Displaying items by tag: China

China: According to Reuters, Jiangxi Wannianqing Cement expects its net profit for the first half of 2015 to fall by 50 – 70% year-on-year to US$12.2 - 20.3m. It has blamed the fall on weak selling prices.

China: According to Reuters, Chinese cement companies, including Huaxin Cement, covered by the carbon market in Hubei Province will likely be forced to spend millions of Chinese Yuan on permits before the compliance deadline on 10 July 2015 after authorities rejected their pleas for leniency.

In June 2015, the companies asked regulators to let them borrow some permits from the 2016 quota, saying that they could not afford to buy permits to cover their obligations for 2014. However, their requests were rejected, easing market concerns that big emitters would be let off the hook.

Huaxin Cement, Hubei's biggest cement producer, has been under particular pressure to buy over the last few trading days as it has a shortfall of 1.15 million permits. "Local officials have talked through the consequences of non-compliance with cement plants, so Huaxin Cement approved a US$6.44m budget to pay for permits," said a trader who did not want to be named as he was not authorised to speak to media.

Trading volumes on the Hubei carbon exchange have surged ahead of the deadline in the absence of any indication that the compliance date, initially set for 31 May 2015, would be pushed back for a second time. As of 9 July 2015, 44 companies, or 32% of the total 138 firms, did not have enough permits to cover their obligations. Of these, 26 were cement producers. A manager with Gezhouba Cement Group, Hubei's second-largest cement producer, said that its permit allocation had been miscalculated.

Companies covered by the Hubei exchange are only obliged to buy a maximum of 200,000 permits, regardless of how much they overshoot their cap. However, Gezhouba has eight subsidiaries in the scheme, bringing its total permit demand to more than a million. "The scheme is punishing big producers, but not inefficient competitors," said the Gezhouba manager. "We pleaded with the government to re-issue permits and narrow the gap, but we have not got any reply. How can we spend tens of millions on carbon?"

Kenyan cement producers kicked off this week about Chinese cement imports for the Standard Gauge Railway Project in Kenya. Local producers, including ARM Cement and Lafarge, have asked the Kenya Railways Corporation to explain why the Chinese-backed project is importing cement. Project builders the China Rail & Bridge Corporation (CRBC) has imported 7000t of cement so far in 2015 according to Kenya Ports Authority data.

Project completion is planned for 2017 with a requirement of 1Mt of cement. If CRBC carried on this rate then, roughly, the project might only use 42,000t of imported cement if the import rate holds. This is less than 5% of the estimated requirement. However, cement imports increases into Kenya have stayed steady since 2012. Imports rose by 2000t from 2013 to 2014. CRBC's imports will stick out significantly in 2015.

Kenya National Bureau of Statistics (KNBS) data places Kenyan cement production at 5.8Mt in 2014, an increase of 16.3% from 5.1Mt in 2013. Production growth has been steadily building since the late 1990s with, more recently, a dip in the rate of growth in 2011 that has been 'corrected' as the growth has returned. Consumption has risen by 21.8% year-on-year to 5.2Mt in 2014 with imports also rising and exports dropping.

Imports for the railway project are duty free as ARM Cement Chief Executive Officer Pradeep Paunrana helpfully explained to Bloomberg. Producers have also recently upgraded their plants to specifically supply 52.5 grade cement to the project. Given this, it is unsurprising that local Kenyan producers, including ARM Cement and Lafarge, are complaining about this situation, especially given the increasingly pugnacious African response to foreign imports led by Dangote and companies in South Africa. Both ARM and Lafarge hold integrated plants and grinding plants in Nairobi and Mombasa. This is the route of the new railway line.

The backdrop to this is that the Chinese cement industry is struggling at home as it adjusts to lower construction rates and reduced cement production growth. Profits made by the Chinese cement industry fell by 67.6% year-on-year to US$521m for the first quarter of 2015, according to National Development and Reform Commission (NDRC) statistics. At the same time the Shanghai Composite, China's principal stock market, has seen the value of its shares fall by 30% since June.

Although it is unclear where the cement imports in this particular row are coming from, informal or formal business links between large state controlled corporations such as a China's major cement producers will always be questioned by competitors outside of China for both genuine issues of competitiveness and simple attempts to claw more profit. If the Chinese cement producers are sufficiently spooked or they really start to lose money then what is to stop it asking a sister company building a large infrastructure project abroad to offer it some help? Or it might consider asking the Chinese bank providing 90% of the financing towards the US$3.8bn infrastructure project to force the Kenyan government to offer more concessions to foreign firms. Meanwhile one counter argument goes that Kenya has a growing construction market with a giant infrastructure project that may unlock the region's long-simmering low cement consumption per capita boom. The Kenyan government may face some difficult decisions ahead.

China: According to Reuters, Anhui Conch Cement sold its shares in Xinjiang Qingsong Building Materials and Chemicals Group and Tangshan Jidong Cement Company in the April – June 2015 period for a net profit of US$217m.

China: According to Dow Jones, West China Cement expects to report a 'significant decrease' in net profit for the six months that ended on 30 June 2015, compared with the US$25.8m net profit for the six months that ended on 30 June 2014. West China Cement said that the anticipated decline is mainly tied to the low average selling price of cement in the past 12 months. It added that it was unable to maintain 'reasonable selling prices and healthy margins' in the southern part of Shaanxi.

Brazil: Magnesita Refratários has announced an agreement with ACIS, a cement maintenance and operations service company based in China and Saudi Arabia, to extend its services offering Magnesita's refractory products supporting greenfield projects around the world. ACIS and Magnesita will target Chinese cement original equipment manufacturers (OEMs), which are building projects in countries primarily outside of China. The cooperation started on 1 July 2015 and shall continue for three years, with a possible extension.

"Partnering with ACIS which is recognised within the cement industry for its technical and service capability, is an important step for Magnesita's continued growth within the industrial market. This alliance with ACIS will help clients control costs utilising Magnesita's high-quality refractory products as new cement plants are commissioned," said Magnesita CEO, Octavio Lopes.

ACIS will create a commercial team in China tp focus on clients and the development of new projects while Magnesita's technical assistance team will work closely with ACIS to provide application and engineering support.

China: According to Reuters, Anhui Conch's board has agreed to invest US$35.4m to set up a joint venture to acquire Shengta Group's cement-related assets.

China: Germany's AViTEQ Vibrationstechnik GmbH has celebrated the opening of a joint venture in Shanghai with China's Shanghai Finde M&E Tech Co Ltd (Finde). Finde is mainly engaged in drive and control technology business in China and has been supplied with AViTEQ magnetic vibrators for about 10 years.

Increasing domestic demand resulted in the establishment of AViTEQ Industrial Technology, which will manufacture innovative vibrating and processing systems exclusively for the Asian market. The joint venture will combine Chinese steel construction skills and German state-of-the-art drive technology. The technology will be used for screening and conveying in various sectors, including the cement industry, steel production and foundries, building and non-metallic mineral industry, chemical, pharmaceutical as well as plastic applications up to food production. Sales and services will be handled by AViTEQ Industrial Technology. The company will provide a 24 hour spare part delivery service for drives and controls from a local warehouse.

"Thanks to the cooperation with our local partners, we are able to offer our systems in China and neighbouring countries at marketable prices while maintaining the highest quality standards. In the medium-term, we are expecting the new company to gain a comparable successful market position with similar size as the German parent company," said Wolfgang Finger, CEO of AViTEQ Germany.

China: According to Reuters, cement producers participating in the carbon market in China's Hubei Province have told the local government that they cannot afford the millions of Chinese Yuan required to buy permits to cover mitigation obligations for 2014 and may default. Refusal to pay would test China's ability to force companies to comply with carbon targets and undermine efforts to curb greenhouse gas emissions, in which a planned national carbon market would have a central role.

The 138 companies covered by the Hubei exchange have to hand over carbon permits in June 2015 to settle their obligations for 2014. Around a quarter are cement firms, which have complained that they were not allocated enough credits. "They are in talks with the government to gain immunity from non-compliance penalties and are asking to borrow some permits from next year's quota," said an unnamed broker.

The companies are facing high environmental compliance costs at the worst possible time, as the economy slows and the construction sector struggles. Chinese cement production fell by 4.8% in the first four months of 2015.

Huaxin Cement, the biggest local producer, is 1.15 million permits short of meeting its mitigation targets, according to a document seen by Reuters. Carbon permits in Hubei are trading at US$4.43 so it could cost the company US$5.1m to cover its shortfall.

"Hubei is generally oversupplied, but the distribution is not balanced. Most of the power sector is over-allocated, but the cement and chemical sectors are short," said another unnamed broker. "Those facing a big gap are not attempting to buy from the market. They are pushing the government for a compromise." Penalties for non-compliance could include a deduction in permits for 2015 plus a fine of up to three times the value of the obligations in default, although that is capped at US$24,176.

China: Profits made by the cement industry have fallen by 67.6% year-on-year to US$521m for the first quarter of 2015 according to statistics released by the National Development and Reform Commission (NDRC). Cement output fell slightly by 3.4% year-on-year to 428Mt in the same period.