Displaying items by tag: Export

Pakistan: Capacity utilisation in the Pakistan cement industry has fallen to 68.3% in the first two months of the 2013 financial year, according to data released by the All Pakistan Cement Manufacturers Association (APCMA). The figure is the lowest since 2002.

Demand for cement declined during July 2012 and August 2012 due to Ramadan and heavy rains in the country. Total cement despatches declined by 1.64% in July and 2.82% in August.

Exports of cement have also started to decline in Pakistan since hitting a high of 11Mt in 2008-2009. In 2011-2012 exports were 8.57Mt. This decline has continued in 2012-2013 as exports fell year-on-year by 5.87% during July 2012 and August 2012 to 1.46Mt from 1.55Mt

Exports to India decreased by 38% in July 2012 and August 2012 to 75,800t. They have been declining since India and Pakistan opened their borders for liberal bilateral trade.

"The decline is not due to a lack of cement demand in India but because of very stringent non-tariff barriers erected by our neighbour," said the APCMA. It added that cement from Pakistan is preferred in India due to its better 'quality.'

Pakistan is unable to export larger quantities of cement to India due to trade barriers, labour shortages on the Indian side of the Wagah border crossing, and short supply of railway wagons. The APCMA has also blamed delays in cement plants registering for export licenses.

Exports to Afghanistan are also declining due to economic slowdown. Exports declined by almost 5% in July 2012 and August 2012.

China: China's cement exports have dropped by 15% in volume and by 8.3% in value from January to May 2012. China exported 4.04Mt of cement clinker from January to May 2012, a decrease of 15% year-on-year. The value of export dropped by 8.3% to US$240m.

Exports of cement clinker to Africa and Hong Kong have dropped but those to Bangladesh, Mongolia and the ASEAN region have increased. China's export of cement clinker to Africa dropped by 20.5% year-on-year to 1.76Mt during the five-month period. Exports to Hong Kong also dropped by 17.2% to 244,000t. By contrast, exports to Bangladesh jumped by 230% to 385,000t. Exports to Mongolia increased by 65.6% to 396,000t and exports to the ASEAN region jumped by 4.7% to 348,000t.

A majority, 80%, of the exports were general trade but border trade of cement is also increasing rapidly. State-owned companies were major exporters, exporting 2.07Mt of cement and sharing 51.4% of China's total export of cement. Private companies, exported 17% less year-on-year, 1.40Mt of cement, comprising 34.6% of all cement export. Foreign-funded companies, sharing 14% of cement exports, exported 566,000t of cement. Among all kinds of cement exported 3.15Mt, of 78%, was Portland cement.

The slow economy offshore also hurt cement export to traditional markets. In the five-month period, China's export of cement to the EU dropped by 86.1% year-on-year, while exports to the Russian Federation and Latin America also slid by 61.9% and 57.7% respectively.

The commencement of major infrastructure, railway and transport projects approved by the State Council for the 12th Five-year period (2011-2015) are expected to drive the demand for cement up. A consolidation in cement output may also happen when more foreign companies start to withdraw or scale down their investments in cement projects.

South Africa: Lafarge is considering approaching the International Trade Administration Commission of South Africa to protect the local market from what it calls 'low-quality cheap cement' imported from Pakistan. The multinational is concerned that substandard products are being used for large infrastructure projects in the country, including the construction of hospitals, government housing and schools. Some importers are labelling cement as flour to dodge quality tests. Yet when the regulators do test imported product, they refuse to disclose the outcome, citing confidentiality.

"Imports are a concern for several reasons; sometimes the prices are very low, which affects us financially. We are looking at approaching the International Trade Administration Commission of SA to intervene in the market, but no decision has been made," said Lafarge South Africa CEO Thierry Legrand. He added that some cement sellers did not comply with the National Regulator for Compulsory Specifications, yet had import licences. Other domestic producers including AfriSam and Pretoria Portland Cement have also expressed concern at the situation.

In 2011 three companies importing from Lucky Cement, Pakistan's biggest cement exporter, were shut down. Cement and Concrete Institute (CCI) managing director Bryan Perrie said that 140,000t of cement were imported into South Africa in the first quarter of 2012 and that a substantial portion of it probably came from Lucky Cement. "People have struggled to keep accurate import statistics of cement but we know that Lucky is a major importer. People bring cement in as flour, so the statistics of how much comes in is often incorrect," he said.

Importers in South Africa are supposed to test samples for every 500t of imported cement. Yet when the CCI asked third-party regulators about the results of these checks, they were told this was confidential. The CCI had asked the regulator to publish a list of cement importers online, recording which products had letters of authority, but this has not happened.

The news this week that Vietnam's state-owned cement producer, Vicem, has made a first half profit 75% larger than that of the first half of 2011 is a surprising statistic from a country with so much spare cement.

The country has spent most of the past decade building cement plant after cement plant. According to research conducted for the April 2012 issue of Global Cement Magazine, Vietnam now has a cement capacity of over 70Mt/yr! Vicem says that it sold 9.7Mt of cement in the first six months of 2012 and reports that this level represents 44% of its intended production for the year. This makes its 2012 cement production target somewhere in the region of 22Mt.

How much of the non-Vicem cement capacity is being utilised in Vietnam is unknown, but it is certainly too much for Vietnam's current needs. When the country's own government owned cement producer announces that it expects to have 6Mt of cement stockpiled by the end of 2012 (enough to supply the UK for the whole of 2013), it is clear that there is a serious cement surplus. Oversupply has not been met by demand, cement prices are depressed and attempts to export, to countries both near and far, are on the up.

To help curb the problem, one cement plant project has been halted in the past week. The Kinh Bac City Development Share Holding Corp (KBC) has received permission from its state to not build its planned 5Mt/yr plant.

Halting new projects is one way for the country to reduce its overcapacity, but in the short term the industry is looking at exports. While its lengthly coastline makes getting cement to ports for export fairly straightforward, Vietnam is badly located to exploit its current situation in this way. It's proximity to China, which itself is starting to face an oversupply scenario despite its efficiency gains, leaves Vietnam at a cost disadvantage.

As well as there being China on Vietnam's doorstep, many other countries in the region, (Indonesia, Malaysia, Japan, South Korea, Philippines, etc), are also self-sufficient in terms of cement and are able to export extra capacity as necessary. Additionally, East Asian countries have often seen Africa as a good export market but the recent rise of Nigeria as a major producer may reduce this opportunity.

Amid all of these numbers the Vietnam News Brief Service commented that the current oversupply in the socialist state was down to the 'unplanned' construction of cement plants over recent years.

Iran: Iran exported 3.34Mt of cement and clinker in the first three months of the current Persian calendar year that began on 20 March 2012. 2.89Mt of cement and 449,400t of clinker were exported during this period.

Iran's cement production capacity will be increased by 6.8Mt to reach 82Mt by the end of the current Persian calendar year. "The country's cement production capacity stood at 76.4Mt in the past calendar year which ended on 19 March 2012," said Mohammad Fatemian, an official with the Industry, Mine and Trade Ministry. Over 10.4Mt of cement was exported in the 2011-2012 year, he said, adding that the figure is projected to rise to 15Mt in 2012-2013.

Iran produced over 66.4Mt of cement in 2011-2012, showing an 8% rise compared to 2010-2011. Minister of Industry, Mine and Trade Mehdi Ghazanfari has announced that the country's current cement production capacity stands at 74Mt. Ghazanfari added that the figure will reach 110Mt by 2015.

Vietnam: Vietnam's Ministry of Construction has proposed the creation of an association for cement and clinker exporters to curb 'unhealthy' competition among them. The proposal has been sent to the prime minister for approval.

In its proposal the ministry said that Vietnam's cement and clinker exports have been 'badly affected' because some companies cut export prices to 'unfairly' compete with the rest. At present Vietnam has eight cement and clinker exporters. Six, Vicem, Ha Long, Thang Long, Cam Pha, The Vissai and Cong Thanh, are domestic. The remaining two, Chinfon and Phuc Son, are joint venture companies.

The ministry has called on local cement companies to cooperate rather than undercut each other in order to liquidate their large inventories through exports. The inventories are the biggest challenge facing the industry, it said. Exporting is considered a temporary measure to deal with the rising inventories which were caused by frozen real estate market and unplanned construction of cement factories nationwide.

Vietnam held around 2.8Mt of cement in inventories at the end of June 2012. The figure is expected to rise to 6Mt by the end of 2012, an increase of 23% on year-on-year.

Vietnam: The Vietnamese minister of construction has claimed that the master development plan for the country's cement industry from 2011 to 2020 approved by the Prime Minister is still in line with market movements and that there is no 'cement crisis' in the country.

Trinh Dinh Dung said that Vietnam consumed 55Mt out of 64Mt of cement produced in 2011, with consumption accounting for 89% of production. "I confirm that there is no cement crisis caused by the development scheme as raised by some people," said the minister.

The country currently has a huge cement surplus given its low domestic consumption. Under a policy of public spending cuts, the amount of construction work is actually falling, pushing down consumption of building materials.The country is forecast to use 55-56Mt of cement in 2012, accounting for just 80% of its own output. "We can't say that the cement development plan triggers an oversupply crisis," said Dung.

One of the biggest questions is why the country still imports cement when it faces huge inventories. The minister explained the country must stick to local commitments that stipulate that ASEAN members cannot impose import bans or tariff barriers on cement. Furthermore, market forces also prompt cement imports, he said.

Cement is mainly produced in the north of Vietnam, resulting in high cement prices in the south due to transport fees. Sometimes, the price of local products gets higher than that of products imported from Thailand.

"In a market economy, the country must import goods from overseas markets at competitive prices if domestic production shows low efficiency," said the minister.

Nigeria: This week has seen a major development in the Nigerian cement industry, with a call from domestic manufacturers to ban cement imports, three months ahead of the government's schedule for the ban. The call has been presented in some quarters as proof that the country, long blighted by high cement imports, has achieved President Goodluck Jonathan's bold target of making Nigeria a net exporter of cement before 2013. In the face of steadily diminishing oil revenues the government would like Nigeria to be known as the regional cement exporter, but what else might happen?

According to the Cement Manufacturers' Association of Nigeria (CMAN), the country's total cement capacity now stands at 22.5Mt/yr. Domestic consumption is estimated at 18.5Mt/yr, translating into a required capacity utilisation rate of 82%. It is bizarre, therefore, that cement producers feel the need to call for an import ban. Perhaps:

a) The producers know that they can't compete with the low cost of imports from outside Nigeria,

b) The producers want to recoup their plant investment costs as quickly as possible,

c) The producers know that they can't export if the country continues to import.

With notoriously poor transport links within Nigeria, option c may be a small factor. If road and rail links are poor, transport costs increase and exports become less desirable for both the supplier and the end-user. What is more likely however, is a combination of a and b. Producers need to recoup their investments but can't if China and India can undercut them from thousands of miles away. If the desire to recoup investments goes unchecked when the import ban comes in, there is a high potential for cartel-like behaviour to surface again in the country.

One does not have to look back far to the last major incident of apparent cement market cartelisation in Nigeria. In mid-2011 President Jonathan had to step in and personally call for a 25% price reduction. His target was hit within three months, but since then prices have slowly started to rise again, even with Dangote's Ibese 6Mt/yr plant coming online just three months ago! With four producers committed to setting up a 3Mt/yr plant each by 2015 in exchange for 2011 import licences, the supply of cement in Nigeria will continue to rise, making the temptation to collaborate even stronger.

Iran: Exports of cement and clinker from Iran have increased by 17.4% to 10.12Mt in the 2011 Iranian year finishing on 19 March 2012. 8.66Mt of this total was composed of cement exports and 1.46Mt was clinker. National cement production increased by 8% in 2011 reaching 66.46Mt, and clinker production increased by 12% reaching 67.64Mt.

In December 2011, Iranian President Mahmoud Ahmadinejad inaugurated a major cement production project in the country's central province of Qom. The plant has a capacity of 1Mt/yr with an investment of US$130m, mainly provided by Iran's Bank Melli and the government's Foreign Currency Reserve Fund.

Saudi Arabia: Saudi Arabia's Ministry of Commerce and Industry has removed restrictions that had been in place on imports of cement, saying that it "has adopted several decisions to ensure the stability of the price of cement and its provision in the local market." The decisions include halting exports, making it obligatory for cement factories to work at full capacity and making producers bear the freight costs to the areas of increased demand. It expects that these measures will mean that cement reaches consumers at a 'reasonable' price.

This is not the first step taken to ensure that the cement supply keeps pace with the huge demand for cement that the construction boom has created. Earlier in 2012 Saudi cement factories were ordered to open up new production lines. These are estimated to have added an extra six million bags to the Kingdom's production every month, taking its total monthly production to about 80 million bags.

The moves come following complaints by cement consumers in remote areas that the price of cement had skyrocketed in recent months, with some accusing dealers of fixing artificially high prices. Saudi Arabia currently has an estimated US$163.5bn-worth of construction projects in the concept phase. It is understandable that it wants to secure the best value cement possible.