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Two of Japan's largest cement producers have reported reduced domestic cement sales in the country this week. First, Taiheiyo Cement revised its forecast for its 2017 financial year, ending on 31 March 2017, bringing its estimated net sales down by 2.3%. Then, Ube Group reported that its cement sales had fallen by 7.2% year-on-year to US$1.05bn in the first half of its financial year. Both producers blamed poor weak demand locally, but Ube also cited a poor export market.

Graph 1: Domestic and export cement sales in Japan, 2006 - 2015. Source: Japanese Cement Association.

This last point is interesting because it differs from the latest data released by the Japanese Cement Association (JCA). As can be seen in Graph 1 JCA figures show that exports of cement have been rising since 2013. So far this trend looks likely to continue in 2016. Ube's different experience may arise from its market mix and its distribution of cement plants and transport infrastructure. Both of its cement plants are based in the south of the country. Commentators have attributed the boost in exports to the devaluation of the Yen in 2015 as well as strong brand perception overseas. Unfortunately, this overall rise in exports has been matched by a fall in domestic sales at the same time and this is causing a headache for the major producers. Production too has started to drop since 2014 (Graph 2).

Graph 2: Cement production in Japan, 2006 - 2015. Source: Japanese Cement Association.

Japan's cement market is dominated by four producers - Taiheiyo Group, Mitsubishi Materials, Ube Industries and Sumitomo Osaka Cement - which hold nearly three quarters of the nation's production capacity between them. According to Global Cement Directory 2016 data, Taiheiyo Cement and its subsidiaries is the market leader with over 30% market share with the other three holding 10 - 20% each.

Graph 3: Cement production capacity share in Japan (Mt). Source: Global Cement Directory 2016.

Taiheiyo's downgraded forecast follows poor first quarter results, in which its net sales for its cement business fell by 16% to US$1.19bn. This follows a slight rise in net sales for its cement business in its 2016 financial year due to a boost in sales from its overseas subsidiaries, particularly in the US, that surpass a fall in domestic sales. Sales volumes were 14.7Mt domestically and 4Mt in exports in 2016. Mitsubishi Materials has posted a similar picture with cement sales and profits rising in 2016 before suffering in the first quarter of 2017. Mitsubishi Materials blamed the poor market on a delay in construction work mainly due to labour shortages and sluggish growth in demand from the public sector. Ditto Sumitomo Osaka Cement.

As highlighted by such decision as Tokyo Cement's move to resume exporting clinker to Sri Lanka in early 2015, Japan's cement industry is working hard to compensate for falling demand at home. Increasing exports in Asia Pacific among other massive exporters such as China, Vietnam and South Korea is impressive, although the prominent foothold by Japanese companies in the recovering US market may offer some advantage here. On-going weak demand in China though cuts out one major market for Chinese exporters. However, being a major exporter in a region of major cement producers must be a concern. Although commentators such as Ad Ligthart dismiss the chances of China flooding the world with cheap cement, if they are wrong and Japan continues its reliance on exports it may find itself in deep water. The other risk is if the US authorities decide to get tougher on foreign exports it may knock out one more market for Japanese exports. Too much reliance on exports is always dangerous. In this context, it’s no surprise that Japanese cement producers are blaming the government for insufficient infrastructure spending.

Belgium: Taner Aykac has been appointed the managing director of Compagnie des Ciments Belges (CCB). The board of directors has also appointed Eddy Fostier as general manager of the company.

Aykac, a Belgian national aged 53 years, holds a Bachelor of Science in Engineering and a MBA. He started his career in the agrochemical sector for Pioneer Overseas Corporation/DuPont in 1988 and subsequently worked for chemical and pharmaceutical multinationals such as Ciba-Geigy, Novartis and Zeneca, where he held various senior roles until 2000 before working for Syngenta Group. In 2011, Aykac was appointed CEO of Cimentas, a Cementir Group subsidiary in the Turkish cement and ready-mixed concrete business, contributing to the reorganisation of the company. He worked in Turkey until the end of 2015.

Brazil: Camargo Corrêa has named Heinz-Peter Elstrodt as its chairman replacing Vitor Hallack. The decision to hire Elstrodt is part of the conglomerate’s intention to direct the company towards asset portfolio management away from the construction industry, according to the Valor Econômico newspaper. Previously, German national Elstrodt has spent 32 years at the consultancy McKinsey, where he reached the role of Latin America president. The changes in management follow the resignation of Hallack in August 2016 and governance problems following links to the Petrobras corruption scandal.

South Africa: PPC has appointed Peter Nelson as its permanent board chairman following his interim tenure in the role following the retirement of Bheki Sibiya. The appointment took affect from 24 October 2016. Other recent appointments include the proposal to elect Nicky Goldin as the third member of the audit committee following the retirement of Bridgette Modise and the appointment of Timothy Leaf-Wright as chairman of the risk and compliance committee with immediate effect

Nelson was appointed to the board as an independent non-executive director on 25 January 2015. His experience covers manufacturing, mining, telecommunications, healthcare, leisure, property, packaging and the motor industry in listed and private entities in South Africa, the UK, Zimbabwe and Nigeria. He has served as chief financial officer on several boards including Telkom, Netcare, Mondi and he was the financial director of PPC from 2000 to 2003.

Goldin was appointed to the board as an independent non-executive director in January 2015 and currently serves on the Remuneration and
Investment sub-committees of the board. She holds a B.Com (Hons) from the University of the Witwatersrand and obtained an MBA from the University of Illinois. She has held senior positions at Deloitte Consulting, BHP Billiton, Anglo American, Standard Bank and ANZ Bank (Australia).

Leaf-Wright is a chartered secretary and was appointed to the board as an independent non-executive director in January 2015. He currently serves as a member of the risk and compliance, social, ethics and transformation and investment committees. His career with Nampak Limited spanned 41 years prior to early retirement in 2014. During the last 11 years, he was seconded to Mozambique, Nigeria and Angola to spearhead negotiations and subsequently construction and managing of both brown and greenfield plants in those countries.

Pakistan: A second 4500t/day production line at the Cherat Cement plant started production on 31 October 2016. Construction of the new line started in 2014, a senior manager at the plant told the News International newspaper. The plant’s first production line, with a production capacity of 3200t/day, opened in 1985. Altogether the plant employs 1000 workers.

Canada: McInnis Cement has completed nearly 75% of the construction phase of the 2.5Mt/yr plant it is building at Port-Daniel-Gascons in Quebec. It also announced that it has closed the financing for the project.

“With the significant turnaround of operations and approximately US$209m in new financing, everything is in place to complete the project on schedule,” said Christian Dubé, Executive Vice-President of Québec at la Caisse, the pension fund manager that took control of the project in August 2016. The first cement deliveries from the plant are scheduled for the spring of 2017.

McInnis Cement began the operating phase in October 2016, with tests on the crushing line and the conveyers used to transport limestone extracted from the quarry to the warehouse. The company expects to receive its first ship at its marine terminal in early November 2016.

By the end of 2016, the company expects to finalise and begin operations of the crushing unit, receive several ships transporting raw materials in its marine terminal and conduct the first operational checks for the grinding of raw materials. Distribution terminals at Sainte-Catherine and Providence are also under construction and other sites under development will soon be added to the company’s distribution network.

Japan: Ube Group’s sales of cement have fallen by 7.2% year-on-year to US$1.05bn in the first half of its 2016 financial year that ended on 30 September 2016 from US$1.13bn in the same period in 2015. Its operating income fell by 24.5% to US$69.8m from US$93.8m. The company blamed this on sluggish demand for cement domestically and low market prices for exports despite buoyant volumes. Overall the group reported that its total new sales fell by 13.1% to US$2.69bn from US$3.09bn.

Algeria: Abdessalem Bouchouareb, the Minister of Industry and Mining, has said that his country will stop importing cement in 2017. He made the comments at a visit to the China Triumph International Engineering (CTIEC) cement plant being built at Adrar, according to the Algeria Press Service. The plant is nearly 90% complete and due to be commissioned at the end of 2016.

"The year 2017 will mark the end of cement imports in Algeria, with the commissioning of all cement plants across the country, whose total annual production capacity is expected to reach 6Mt," said Bouchouareb. He added that industrial projects will allow the country to achieve self-sufficiency in cement and begin to export it.

Ghana: Dangote Cement has defended its conduct against accusations of tax evasion, dumping and other unfair trade practices by local cement producers. Tor Nygard, managing director of Dangote Cement Ghana, defended the Nigerian company at a press conference in Tema saying that the company's entry into the local market had stabilised the price of cement and strengthened competition, according to the Business and Financial Times newspaper. He also described the attacks by market competitors as ‘smear tactics.’

The Cement Manufacturers Association of Ghana (CMAG), representing local cement producers such as Ghacem and Diamond Cement, lobbied the Ghanaian government in October 2016 calling for a ban on imports of cement.

Nygard dismissed accusations of dumping cement in Ghana from Nigeria and confirmed that the company pays all the relevant taxes on its imports. He added that Ghacem and Diamond Cement employ 3000 workers after 55 years of operation but that Dangote Cement employs 2000 workers in the country after only six years of operation. Finally, he detailed plans for the company’s new US$100m cement grinding plant in Takoradi that is due to be commissioned at the end of 2017.

China: Anhui Conch has reported that its revenue fell by 0.05% year-on-year to US$5.6bn in the first nine months of 2016. Its net profit fell by 2.2% to US$881m from US$901m. Although after extraordinary items, due to government subsidies and asset disposals, its profit rose by 28% to US$782m. No comment was made on the results but the cement producer did note that its prepayments for coal and other raw materials and fuel rose during the third quarter of the year.