Displaying items by tag: GCW312

Last week we looked at the prospect of two new Angolan cement plants, a situation that will reportedly lead the country to being ‘self sufficient in cement.’ When we hear this phrase, very often from relatively small markets in Africa or Asia, the obvious next step invariably follows: The country in question will become a regional powerhouse for cement exports.

But try telling that to the desperate Vietnamese cement producers, swamped by chronic overcapacity and very low prices, both at home and abroad. In an effort to shift more of Vietnam’s cement mountain, this week the Ministry of Planning and Investment (MPI) proposed big changes to its handling of cement exports. At the moment cement is subject to a 5% export tax and does not receive VAT refunds. This means that Vietnamese cement has become less competitive than Chinese, Thai, Indonesian and Japanese cement on the regional market, compounding the oversupply situation at home.

The MPI now proposes to scrap the tax and allow for VAT refunds to avoid a colossal 36-47Mt oversupply of cement by 2020. It is quite staggering that this response hasn’t been considered before. This is especially the case, given that the VICEM’s General Director Tran Viet Thang asked for the government to look at the rules back in February 2017. Indeed the Vietnam Cement Association predicted an oversupply of nearly 50Mt/yr by 2020 in January 2017.

Vietnam exported 14.7Mt of cement and clinker in 2016 according to its domestic statistics service. The country was the seventh largest exporter of cement and clinker in 2016 in value terms, with a total value of US$431.7m. China, as one might suspect, topped the list, but only at US$683.6m, around 58% more than Vietnam. Given that China’s cement capacity is around 20 times that of Vietnam, this highlights the extent to which Vietnam is trying to rely on imports.

A market-led response to this would be to close some of the cement plants down and stop commissioning any new ones. China has made some inroads into this approach and Vietnam is following suit… to some extent. That said, however, Trinh Dinh Dung, the Deputy Prime Minster, inaugurated the second production line at the Thanh Thang Cement plant on 4 July 2017 and Long Son Cement will open its second production line at Long Son in late August 2017. That new line will add nearly another 3Mt/yr of capacity to the national total just by itself. On top of this, Thai-owned Siam City Cement Vietnam opened a new ‘terminal’ in Vietnam in late June. Thailand ranked above Vietnam in the cement and clinker export list for 2016 at US$612.2m, suggesting that, contrary to the obvious implication, the port could even be used to ship out Thai exports into Vietnam!

This is not the first time we have heard about Vietnam’s massive cement surplus but it is the first time that the government appears to have registered it as needing attention. A market-led economy would simply shut the plants down but Vietnam plays by different rules. Will changing the rules on tax help it sell out its surplus? Call us in 2020…

Pakistan: Loesche has provided an LM 56.3+3 CS vertical roller mill for cement grinding to Attock Cement Pakistan Ltd (ACPL). The new mill will be used in the new line three of the cement plant in Hub Chowki in Pakistan, in the Lasbela/Baluchistan district, 20km north of Karachi. The mills will grind OPC cement with a fineness of 3300 Blaine at a capacity of 200t/hr or 2800 Blaine at a capacity of 240t/hr.

Alongside the delivery of the mill, the Loesche mandate also includes the monitoring and assembly as well as the commissioning, which is due to take place in mid-2017. The Chinese company Hefei Cement Research & Design Institute, with which Loesche has successfully delivered mills on a regular basis, will act as Loesche’s contractor and will assume overall responsibility for the new cement line.

India: The Cement Manufacturers' Association (CMA) has elected Mahendra Singhi, the group chief executive officer (CEO) and director of Dalmia Cement (Bharat), as its new vice president. Singhi has previously served as president of the Rajasthan Manufacturers Association. He is a science and law graduate by training and also a chartered accountant.

Spain: Sergio Martínez Hernández has been appointed as the new director of LafargeHolcim’s Carboneras cement plant in Almería. Martínez Hernández holds over 24 years of experience in the cement industry, according to Teleprensa. He joined Holcim in 1993 after training as an engineer at the Escuela Técnica Superior de Ingenieros Industriales (ETSII) in Madrid. During his career he has worked at plants in Gádor in Almería, Yepes in Toledo and Portland in Colorado, USA.

India: Shri C Madhusudana Rao has resigned as a director and a committee member of Kakatiya Cement Sugar & Industries on personal grounds. His departure took effect on 24 July 2017.

Switzerland: LafargeHolcim has released its results for the second quarter and first half of 2017. Its net sales were up by 3.6% on a like-for-like basis in the quarter and its operating earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 10.1% on a like-for-like basis, driven by pricing, cost discipline and synergies.

During the second quarter the group saw net sales of Euro6.16bn and an operating EBITDA of Euro1.6bn. Its net income rose to Euro707.6m, a rise of 38% from the same period in 2016 when it made Euro512.2m.

In the first half of 2017 LafargeHolcim’s net sales were Euro11.2bn, a 4.4% like-for-like improvement compared to the first half of 2016. Its operating EBITDA was Euro2.28bn and its recurring net income was Euro611.9m, a rise of 39% compared to Euro440.3m.

Beat Hess, Chairman and interim CEO said, "LafargeHolcim delivered positive earnings growth for the fifth consecutive quarter supported by favourable pricing, cost discipline and synergies. The unique strengths of our balanced portfolio are once again evident in our results with key countries such as the US, India, Nigeria and, notably this quarter, Mexico making significant contributions to earnings, more than offsetting headwinds in some of our markets. On that basis, and with our performance to date, we remain confident that we will achieve our full year guidance and our 2018 targets.”

Iran/Iraq: Iraq has imposed a 45% tariff on cement import from Iran, according to the head of non-metal mine products and the Department of Ministry of Industries and Business in Iran. Seifollah Amiri of the Tehran Chamber of Commerce said, “Currently, only exporting clinker to Iraq is possible.”

Iran exported 12Mt of cement worth US$695m in the Iranian fiscal year that ran to 19 March 2017. Iraq took US$441m worth of material. Assuming that all exports are the same price per tonne, this equates to around 7.6Mt of cement.

Ukraine: Cement production in Ukraine rose by 2.6% to 0.96Mt in June 2017 compared to sales in May 2017, according to data from the State Statistics Service. In the first six months of 2017 production of cement rose by 1.3% year-on-year to 4.23Mt. In 2016 production rose by 7.1% compared to 2015 to 9.1Mt. However, with a total capacity of 20Mt/yr, this implies a capacity utilisation factor of just 46%.

Peru: Union Andina de Cementos (UNACEM) recorded a profit of US$17.0m in the second quarter of 2017, an increase of 26.8% from a profit of US$13.4m in the same year-earlier period. The firm's profit for the first half of 2017 stood at US$120.2m, up from US$110.4m in the first half of 2016. Net sales totalled US$143.2m in the second quarter of 2017, almost the same level recorded in 2016. The company’s cement sales fell by 4.5% year-on-year in the second quarter of 2017.

South Africa: PPC has announced that its CEO Darryll Castle will be stepping down to pursue other interests. In a statement PPC said that Castle will remain ‘available’ to the group for six months to ensure a smooth handover. Johan Claassen, the current managing director of PPC, has been appointed as the interim CEO.

PPC reported a 93% fall in full-year earnings in June 2017 due to a liquidity crisis precipitated by the cut in its credit rating to junk status.

Meanwhile, the resignation of Tito Mboweni, one of PPC’s independent non-executive directors has fuelled speculation in the South African press about the ongoing merger discussions between PPC and Afrisam. Some believe that there may be ‘irreconcilable disagreement’ between Mboweni and the wider board about the strategic direction of PPC with respect to Afrisam.