Displaying items by tag: Forecast

Mozambique: Ambrian, the UK-based owner of the Cimentos da Beria grinding plant, forecasts that its sales will rise by 25% year-on-year in 2017 from 2016. The prediction follows a poor third quarter where sales volumes fell by 16% and the company described the economic conditions in the country over the past year as ‘challenging.’ The group added that it has seen cement prices improve year-on-year and that the plant in Beira is now generating positive earnings before interest, taxation, depreciation and amortisation (EBITDA).

However, Ambrian also reported that it is facing ‘urgent’ short-term liquidity issues owing to difficulties in moving cash resources held within the group to the company. It is currently trying to secure short term financing and a longer-term strategic partnership and investment for the group as a whole to allow it to reduce its debt and develop its business in Mozambique.

India: ICRA is expecting cement demand is pick up in the fourth quarter of the 2017 – 2018 financial year following weak real estate activity, sand shortage and Goods and Service tax (GST) implementation issues in the first half of the year. In its October 2017 update the credit ratings agency said that demand was expected to benefit from the housing sector and road and irrigation projects in the infrastructure sector, according to the Press Trust of India. It added that the profitability of the industry depends on the industry’s ability to control prices given that higher input costs for fuel and freight are expected.

The credit ratings agency said that cement demand remained subdued across the country due to various local issues. In the North, especially in the states of Uttar Pradesh and Punjab, the offtake had been impacted by a sand shortage and lack of labour. In the West the implementation of the Real Estate Regulatory Authority (RERA) Bill resulted in construction activity slowing down. In the South, Tamil Nadu and Kerala were hit as demand was affected by the sand shortage, drought impacting rural offtake and weak housing activity. A recent ban on sand mining in Bihar is also likely to reduce sales volume growth in the eastern region in coming months.

US: The Portland Cement Association (PCA) has downgraded its forecast for cement consumption in 2017 and 2018 due to bad weather and lower anticipated budgets for the public construction sector. The association now expects cement consumption to rise by 2.6% in 2017 and 2.8% in 2018. It previously anticipated a 3.5% growth rate for both years in a statement made in May 2017.

“Once infrastructure and tax reform initiatives take hold and affect economic and construction activity, then we can expect growth in cement consumption to accelerate to higher levels,” said Ed Sullivan, PCA senior vice president and chief economist.

Sullivan noted the updated forecast assumes tax reform and a US$250bn national infrastructure program spearheaded by the Trump Administration and the House of Congress. However these initiatives are unlikely to begin until mid-2019. He added that the dual fiscal stimuli would accelerate GDP growth, construction spending and cement consumption. Lowering unemployment rates are also expected to add to inflationary pressures alongside these fiscal programs.

The PCA said that rising inflation would necessitate a stronger Federal Reserve reaction and is expected to result in a rapid and perhaps larger-than-expected increase in interest rates. This, in turn, could cause a slowdown in the construction industry leading to a potential decline in activity from the end of 2021.

India: The credit ratings agency ICRA has downgraded its forecast for cement demand growth to 3.5 – 4% for the 2017 - 2018 financial year due to a slow first half of the year. It blamed the slow first half on a sand shortage in some regions, the implementation of the Real Estate Regulatory Authority and slowed construction activity in the west, according to the Press Trust of India. The agency expects demand to be subdued during the second quarter of the year due to weather and the implementation of the Goods and Services Tax (GST).

However, it forecasts demand to rebound afterwards as housing demand and infrastructure projects pick up. In July 2017 the agency had predicted a growth rate of 5%.

Brazil: Paulo Camillo Penna, the president of the Brazilian cement association SNIC, predicts that the local industry will start to recover in 2018. His comments follow the publication of data for August 2017, according to the Valor Econômico newspaper. He added that the country would need four or five years of growth to resume the levels of 2014, the last year sales increased reaching 71Mt. Sales of cement have been falling less steeply than previously but are still projected to end 2017 with a decrease of 7%. Sales are then forecast to grow by 1% in 2018 with a more rapid recovery expected to begin in 2019.

Australia: Adelaide Brighton has announced a 10.9% year-on-year fall in net profit for the six months to June to US$54.4m, while revenues rose by 4.7% to US$569.2m. For the full year it expects underlying net profit to be in the range of US$148 - 157m. The company added that a surging property market and a healthy pipeline of infrastructure projects means that it is on the lookout for acquisitions in a bid to keep pace with demand and grow its market share. The company has already spent US$67.7m on bolt-on acquisitions so far in 2017.

“From a demand point of view on the east coast, it’s hard to be pessimistic,” said chief executive Martin Brydon to The Australian newspaper. Brydon said the company was pragmatic about the residential property market eventually cooling off, but any slowdown would not immediately affect the business. “Even if there was a significant drop in approvals or applications for housing, the pipeline is still there for the next 18 months,” he added.

The company also said it was likely to raise cement prices for a second time later in 2017 amid the robust conditions on the east coast, but declined to confirm the likely amount of the price rise. The price rise has been partly precipitated by strong demand but also by rising electricity prices, which remain a major preoccupation for the company. It is expected to spend an extra US$6.3m on electricity within 2017 than it budgeted for, due to unexpectedly high prices.

Thailand: Siam Cement Group has revised down its sales growth outlook for 2017 to 3 – 5 % from 5 - 10%, following an unexpected drop in cement demand in the first half of the year. The group's net profit in the April to June period was US$396m, a decrease of 17% year-on-year, on sales of US$3.2bn, unchanged from the same period of 2016.

"The cement market in Thailand slowed down more than we expected," explained Chief Executive Roongrote Rangsiyopash. Net profits in cement and building materials, one of its three core business units, slid by 29%.
Roongrote said that government infrastructure projects, which are being increasingly approved and going through bidding procedures, had not yet reached the stage of actually needing cement.

Domestic cement sales by volume were down by 7% year-on-year in the April-June period, following an earlier 7% fall in the previous quarter. Demand in all sectors, from the government, commercial construction and residential buildings, declined. "I hope that the latter half of the year will improve, but I am not sure that we can make up for the decline in the first half," added Roongrote.

Adding to the slow domestic market, other Association of Southeast Asian Nations (ASEAN) markets also saw sluggish cement demand, although Roongrote shrugged off concerns, saying that the slump had been caused by ‘temporary factors.’

India: The credit ratings agency ICRA has forecast that cement demand is likely to increase by 5% year-on-year in the 2017 – 2018 financial year due to increases in infrastructure and residential housing. In a report on the Indian cement sector it said that demand for cement fell by 1.2% to 280Mt in the 2016 – 2017 period, according to the Hindu newspaper. It added that the government’s demonetisation policy had decreased sales volumes by 9% between November 2016 and March 2017 as construction activity fell. However, in July 2016 ICRA failed to anticipate the negative effects of demonetisation predicting that cement demand would grow by 6% in the 2016 – 2017. Since then sales picked up by 17% in April 2017 leading to the current optimistic outlook.

India: The Cement Manufacturers Association (CMA) says that demand for cement is likely to grow in the second half of the Indian financial year due to the new Goods and Services Tax (GST) and increased infrastructure spending. The cement industry is also expected to benefit from a 30% reduction in logistic costs due to simplified state border checks, according to the Press Trust of India. The CMA’s forecast follows a fall in growth for the cement industry in the previous financial year.

Peru: The Association of Cement Producers (Asocem) has forecast that cement production will grow by 1 - 1.5% in 2017. This is based on predicted growth in the second half of 2017 following a decline in production of 5.5% over the last 12 months, according to the Gestión newspaper. Despite this production continued to fall in May 2017, by 6.4% year-on-year to 0.78Mt, although the rate has slowed since April. Cement demand is expected to rebound due to the reconstruction work after El Niño-related flooding and government infrastructure projects.