Displaying items by tag: China

Iraq: China-based Sinoma International Engineering has won a contract to build a 2.19Mt/yr cement plant in Samawa, Muthanna, for Al-Diyar Company for Cement Industry and Industrial Investment. Yicai Global News has reported that Sinoma International Engineering will carry out engineering, procurement and construction on the project. The value of the contract is US$220m.

China: Asia Cement (China)'s sales were US$569m during the first half of 2023, down by 17% year-on-year from first-half 2022 levels. Reuters has reported that the company's profit also dropped, by 37%, to US$27.2m from US$43.3m.

Asia Cement (China) said that it expects the current decline in Chinese cement demand to slow throughout 2023.

Rwanda: West China Cement subsidiary Anjia Cement has inaugurated its Muhanga grinding plant at the Muhanga Industrial Park in Gitarama. Xinhua News Agency has reported that West China Cement invested US$50m in the plant's construction. It subsequently aims to raise its total investments in Rwanda to US$100m.

Rwanda Development Board chief executive officer Clare Akamanzi said "Over the past five years, we have registered investments from China worth close to US$1bn, which will collectively generate up to 25,000 jobs for Rwandans."

China: Huaxin Cement has blamed a fall in its profits in the first half of 2023 on falling clinker prices and sales volumes in its home market. In a preliminary results announcement, it reported that its net profit dropped by 25% year-on-year to US$166m in the first half of 2023 from US$221m in the same period in 2022. Despite this, the group’s operating income rose by 10% to US$2.20bn from US$2.00bn. Its overall sales volumes of cement and clinker increased by 2% to just under 30Mt. However, domestic sales volumes decreased by 0.76%. It also reported that concrete sales volumes grew by 82% to 10.9Mm³.

Italy: Cementir Holding, a subsidiary of Caltagirone Group, recorded Euro841m in sales in the first half of 2023. This corresponds to year-on-year growth of 1.1% from Euro832m in the first half of 2022. The producer's earnings before interest, taxation, depreciation and amortisation (EBITDA) rose by 40% to Euro201m from Euro144m. Likewise, its net profit rose by 36% to Euro90.3m from Euro66.6m

Cementir Holding said that its cement sales volumes fell by 5.5% year-on-year during the half, to 5.1Mt. Volumes growth of 16% in China and Türkiye, and of 8% in Egypt, failed to offset a drop in Belgium, Denmark, Malaysia and the US. In Türkiye, the group increased its focus on the domestic market, and halved its export volumes. Exports also dropped in Malaysia, by 12%, as well as in Denmark.

Chair and chief executive officer Francesco Caltagirone said “The first half of 2023 closed with encouraging results, with significant increase in EBITDA, earnings before interest and taxation and net profit, thanks to careful management of profitability, which offset the general reduction in sales volumes."

China: Yin Zhisong has been elected as the chair of Sinoma International Engineering. He succeeds Liu Yan, who has resigned. Zhisong has held of number of management positions with subsidiaries of China National Building Material (CNBM) and Sinoma. Notably he has worked as the general manager of Suzhou Sinoma Construction, the general manager of Sinoma International Engineering and a vice president at Sinoma International Engineering.

China: China Shanshui Cement has warned investors of an anticipated net loss during the first half of 2023. Dow Jones Institutional News has reported that the group expects to record a '145 - 150%' year-on-year decline in its profit compared with first-half 2022 levels. It attributed this to a fall in the price of its cement throughout the period.

China: China National Building Material expects its net profit to drop by 80% year-on-year during the first half of 2023. AAStocks Financial News has reported that the group partly attributed the anticipated drop to a fall in its cement prices, as well as its commercial concrete prices.

The close of the first half of 2023 brought the latest crop of seasonal cement data from the Vietnam National Cement Association (VNCA). Vietnam sold 61.4Mt of cement and clinker during the first half of 2023, up by 2.7% year-on-year.¹ Graph 1 (below) tracks the progress of full-year Vietnamese cement and clinker sales over the six years up to 2022, as well as the most recent half-year.

Graph  1 - Vietnamese annual cement production, January 2017 – June 2023

The first half of 2023 marks the first half-year in which lockdown restrictions have been absent in both Vietnam and its main export market, China, since the start of the Covid-19 outbreak.² Vietnam was especially hard-hit: it implemented the first lockdown outside of China in March 2020, and has recorded the 13th most Covid-19 cases of any country up to July 2023. Then, the Russian invasion of Ukraine in 2022 caused uncertainties for cement producers and importers all around the world. Yet the price of imported coal across Southeast Asia had returned to pre-war levels by the end of June 2023.³ This indicates that the first half of 2023 may represent a ‘typical’ first half for the Vietnamese cement industry, for the first time this decade. During the 2010s, this meant growth margins of over 10% year-on-year.

During the first half of 2023, Vietnam’s sales volumes grew by 30% from pre-Covid-19 levels of 47.1Mt in the first half of 2019, confirming the industry trend of rapid capacity expansion. Just in the course of the half year, Vietnam’s integrated cement capacity rose by 7.9% to 123Mt/yr.⁴ It previously rose by 6.9% year-on-year to 114Mt/yr in 2022. That year, first-half cement sales also grew by 6.9% year-on-year, to 59.8Mt from 55.9Mt. In the first half of 2023, capacity growth has outstripped the country’s sales growth, of 2.7% year-on-year.

Meanwhile, Vietnam exported 15.7Mt of cement and clinker in the first half of 2023, 26% of its total despatches.⁵ This corresponds to a decline of 31% year-on-year from 22.7Mt (38% of despatches) in the first half of 2022 and a rise of 0.5% from pre-Covid-19 levels of 15.6Mt (33%) in the first half of 2019.

Chinese construction is the lynchpin in the Vietnamese cement industry’s current growth model. Over successive Five-Year Plans, it has consumed increasing volumes of clinker from Vietnam, as well as cement, at diminishing prices. This strategy overreached itself in the first quarter of 2023, more than a year into an on-going Chinese property market slump, when the value of Vietnam’s cement and clinker exports to the country fell by 95% year-on-year, to US$11.4m.⁶

By lowering prices, Vietnam’s cement sector charts a careful course within the contested waters of global trade rules, but it has run aground before. Most recently, from the start of 2023, the Philippines attached tariffs of up to 28% (and up to 55% for blended cement) to Vietnamese cement from 11 different producers.⁷ The Philippines Tariff Commission had found that ‘dumped’ cement from Vietnam – constituting over 50% of cement imports over the 18 months up to the end of 2020 – threatened the domestic industry. The failure to diversify its markets is a further sign that Vietnam’s current positioning in the cement and clinker trade is, at best, medium-term.

From October 2023, cement entering the European Union (EU) will become subject to extra taxes under the carbon border adjustment mechanism (CBAM).⁸ The EU is a relatively small trade partner for Vietnam, but the longer-term effect of this policy will be to replicate itself in the statute books of other nations and trade blocs, beginning in the Global North. With forecast lignite imports of 70 – 75Mt to Vietnam in 2023 – 2026, opportunities for cement exports from Vietnam, and countries like it, are diminishing.

The best situation for Vietnam would be accelerated growth in its domestic consumption base. The government is attempting to trigger a construction boom with its 2023 budget, which includes US$5bn in residential construction funding. Meanwhile, full-year infrastructure spending will rise by 25% year-on-year.⁹ To this end, it also needs to keep the cement price low. From 1 January 2023, Vietnamese exporters paid a tax of 10% of value on shipments of cement and clinker, instead of the previous 5% rate. If successful, this will nourish booming consumption with booming, and cheap, supply. Vietnam is grafting its Chinese model back onto the domestic market.

Producers will keep exporting. In May 2023, Nghi Son Cement Corporation despatched a first shipment of 31,500t of cement to the US. Nghi Son Cement Corporation’s cement, produced with fly ash, is clearly considered by the company and its owners to have some long-term marketability in the US. Said owners include Japan-based Taiheiyo Cement, which produces cement in the US via its CalPortland subsidiary.

In Vietnam, the cement industry has undergone a period of unparalleled growth, fuelled by exports. It can now reinvest the proceeds in establishing a self-sufficient construction sector around an ever more sustainable cement industry, ready to become the first choice across new markets as they arise in Southeast Asia and beyond.

1. Global Cement, 'Vietnam's first-half cement production declines in 2023,' 29 June 2023, https://www.globalcement.com/news/item/15941-vietnam-s-first-half-cement-production-declines-in-2023

2. The Observer, ‘‘It was all for nothing’: Chinese count cost of Xi’s snap decision to let Covid rip,’ 29 January 2023, https://www.theguardian.com/world/2023/jan/29/chinese-cost-covid-xi-lockdowns-china

3. Reuters, ‘Column: Asia thermal coal prices get the blues from Europe and LNG,’ 20 June 2023, https://www.reuters.com/markets/commodities/asia-thermal-coal-prices-get-blues-europe-lng-russell-2023-06-20/

4. Việt Nam News, ‘Record input costs thwart cement groups,’ 12 July 2023, https://global.factiva.com/ha/default.aspx?mod=SavedSearch_SelectSearch&page_driver=SavedSearch_SelectSearch#./!?&_suid=168119771197707004455190223307

5. Việt Nam News, ‘Industry: Vietnam’s Cement, Clinker Exports +82.2% y/y to $116M in Jun: GSO,’ 4 July 2023, https://global.factiva.com/ha/default.aspx?page_driver=searchBuilder_Search#./!?&_suid=168908188871006418595282713178

6. Vietnam Investment Review, ‘A strenuous year ahead in cement,’ 9 May 2023, https://vir.com.vn/a-strenuous-year-ahead-in-cement-101707.html

7. Global Cement, 'Philippines Department of Trade and Industry to impose anti-dumping duties on cement from Vietnam,' 22 December 2022, https://www.globalcement.com/news/item/15084-philippines-department-of-trade-and-industry-to-impose-anti-dumping-duties-on-cement-from-vietnam

8. Global Cement, 'Too taxing? How the CBAM affects cement exporters to the EU,’ 29 June 2022, https://www.globalcement.com/news/item/14316-too-taxing-how-the-cbam-affects-cement-exporters-to-the-eu

9. Customs News, ‘Cement enterprises expect a "brighter" second half of 2023
https://english.haiquanonline.com.vn/cement-enterprises-expect-a-brighter-second-half-of-2023-25368.html

China: China Resources Cement has applied to the National Association of Financial Market Institutional Investors (NAFMII) to register an issuance of notes, Reuters has reported. Under the application, China Resources Cement seeks to register an issuance of US$2.08bn in medium-term notes.