Displaying items by tag: Egypt

Egypt: The Egyptian government has reportedly proposed that cement companies cap production by at least 14%. Multiple sources quoted by Reuters reveal that a formula was discussed in April 2021 proposing that cement plants cut production by a base amount of 10.5%. An additional cut of 3.7% would then be made for each production line a plant has and another 0.65% for each year they have been in operation. However, it is unclear how the age of a plant or production line would be determined. The Ministry of Trade and Industry has not commented on the story.

The measures have been suggested in order to help the sector cope with falling consumption and production overcapacity. Cement sales fell by 5% year-on-year to 41.7Mt in 2020 from 43.8Mt in 2019. However, two of the cement executives quoted said that the proposed cuts seemed unfair on multinational companies like their own that had older plants.

A great question was asked at yesterday’s Virtual Global CemTrans Seminar: what impact did the recent blockage of the Suez Canal cause to the cement industry? Luckily, Rahul Sharan from Drewry was on hand discussing freight costs following the start of the coronavirus pandemic.

As most readers will know, the Suez Canal was blocked in late March 2021 when the 200,000dwt Ever Given ran aground, at around six nautical miles from the southern entry of the canal. The ultra large container vessel was subsequently refloated and towed away just under a week later. While this was happening the fate of the ship became a global news story with business analysts totting up the cost of the obstruction. 40 bulk carriers were reported as waiting to transit the waterway the day after the blockage started and some of these were carrying cement. Reporting by the BBC noted that 369 ships were stuck waiting on either side of the blockage on the day before the ship was finally freed. The Suez Canal Authority (SCA) estimated their loss of revenue from the incident at US$14 – 15m/day. Analysts like Allianz placed the cost to the global economy at US$6 - 10bn/day.

In Sharan’s view the blockage of the Suez Canal happened at a potentially risky moment for cement and clinker shipping because there was already congestion in shipping lanes built up on the east coast of South America and around Australia. However, a delay of a week around the canal, followed by the resulting congestion dispersing quickly over the following days, does not seem to have had any major impact so far.

Sharan’s presentation at Global CemTrans also included a summary of cement shipping. The key takeaways were that clinker shipping overtook cement shipping in 2019 with a connected increase in fleets investing in handymax-sized vessels. He also pointed out the key cement and clinker importing countries in 2019, before the coronavirus pandemic started causing market disruption. For cement: the US, the Philippines and Singapore. For clinker: China, Bangladesh and the Philippines. Turkey and Vietnam were the biggest exporters for both in that year.

The Ever Given incident has highlighted the continued importance of the Suez Canal for global trade for commodities. Goods still need to be physically moved around, however much stuff we digitise. It also contrasts with the issues that the Egyptian cement sector has faced in recent years such as production overcapacity. While domestic cement plants have struggled to maintain their profits, plenty of cement carriers have been transiting through the Isthmus of Suez. Local producers may well have gazed at them and wondered where they were going.

One of them, Al-Arish Cement Company, took action in this direction this week with its first export shipment of clinker. The Clipper Isadora ship disembarked East Port Said port for Ivory Coast. Future shipments are planned for West Africa, Canada, the US and Europe. Ship tracking reveals that the Clipper Isadora has not taken the Suez Canal on this occasion.

The proceedings pack for the Virtual CemTrans Seminar 2 2021 is available to buy now

Egypt: Sinai Cement’s consolidated net loss before minority interests was US$35.6m in 2020. The figure represents an increase of 26% year-on-year from US$28.3m in 2019, according to Mubasher.

Egypt: South Valley Cement’s full-year sales in 2020 were US$22.3m, down by 20% year-on-year from US$28.0m. Loss also fell by 20%, to US$16.0m from US$20.1m in the 2020 financial year, according to Mubasher.

Egypt: Developer Mountain View has awarded a 300,000m³ concrete supply contract to Lafarge Egypt, part of Switzerland-based LafargeHolcim. Mountain View will use the concrete to build its Mountain View iCity in East Cairo. The investment in the project totals US$12.7m.

The producer has also signed a memorandum of understanding with the Egyptian National Research Centre to undertake initiatives aimed at enhancing construction.

Greece: Titan Cement’s consolidated earnings before interest, taxation, depreciation and amortisation (EBITDA) rose by 7% year-on-year to Euro286m from Euro267m in 2019. Sales remained level year-on-year at Euro1.61bn and net profit after taxes and minorities (NPAT) fell by 97% to Euro1.50m from Euro50.9m. The group attributed the profit slump to one-off charges, namely the full write-off of the Euro46.6m goodwill of subsidiary Titan Cement Egypt and the derecognition of Euro17.3m of accumulated deferred Egyptian tax assets. If not for these, the group says its consolidated NPAT would have increased by 28% to Euro65.4m.

Cement sales were 17.1Mt, up by 1% from 17.0Mt. The group called the impacts of the coronavirus outbreak ‘less severe than expected.’ Ready-mixed concrete sales rose by 3% to 5.4Mm³ from 5.2Mm³.

Construction activity continued under coronavirus lockdown in most of the group’s countries of operation. As a result, sales remained resilient across all markets. US sales fell by 2% to Euro938m from Euro952m due to negative currency exchange effects. Greece and Western Europe sales rose by 1% to Euro247m from Euro245m. Southeastern Europe sales rose by 3% to Euro938m from Euro952m and Eastern Mediterranean sales rose by 1% to Euro152m from Euro150m.

Group executive committee chair Dimitri Papalexopoulos said “In 2020, we delivered strong financial performance while taking care of our employees and those around us, ensuring high-quality, uninterrupted customer service and accelerating progress towards our digital and sustainability aspirations. In the face of uncertainty caused by Covid-19, we remained confident in our business model. We adapted to shifting market conditions and continued to pursue operational excellence while laying the groundwork to capture future growth.” The group anticipates a positive market trend in all regions in 2021.

Egypt: Arab Swiss Engineering Company (ASEC) has launched legal action against Misr Beni Suef Cement. The latter terminated the supplier’s technical management contract in mid-February 2021. Arab Finance has reported that the producer alleges that ASEC breached its commitments regarding its Beni Suef cement plant’s production capacity.

News has been dripping out slowly over the last few months about which assets HeidelbergCement is planning to divest. This week reporting from Bloomberg suggested that the German-based building materials producer might be seriously considering selling one or more integrated plants in Spain. The idea is reportedly part of a wider review of its portfolio in the country with the possible inclusion of cement plants at San Sebastian and Bilbao at a future date also. A proposed price of Euro300m for the national business was put forward by the sources to the reporters but it is unclear how many cement plants that figure includes.

HeidelbergCement announced in July 2020 that it had reduced the value of its total assets by Euro3.4bn following a review. It blamed this on reduced demand for building materials due to the coronavirus pandemic and the devaluation of its Hanson subsidiary in the UK, in part related to the UK’s exit from the European Union. A divestment plan followed at its Capital Markets Day event in September 2020 when it said it was simplifying its country portfolio and prioritising the strongest market positions. To this end it said it was setting up a watch list of underperforming assets to keep an eye on.

Over the next few months a number of corporate reorganisations and actual confirmed divestments occurred as well as plenty of speculation. HeidelbergCement-controlled Suez Cement started to acquire a 100% stake in its own subsidiary, Tourah Portland Cement, in September 2020. Suez Cement then sold its majority stake in Kuwait-based Hilal Cement in late January 2021. This week HeidelbergCement Bangladesh informed the local stock exchange that it is planning to amalgamate its subsidiary Emirates Cement.

Signs that European reviews had taken place could be seen later in the autumn of 2020. In November 2020 the Italian press picked up on rumours that HeidelbergCement was planning to move subsidiary Italcementi’s research centre from Bergamo, Lombardy, to Heidelberg in Baden Württemberg. Whether this was ever a serious proposition or not, this appeared to have been avoided in early February 2021 when an Italian union said it had agreed with Italcementi to keep the research centre in Italy as well as a preserving jobs generally. Meanwhile, also in November 2020, France-based subsidiary Ciments Calcia announced a major upgrade at its integrated Airvault cement plant but along with the conversion of two other integrated plants into a grinding unit and a terminal respectively, and changes at the French headquarters at Guervill.

Just before Christmas the bigger speculations started to appear in the press, with a story suggesting that HeidelbergCement was considering selling assets in California, US, with a target price of US$1.5bn for three integrated plants and associated concrete and aggregate units. That story is particularly beguiling given Cemex’s decision this month to reopen a kiln in Mexico to supply cement to the southwest US to meet shortages (See GCW 493)! Incidentally, readers should also note the story this week about a shortage of natural gas exports from Texas, US, that has caused cement plants in northern Mexico to shut down. This week, as mentioned at the start, has seen Spain added to the list of places that HeidelbergCement might be considering selling up in. The Spanish market like Italy has been rationalising heavily over the last decade particularly as export markets have dwindled. Oficemen, the Spanish cement association, reported that domestic cement consumption fell by 10% year-on-year to 13.3Mt in 2020 from 14.7Mt in 2019. On top of this Oficemen has repeatedly warned of the threat that CO₂ emissions prices pose for its members’ exports.

Group chairman Dominik von Achten told Reuters this month that the company plans to sell the first of the five assets in early-to-mid 2021. Of course he wouldn’t say where, except for adding that the company would stay in ‘rock solid’ markets like Northern Europe. Indonesia has been seen as a candidate for disposal by analysts, likely due to local production overcapacity levels and LafargeHolcim’s own departure in Indonesia 2018. All Von Achten would say on the matter was that Indonesia was an ‘important’ market for the group. Whether it’s seen as important for reducing company debt or building value remains to be seen. HeidelbergCement hasn’t exactly been shy about saying what they are doing over the last half year or so but they are only going so far and they won’t comment on speculation. So in the meantime we must wait to find out more.

Egypt: Misr Beni Suef Cement has ended a contract with Arab Swiss Engineering Company (ASEC). In April 2019 the companies signed a contract for ASEC to provide technical management at the producer’s plant. Reuters News has reported that the cement company will now undertake the operation of its production lines.

Italy: Cementir Holding recorded revenues from sales and services of Euro1.22bn in 2020, up by 1% year-on-year from Euro1.21bn in 2019. Cement and clinker volumes rose by 13% to 10.7Mt from 9.49Mt. Volumes registered the sharpest increase in Turkey, of 39%. Ready-mixed concrete (RMX) volumes grew by 7.8% to 4.4Mm³ from 4.1Mm³. The company maintained its 2019 earnings before interest, taxation, depreciation and amortisation (EBITDA) levels of Euro264m. It said that an improvement in performance in Turkey, Denmark, Egypt, China and Sweden balanced out negative effects on earnings in Belgium, US and Malaysia.

Chair and chief executive officer Francesco Caltagirone said, “In 2020, despite the serious pandemic, the group showed significant resilience with a 13% increase in cement volumes sold and revenue reaching the historical record. On a recurring basis, EBITDA increased by 2%, EBIT was up by 4% and yearly cash generation was Euro119m."

Under Plan 2021 – 2023 Industrial Plan, the company says that it envisages sales growth of 20% to Euro1.47bn and EBITDA growth of 29% to Euro340bn in 2023 compared to 2020 figures. It said that digitalisation investments begun in 2019 will contribute an expected Euro15m to EBITDA in 2023. As part of its sustainability commitments it has set a CO₂ emissions reduction target of around 30% by 2030, with emissions below 500kg/t of grey cement. However, it said that under the future European Taxonomy criteria white cement emissions are not included.

The group is planning to invest around Euro107m from 2021 to 2023 on sustainability and digitalisation. This includes a the construction of a new calcination plant in Denmark for the production of its Futurecem product and, the installation of wind turbines with an installed capacity of 8.4MW. It is also planning to increase the alternative fuels substitution rate at its integrated Gaurain plant in Belgian to 80% from 40% and invest in the use of natural gas and biogas in some of its plants.