Displaying items by tag: Capacity utilisation

Ukraine: Cement producers have warned of consequences for the industry due to a 67% rise in the marginal price of electricity, according to Lyudmila Krypka, executive director of Ukrcement. Due to high tariffs, the industry is reportedly only operating at 60-70% of capacity.

Krypka said “Export for us is a matter of survival.”

She said that the increase was unjustified and wartime conditions with limited energy market competition created additional risks. Ukrainian industry receives no compensation for energy costs, unlike in the EU. Ukrcement has proposed preferential electricity transmission tariffs for energy-intensive industries and technical and economic criteria for priority enterprises.

Indonesia: The government has called on cement producers to expand exports and develop sustainable products to counter oversupply, according to Antara news. This comes after a visit by the Director General at the Ministry of Industry, Taufiek Bawazier, to the Solusi Bangun Indonesia cement plant in Bogo, West Java. Bawazier said that national cement production capacity currently stands at 122Mt/yr, while demand is only around 70Mt/yr, resulting in low utilisation and inefficiency.

Bawazier said “This is a serious challenge for the industry. If left unresolved, it could lead to unhealthy business competition. Strengthening the domestic component level policy is also a priority. Currently, local cement products have achieved a 60–70% domestic content level.”

He added that production capacity could be controlled by imposing a moratorium on new cement industry permits in regions where the market is already saturated. Several cement producers, such as Semen Indonesia, already export to Australia and even the US.

Pakistan: Local cement despatches are expected to fall by 28% month-on-month and 15% year-on-year to 2.63Mt in June 2025, primarily due to reduced working days over the Eid holidays. Daily average sales dropped to 88,000t from 118,000t in May 2025. Provisional data covering 22 days of the month showed 1.75Mt of cement sold, with full-month estimates at 2.5Mt, below the 11-month average of 3.06Mt.

Total sales for June 2025 are forecast at 3.54Mt, flat year-on-year but down 24% from May 2025. Sector capacity utilisation is projected at 52%, down from 68% in May 2025. For the 2024–25 fiscal year, total cement sales are expected to remain flat, with a 5% drop in local sales and a 30% rise in exports. Analysts anticipate recovery in the 2026 financial year, supported by improved macroeconomic conditions and lower interest rates.

Philippines: Just 53% of domestic cement production capacity is in use, according to Cement Manufacturers of the Philippines president Reinier Dizon, who raised concerns over the long-term sustainability of local producers amid an increase in ‘cheap’ imports.

Dizon spoke during a Tariff Commission public hearing, of which five days are scheduled until 20 June 2025, examining the imposition of definitive safeguard measures on imported Portland and blended cement.

The Department of Trade and Industry imposed a provisional safeguard in February 2025, following a preliminary finding that the rise in imports caused serious injury to the domestic industry between 2019 and June 2024. Vietnam and Indonesia, which supply 93% and 5% of imports respectively, were not exempted, while China, which supplies 1%, was.

Ukraine: Ukrainian cement and concrete producers are ready to expand capacity to meet reconstruction demand, according to a survey by Consumer and Business Research Ukraine (CBR), despite reduced funding and limited state budget. Cement production dropped to 5.4Mt in 2022 from 11Mt in 2021 but stabilised at 7.4Mt in 2023 and 7.97Mt in 2024. CBR estimates that 8Mt/yr is feasible during wartime, rising to 12Mt/yr in the third or fourth year of reconstruction.

The Ukrainian Cement Association (UkrCement) head Pavlo Kachur said “Reconstruction will begin with demining, reinforcing the front lines and restoring energy infrastructure. Large-scale construction will likely not begin until the third or fourth year.”

At present, plant capacity utilisation varies across regions. Plants in western Ukraine are operating at higher capacity, while those in the south and east remain underutilised. In 2022, plants operated at a loss but retained staff. In 2023, volumes were sufficient to break even. Two-thirds of surveyed consumers increased production in 2023, though 2024 expectations were cautious.

Kachur said “Time will be needed for training, planning and securing financing—and cement producers will use that time to fill the market, primarily by investing in modernisation and capacity expansion. For example, two major projects to build new kilns are already ready in Kryvy Rih and Ivano-Frankivsk.”

The study notes that building brand new plants is unlikely, but modernising existing kilns can be accomplished within a year. It expects at least two plants to launch new kilns, increasing capacity by 2Mt/yr. For example, Kryvyi Rih Cement has obtained a permit to develop the Maryanske limestone deposit (60km from the plant) and plans to build a clinker kiln at the site.

CBR researcher Tetiana Sytnyk said “Cement companies are ready to make rapid investments in modernisation and to launch additional kilns once recovery begins. They’re waiting for clear signals to proceed – such as the allocation of reconstruction funds or a surge in demand to at least 9.5Mt/yr.”

Ukraine exported 1.7Mt of cement in 2024, up from 56,000t in 2021, with Kachur adding that exports have ‘saved’ the local industry during the war. Developed countries will be capable of meeting Ukraine’s reconstruction needs, though this could hurt local producers. Kachur added “During the recovery phase, Ukraine’s market must be as localised as possible with domestic products. Only countries that supported us during the war should have access.”

Cuba: Cement production fell to 258,000t in 2024, representing only 10% of the country’s installed capacity, according to the OSDE Group of Business Construction Materials. President Reynolds Ramírez Vigaud attributed the decline to energy shortages amid national financial challenges.

The sector's problems date back to 2017, according to CiberCuba, when capacity utilisation was 58%. Despite initiatives such as the first ‘eco-friendly’ cement production in 2018 and the reopening of the Sancti Spíritus cement plant in 2022, the industry has faced logistical issues and plant shutdowns. This has a knock-on effect on the government’s annual housing plan and the inability to meet domestic demand for cement. The government is also prioritising the export of cement to obtain foreign currency, worsening shortages and increasing prices.

New cement plants at Nuevitas and Santiago de Cuba will begin production in 2025.

Pakistan: The cement industry in Pakistan is experiencing a significant decline, with local dispatches for September 2024 projected to fall by 22% year-on-year to approximately 2.79Mt. This decline is reportedly due to a slowdown in construction activities, exacerbated by rising costs of construction materials. According to Topline Pakistan Research, local cement sales for the first quarter of the financial year 2025 are also expected to decrease by 21% compared to the same period in 2023.

Despite a slight month-on-month increase in dispatches from 2.75Mt in August 2024, the year-on-year data highlights a continuing slump in construction and a sharp increase in cement prices. However, there cement exports are projected to increase by 27% month-on-month and 36% year-on-year. Total cement sales for September are estimated at 3.56Mt, marking a 14% decline year-on-year but a 6% increase from August 2024. Capacity utilisation in the sector is estimated at 52% for September 2024, an improvement from August 2024’s 47% but still below the 60% recorded in September 2023.

India: Cement producers in North, Central and East India have reduced production by 10 - 15% in the second quarter of 2024 due to low demand and project delays after an extended monsoon, according to The Hindu Business Line. Clinker utilisation stands at 70-75% for the quarter, down from around 80% during April – June 2024. South India remains comparatively unaffected.

India: Cement volumes in India are projected to rise by 7-8% year-on-year in the 2025 financial year, driven by sustained demand from the infrastructure and housing sectors. This forecast is supported by the government's focus on infrastructure projects, sanction of additional houses and industrial capital expenditure, according to a report by the credit rating agency ICRA.

The Indo-Asian News Service reports that capacity addition in the cement industry is estimated at 63-70Mt between FY25 and FY26, with approximately 33-35Mt expected in FY25 alone. The capacity utilisation is expected to rise to 71% in FY25 from 70% in FY24, backed by higher cement volumes.

Pakistan: The Economic Survey 2023-24, unveiled by Finance Minister Muhammad Aurangzeb, reported that the capacity utilisation of Pakistan's cement industry fell to 54.6% in the first nine months of the 2024 financial year (July 2023 – April 2024), the lowest level recorded since data collection began in 2006. Despite an overall production capacity of 82.3Mt, the industry managed only 37.5Mt/yr in local dispatches and exports during the period.