants to build more plants to become the dominant cement manufacturing company in the Philippines." He added that Northern Cement aims to secure at least a 30% share of the cement market, which had 'huge potential.' "The revenue potential for each 2Mt/yr plant is estimated at US$200m/yr," he said.
Oman Cement admits probe on cement quality 29 May 2013
Oman: On 23 May 2012 Oman Cement Company (OCC) said that the Public Authority for Consumer Protection (PACP) has initiated an investigation on the quality of cement imported by the company. A team from PACP visited the company to inspect the cement imported and locally purchased for blending with its own cement, which the team considered to be a violation.
However, the company assured the team that the cement purchased after tender process is manufactured by reputable local and foreign cement companies according to the specifications better than the British-European and Omani standards and conform to high quality standard followed by OCC.
The clarification was in response to a newspaper report on deceptive commercial practices carried out by a company in importing 30,000t of 'inferior' quality cement, which was allegedly re-packed and sold as high quality product at a high price.
OCC also assured the authority that the cement purchased has been subjected to laboratory test and harmonising it with OCC-manufactured cement is undertaken with adherence to high quality standards.
"The purchase of cement, which amounts to about 30,000t and is hardly 1% of the annual capacity of the firm, had been necessitated due to breakdown of one of the cement mills of the company in April 2013," added OCC in a statement.
In a separate statement Raysut Cement sought to distance itself from the communication between OCC and the PACP.
Mexico: Grupo Cementos de Chihuahua has reported that it made a net loss of US$8.0m in the three months to 31 March 2013. While representing a loss, the loss was 9.9% lower than in the same period of 2012.
Its revenue was down by 2.7% year-on-year from US$116.5, to US$115.2m, while earnings before interest, tax, depreciation and amortisation took a 36.5% hit, falling from US$16.5m in the first quarter of 2012 to US$11.0m in the first quarter of 2013.
Pakistan: Gharibwal Cement Ltd (GCL) has shown an impressive increase of 447% in net profit for the third quarter of the current Pakistan fiscal year, which covered the three months to 31 March 2013.
The company made a net profit of US$1.81m compared to just US$330,500 in the three months to 31 March 2012. Net sales of the company were up by 17% to US$18.0m compared to US$15.3m during the year-earlier period.
Muhammad Rafique Khan, director of the company, said, "During the current nine month period cement industry achieved overall net volumetric growth of 4.9%. However, domestic sales volumes increased by 6.2% whereas export decreased by 1.2%."
He said that GCL's improved performance was due to increased sales volumes, improvement in net retention prices and continued efforts of the management to control costs. All these factors over a period of nine months enabled the company to increase its sales volume and sales revenue by 20% and 34% respectively.
During the period company operated at 47% of its installed capacity, which is better than the 39% capacity utilisation seen in the comparative period of 2012, although still very low. Keeping in view the continuous growth of cement dispatches, restructuring by major banks and financial institutions, stable selling prices and tight cost controls by the management, the company says that it will be able to perform better in the future.
Holcim renames Mexican unit 29 May 2013
Mexico: Swiss construction materials company Holcim's subsidiary Holcim Apasco will be renamed Holcim México. Holcim Latinoamérica's CEO Andreas Leu said that the move had been taken in order to "Unify the brand and strengthen its presence as a global leader in the Mexican market."
A slowdown in the Mexican construction industry has caused a 10% decline in cement demand in the country in the first three months of 2013, but the firm expects cement sales to increase by 1-2% in 2013, according to Holcim Mexico's CEO Eduardo Kretschmer.
"Mexico has great potential in the construction sector, as it is an emerging economy with strong macroeconomic fundamentals, a young population that in the coming years will demand more and better housing and infrastructure," said Kretschmer.
China to cut nitrogen oxide emissions to 450mg 24 May 2013
China: A new standard for nitrogen oxide (NOx) emissions from cement plants drafted by the Ministry of Environmental Protection is expected to be issued on 1 July 2013, according to the China Securities Journal.
The new standard will cut the amount of NOx emitted by an existing cement plant to below 450mg for every normal cubic meter of cement produced. Currently on average Chinese cement producers emit 880mg of NOx. For those new cement production lines, the emission standard will be capped below 320mg. The drafted requirement is stricter than market expectations for the cap to be set at 500mg.
The Chinese cement industry produces about 11.6% of all NOx emissions across China's industrial sectors. It has been targeted in move to address air pollution, particularly after hazardous smog levels were reported since the start of 2013. In 2011, the Sichuan provincial government said power would be cut for cement plants that fail to achieve the NOx emissions target set by the provincial government for the 2011 - 2015 period.
Same product, same price? Competition in the UK 22 May 2013
Back in November 2012 this column asked whether the UK cement market had become more competitive following the sale of the Hope cement plant. Broadly, we thought it had. Half a year later though and it seems that the UK Competition Commission doesn't think so. On 21 May 2013 it released provisional findings that the UK's three major cement producers were failing to compete on price with each other.
Its three main points of evidence included increases in average cement prices between 2007 and 2011, rising profitability for UK producers between 2007 and 2011 and only small changes in annual market share of sales. All of these market outcomes occurred despite a 'significant' slump in demand for cement from 2007 to 2009.
The problem here is that the Competition Commission's data refers to the UK market before it took action. In 2012 it forced the sale of Lafarge's Hope cement plant as a condition of the joint-venture between Lafarge and Tarmac. Subsequently, Lafarge and Tarmac's combined cement production capacity in the UK fell from 5.15Mt/yr to 3.85Mt/yr. However, the Competition Commission has modelled Hope Construction Materials as an effective replacement of Tarmac's previous market share in its analysis. With no major change to the status quo in the UK cement industry, it feels that competition is unlikely to improve. Hence the need for further action.
It must be emphasised that the Competition Commission did not find any evidence of explicit coordination between the producers. Professor Martin Cave, Competition Commission Deputy Chairman and Chairman of the Inquiry Group, summed it up as follows: "In a highly concentrated market where the product doesn't vary, the established producers know too much about each other's businesses and have concentrated on retaining their respective market shares rather than competing to the full."
To look at just one example, it should be noted that most of the management team of Hope Construction Materials came originally from jobs at either Lafarge or Tarmac. However in Hope's defence, who else would the new company hire except seasoned industry personnel. Naturally they would want the best people possible!
With the revival of the UK construction industry hanging in the balance the Competition Commission has a tough job ahead to ensure increased competition in the future.