Displaying items by tag: Eurocement

Russia: The head of Job Safety, Industrial Safety & the Environment Department at Eurocement’s Nevyanskiy Tsementnik cement plant has been fined Euro42,000. The fine was issued by the local authorities for emissions of non-organic dust with high silicon content, according to URBC Daily News. The plant does not have an emissions permit.

Tajikistan: The government has supported a new cement plant project to be built in the Surxondaryo Region. The unit will be financed by private investors, according to Uzbekistan Newsline. Several new cement plants are planned locally including a 2.4Mt/yr integrated project from Russia’s Eurocement Group with an investment of US$220m and two Chinese-backed projects. Xin Lei is planning to build a 1Mt/yr plant for US$108m in the Akhangaran region. Akhangaranshifer also wants to build a 1Mt/yr plant for US$100m.

Belarus/Russia: The Belarusian Architecture and Construction Ministry says that the trade turnover of the Belarusian-Russian cement market reached up to US$400m between 2014 and 2018. Following the signing of a bilateral agreement in 2014 Belarusian cement was allowed to be sold in Russia via Eurocement Group, according to the Belarusian Telegraph Agency (BelTA). Belarusian Architecture and Construction Minister Anatoly Cherny and Eurocement Group President Mikhail Skorokhod met in early August 2018 to discuss performance in the first half of 2018.

Ukraine: Eurocement Ukraine has reduced its loss by 14% year-on-year to Euro4.47m in 2017. It nearly doubled its production to 1.12Mt of cement, according to Nezavisimy Stroitelny. Of this total 1.1Mt was shipped to consumers.

Russia: China CAMC Engineering is seeking international finance for an upgrade to the Zhiguli cement plant. The US$70m project was part of a wider US$175m contract with Eurocement signed in mid-2014 to upgrade three plants, according to Inside International Industrials. The building phase of the project is planned to last 36 months. The other plants in the project are the Pikalevo cement plant and the Savinski cement plant. China CAMC Engineering a subsidiary of China National Machinery Industry Corporation (Sinomach).

Russia: Eurocement Group plans to spend Euro31m on upgrade work at two cement plants in the Leningrad region. It will allocate Euro14m towards work at Pikalyovskiy Cement and Euro17m at Peterburgcement, according to the Delovoy Peterburg newspaper. New milling equipment with additional filter will be installed at Pikalyovskiy Cement, and one of the plant’s two mills will be closed. This will allow the enterprise to raise the output of premium cement, decrease its production cost, and reduce emissions. A gas-piston thermal power with a capacity of 24.9MW will be built at the Peterburgcement plant.

UK: Nine cement and concrete companies have launched the Global Cement & Concrete Association (GCCA), a new association that intends to develop the sector’s role in sustainable construction. The association also wants to build innovation throughout the construction value chain, in collaboration with both industry associations and architects and engineers.

The GCCA will be led by international cement companies and headquartered in London, complementing and supporting the work done by existing associations at national and regional level. Membership of the GCCA is available for cement manufacturers from all over the world that share the organisation’s values, and partnerships will be developed with organisations that share its vision. GCCA’s founding members are Cemex, CNBM, CRH, Dangote, Eurocement, HeidelbergCement, LafargeHolcim, Taiheiyo and Votorantim. They represent 1046Mt of cement production capacity, according to the Global Cement Top 100 Report.

Russia: Arpad Farkas has been appointed general director of Lipetskcement, part of the Eurocement Group. Farkas previously ran a cement plant for Lafarge.

Eurocement owner Filaret Galchev has been surprisingly candid on Russian television this week commenting on why his company offloaded shares in LafargeHolcim in February 2016. He described the move as ‘unexpected’ and a reaction to the shares losing nearly half their value in six months.

Eurocement ran a repurchase deal for the stake with Sberbank in late January 2016 before the bank sold it in early February 2016. Galchev’s wallet wasn’t the only casualty of LafargeHolcim’s falling share price. Board chairman Wolfgang Reitzle announced his plans to resign from the company at about the same time. LafargeHolcim’s share price has since rallied somewhat although it remains well below the level it commanded in the summer of 2015 following the merger.

Back on Russia, Galchev also continued Eurocement’s theme of predicting doom and gloom for the domestic cement industry. He forecast a further drop of up to 10% in local demand for cement. This is in line with previous comments Eurocement has made since at least about mid-2015. Although on the plus side the steepness of the fall in demand may be softening at least.

Graph 1 – Cement production in Russia, 2011 – 2015.

As the data above from the Russian Federal State Statistics Service (ROSSTAT) shows, cement production in Russia fell by 9% year-on-year to 62.1Mt in 2015 from 68.5Mt. This follows years of growth. Data for the first four months of 2016 seemed to show an acceleration of this trend with an 18% drop in production to 8.9Mt for the first three months of the year. However, the latest released figures, for April 2016, show that production may be picking up somewhat. We won’t get a better idea until the middle of the year. On the supply side, ROSSTAT doesn’t release any figures on cement consumption but the Russian railways were have reported that their cement volumes to consumers were down by 9.2% to 4.8Mt in the first quarter of 2016. This is a percentage drop close to what Filaret Galchev has been suggesting for 2016 as a whole.

The news from the multinationals supports this picture. LafargeHolcim reported weak construction markets in the first quarter of 2016 following sharp declines in 2015. HeidelbergCement recorded ‘slight’ decreases in its sales volumes in the period. It also noted a knock-on effect in Sweden due to lowering export deliveries to Russia.

All in all it’s a similar picture to fellow BRIC country Brazil, which we covered last week, with falling commodity prices hammering the economy and the local industry battening down the hatches. However, international oil prices are slowly creeping up and the International Monetary Fund (IMF) has predicted lower decreases in its economic output in 2016. Perhaps Filaret Galchev will have some good news to talk about on Russian television sooner than he thinks.

LafargeHolcim has stopped clinker production at its Voskresenskcement plant in the Moscow region of Russia. The move is part of reorganisation of the company's structure in Russia following market contraction. LafargeHolcim warned of declining cement volumes in its third quarter report for 2015 blaming a 'volatile' economic situation and low oil and gas prices negatively affecting construction activity.

Lafarge, before the merger with Holcim, reported that its cement volumes in Russia grew by 9% in 2014 compared to 2013 owing to the opening of its 2Mt/yr Ferzikovo plant in the Kaluga region in May 2014. It noted at that time that the construction market had slowed down in the fourth quarter of 2014. The Voskresenskcement plant had a Euro5m FLSmidth electrostatic precipitator fitted on one of its kilns in June 2014. This was part of a Euro60m upgrade project on Lafarge Russia's cement plants between 2008 and 2013. Also, in the run-up to the merger Lafarge Holcim sold its UralCement plant in Korkino to Buzzi Unicem.

LafargeHolcim is a relatively small player in the Russian cement industry but its experiences may be symbolic. Eurocement, the Russian market leader with 33% of cement production capacity, forecast that cement consumption in the country might fall by 5 – 10% in 2015. At that time, in June 2015, Eurocement president Mikhail Skorokhod blamed the high cost of borrowing and its effects on slowing new construction projects. Previously, the Russian Cement Association predicted that it expected domestic cement consumption to fall by 15% in 2015.

Unfortunately, it looks like the most pessimistic end of Eurocement's forecast may be correct. CMPRO data shows that cement consumption fell by 9.4% year-on-year to 49Mt in the first nine months of 2015. Data is yet to be publicly released for December 2015 but the cumulative totals for the first eleven months of 2015 hold with that decrease in cement consumption. Prior to this Russian cement production and consumption had been growing annually since 2009.

Particular declines in cement consumption for the first nine months of 2015 have been reported in the Volga Federal District, the Siberian Federal District, the Ural Federal district and the Northwestern Federal District of Russia. However, it should be noted that these regions had all had a production deficit of cement for most of 2010 to 2013 according to EY analysis. These regions all had cement oversupply problems during the boom years of growth and are now suffering even more as the market contracts. The three biggest cement producing regions in Russia are the Central Federal District followed by the Volga Federal District and then the Siberian Federal District.

Alongside all of this, Eurocement planned to sign US$280m of contracts with Sinoma in November 2014 to build new clinker production lines at three plants. This followed an earlier US$580m set of deals with CNBM and Sinoma to build new plants. On 1 February 2016 Rolt Company announced that it had started project development on four power plants for Eurocement.

Eurocement's financial status is unknown but it may now be regretting all that spending. Last week, on 25 January 2016, Sherbank CIB announced that it held 6% of LafargeHolcim's shares following a repurchase deal with Eurocement. This follows a request for a US$634m loan from Sherbank in mid-2015. Unless growth resumes in the construction market it may have paid over US$850m to build new cement plants at the peak of the Russian market. Add in currency exchange effects and 2016 may be a bumpy year for Eurocement and the Russian cement market as a whole.