Displaying items by tag: Fuel
Jordan: The country’s industrial chambers have made a statement saying that most cement plants are charging ‘average’ prices for cement despite recent rises in energy costs due to imported coal and diesel. In a joint statement the group’s said, that although some plants have increased the price of cement, it does not reflect the increase in real cost to producers, according to the Jordan News Agency. The price of cement has reportedly risen by 12% recently.
The industrial chambers noted that the sector is, “keen to stabilise commodity prices locally and maintain their sustainability." It added that it accomplished this in the interests of citizens during the Covid-19 crisis despite the high price of raw materials. The statement also noted that the country has a cement production capacity of 10Mt/yr but the local market only uses 3Mt/yr.
Fuels in India
02 June 2021Another week and it’s another commodity story related to the effects of coronavirus. This time the Indian press and financial analysts have started to notice a shift in the fuel mix of some of the major producers from petcoke to coal. UltraTech Cement moved to 30% petcoke and 60% imported coal in the fourth quarter of its 2021 financial year that ended on 31 March 2021. This compares to a reported mix of 77% and 10% in the previous year according to Mint. Dalmia Bharat reduced its share of petcoke to 52% in the fourth quarter from 70% in the third quarter, while its coal mix was 35 - 40% in the fourth quarter.
Price is the driver here. UltraTech Cement’s chief financial officer Atul Daga summed the situation up in an earnings call in late January 2021. Essentially, he said that fuel represented about 13% of total costs for cement producers in India and that both the cost of coal and petcoke nearly doubled from June 2020 to January 2021. However, coal is seen as the cheaper option, hence the move towards it in the fuels mix ratio. The petcoke market meanwhile has suffered due to reduced oil refinery output due to, you guessed it, the effect of coronavirus on global markets in 2020. Scarcity in the US market has particularly affected the decisions on buyers for Indian cement companies since this is the key source of their imports. Demand for petcoke from Latin America and the Mediterranean hasn’t helped either. Both petcoke and coal markets are expected to stabilise in the second half of 2021. Diesel prices have also risen recently causing UltraTech Cement’s power and fuel costs to increase by 28% year-on-year to US$356m and logistics costs, including freight expenses, to rise by 25% to US$449m in the fourth quarter of its 2021 financial year.
With this in mind it’s interesting then, that for some analysts at least, fuel prices have been seen as more worrying for cement producer profits than the latest round of coronavirus-related lockdowns from India’s second wave of infection. Fitch Ratings for example, warned that the impact of mounting fuel costs would continue to be seen in the quarter to June 2021 but that it would subside due to the switch in fuel mix and price rises passed to end consumers. On the lockdowns, it forecast that localised restrictions, with cement plants being allowed to continue operating in most states, would cause a far less pronounced drop in cement demand than during the first national lockdown.
Graph 1: Monthly cement production in India, January 2019 – April 2021. Source: Office of the Economic Adviser.
Graph 1 above shows that the crisis the Indian cement sector faced during the first lockdown, when production crumbled by 85% year-on-year to 4.3Mt in April 2020. The following recovery saw production reach its second highest ever figure at 32.9Mt in March 2021. It’s too soon to tell what’s happening from the national figure but that dip in April 2021 is not looking good so far.
One benefit from unstable fuel prices is that it builds the economic case for cement producers to raise their alternative fuels substitution rates. UltraTech Cement, for example, reported that its ‘green’ energy rate grew to 13% in its 2021 financial year from 11% in 2020. With a target of 34% by its 2024 financial year, this is an ideal opportunity for a change for both UltraTech Cement and other producers.
Mexico: Cemex plans to start using hydrogen as part of its fuel mix at its cement plants around the world in 2021. The estimated cost of the roll-out is US$40m. The company says it completed the deployment of its hydrogen technology across all of its cement plants in Europe in 2020 following trials at the Alicante Cement Plant in Spain in mid- 2019.
Global operations, technical and energy vice-president Roberto Ponguta said, “The fast adoption of this new hydrogen-based technology is a clear example of Cemex's innovation efforts and its strong commitment to decarbonise the cement production process.” He added, "We continue to identify and deploy existing technologies which have a high potential to contribute to our sustainability goals, and hydrogen is a key lever.”
Ambuja Cement digitises supply chain
13 July 2020India: Ambuja Cement has modernised its logistics operations by digitising its supply chain to “improve visibility, deliver quality customer service and optimise cost.” The Economic Times newspaper has reported that the company has integrated all aspects of raw material, fuel and equipment supply and product deliveries on a single online platform in order to “enhance overall efficiency and productivity.” Company director Martin Kriegner said additionally that the digitisation will aid in, “fuel mix optimisation and strategic sourcing, helping to mitigate rising input costs.”
Ambuja Cement’s 3.0Mt/yr greenfield expansion to its integrated 1.5Mt/yr Marwar Munda, Rajasthan plant is scheduled for commission by 1 January 2021. The company has a master supply agreement with ACC aimed at maximising the consistency of cement supply to the Rajasthan market once the new 4.5Mt/yr plant becomes operational.
Vecoplan announces 360-Degree Days
11 May 2020Germany: Vecoplan has said that it will host 360-Degree Days, an exclusive live presentation from its technology centre, from 27 - 29 May 2020. It says that the event is aimed at filling the void left by the cancellation of IFAT 2020, which would have covered waste and raw materials management, due to the coronavirus outbreak. Vecoplan said, “Participants will learn all about recycling and processing technology, subdivided into several topic areas. Details on the content will be announced closer to the time.”
Vietnamese contract for FCT
24 April 2020Vietnam: US-based FCT Combustion has published details of a new contract with Vietnam National Coal and Minerals Industry Holding Group (Vinacomin) for the supply of an FCT Turbo-Jet burner to Vinacomin’s 0.6Mt/yr La Hiên plant in Thái Nguyên province. The upgrade aims to enable the use of lower calorific coal while maintaining clinker strength and specific fuel consumption, in order to reduce fuel costs.
FCT Combustion previously provided burners at Vinacomin’s 0.8Mt/yr Quan Trieu cement plant in 2019 and 1.5Mt/yr Quang Son cement plant in 2020, both in Thái Nguyên province.
Entsorga installs AF line at Hungarian plant
23 April 2020Hungary: Italy-based Entsorga has completed the installation of an automated alternative fuel (AF) line at a Hungarian cement plant.The upgrade consists of an Entsorga Spider crane and Pelican power system which will be able to maintain a continuous feed to the plant’s calcination system 24 hours a day.
Entsorga CEO Francesco Galanzino said, “Bringing a commission to a successful conclusion in the middle of the maximum intensity period of the coronavirus crisis has been a great satisfaction. The cement plant will make significant savings in CO2 emissions.”
Egypt: Sinai Cement’s net loss in 2019 was US$28.1m, down by 44% year-on-year from US$50.2m in 2018. Arab Finance News reported that the company attributed the loss to accumulated effects of currency devaluation on imported fuel and to rises of electricity and oil prices.
HeidelbergCement boosted in ‘bizarre’ start to 2020
23 March 2020Germany: HeidelbergCement started the new year better than ever before, according to chief executive officer (CEO) Dominik von Achten. He reported that this had been mainly due to good weather before the onset of the coronavirus outbreak. Von Achten warned that the situation had already changed beyond recognition since mid-February 2020 for the multinational.
He said that the coronavirus outbreak had not only caused plants to be closed, either by enforcement or due to a lack of demand, but because migrant workers are unable to travel to construction sites. For example, workers from Eastern Europe are increasingly lacking in Western Europe. In Indonesia, a market that is important for HeidelbergCement, the lack of Chinese construction workers is stark, as they remain confined to their home country.
According to Von Achten, HeidelbergCement is now paying particular attention to its costs, has deferred all unnecessary investments and has considerable liquidity leeway. He added that the group is likely to benefit significantly from lower fuel costs as conditions improve over the course of 2020. HeidelbergCement is currently particularly affected in Lombardy, where its Italcementi subsidiary has its headquarters. HeidelbergCement has shut down its factories in Italy and imposed a freeze on hiring and non-essential spending. "You can see it's hitting the world like a wave," says Von Achten. "It's a tough test."
Titan Cement to upgrade Pennsuco kiln line
13 March 2020US: FCT combustion has announced that it has won an engineering, procurement and construction (EPC) contract with Titan Cement for the upgrade of its 5000t/d kiln line to 100% natural gas firing. The upgrade consists of the installation of two new burners: a dual-fuel capability Gyro-Therm Mk3 and a back-up natural gas-firing Gyro-Therm Mk3. The company has said that it will also supply accessories, field instruments, burner management system (BMS) and valve train.