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Many of the Chinese cement producers have released their annual results for 2017 over the last week, giving us plenty to consider. The first takeaway is the stabilisation of cement sales since 2014. As can be seen in Graph 1, National Bureau of Statistics data shows that cement sales grew year-on-year from 2008 to 2014. This trend stopped in 2015 and then government mandated measures to control production overcapacity kicked-in such as a industry consolidation, shutting ‘obsolete’ plants and seasonal closures. Although it’s not shown here, that last measure, also known as peak shifting, cans be seen in quarterly sales data, with an 8% year-on-year fall in cement sales to 578Mt in the fourth quarter of 2017.

Graph 1: Cement sales in China, 2007 – 2017. Source: National Bureau of Statistics.

Looking at the sales revenue from the larger producers in 2017 doesn’t show a great deal except for the massive lead the two largest producers – CNBM and Anhui Conch – hold over their rivals. CNBM reported sales roughly twice as large as Anhui Conch, which in turn reported sales twice as large as China Resources Cement (CRC). With everything set for the merger between CNBM and Sinoma to complete at some point in the second quarter of 2018, that leader’s advantage can only get bigger.

Graph 2: Sales revenue of selected Chinese cement producers. Source: Company reports.

What’s more interesting here is how all of these companies are growing their sales at over 15% in a market where cement sales volumes appear to have fallen by 1.67% to 2.31Bnt in 2017. CNBM explained that its sale growth arose from improving cement prices in the wake of the government’s supply side changes. It added that national cement production fell by 3.1% to 2.34Bnt. CNBM’s annual results also suggested that the cement production capacity utilisation rate was 63% in 2017.

Anhui Conch’s results were notable for its large number of overseas projects as it followed the state’s ‘One Belt, One Road’ overseas industrial expansion strategy. Projects in Indonesia and Cambodia were finished in 2017 with production set for 2018. Further plants are in various states of development in Laos, Russia and Myanmar. The other point of interest was that Anhui Conch is developing a 50,000t CO₂ capture and purification pilot project at its Baimashan cement plant. Given the way the Chinese government has been able to direct the local industry, should it decide to promote CO₂ capture at cement plants in the way it has pushed for waste heat recovery units or co-processing, then the results could be enormous.

CRC reported its continued focus on alternative fuels. Municipal waste co-processing projects in Tianyang County, Guangxi and Midu County, Yunnan are under construction and are expected to be completed in the first half of 2018. Construction of its hazardous waste co-processing project in Changjiang, Hainan was completed in February 2018.

As ever with the Chinese cement industry, the worry is what happens once the production overcapacity kicks in. The state–published figures and state-owned cement companies suggest that the industry is in the early stages of coping with this. In February 2018 Reuters reported that the Ministry of Industry and Information Technology (MIIT) had banned new cement production capacity in 2018. The detail here is that new capacity is allowed but that it has to follow specific rules designed to decrease capacity overall. This followed an announcement by the China Cement Association that it would eliminate 393Mt of capacity and shut down 540 cement grinding companies by 2020. The aim here is to hold capacity utilisation rates at 80% and 70% for clinker and cement respectively and to consolidate clinker and cement production within the top ten producers by 70% and 60%. If the utilisation rate from CNBM is accurate then the industry has a way to go yet.

Pakistan: Lt Gen Tariq Khan has been appointed as the chief executive and managing director of Fauji Fertilizer Company, the owner of Fauji Cement. He succeeds Lt Gen Shafqaat Ahmed.

Switzerland: Roland Köhler has been appointed as the chairman of the board of the LafargeHolcim Foundation for Sustainable Construction. He succeeds Rolf Soiron, the founding chairman of the Foundation since 2003, with effect from 1 April 2018.

Brinda Somaya, Principal Architect & Managing Director of Somaya & Kalappa Consultants in Mumbai, India and Stuart Smith, Director of Arup, a multinational engineering Group based in London, UK have also been appointed as new members to the board of the foundation.

The foundation selects and supports initiatives that combine sustainable construction solutions with architectural excellence and enhanced quality of life beyond technical solutions. Through the non-commercial promotion and development of sustainable construction at national, regional, and global levels, the LafargeHolcim Foundation encourages sustainable responses to the technological, environmental, socioeconomic and cultural issues affecting building and construction.

Greece: Titan Group’s turnover fell slightly to Euro1.51bn in 2017. Bad weather, the devaluation of the Egyptian Pound and weakening of the US Dollar affected its operating results despite a buoyant US market. Its earnings before interest, taxation, depreciation and amortisation (EBTIDA) fell by 1.9% year-on-year to Euro273m in 2017 from Euro279m in 2016. Its net profit fell by 66.5% to Euro42.7m from Euro127m.

The cement producer’s turnover grew by 9.9% to Euro873m in the US despite Hurricane Irma in September 2017 and other poor weather effects. In Greece it reported that build activity weakened further in 2017. It said that although export volumes remained high, its profit margins were hit by the lowering value of the US Dollar and increased fuel prices. Overall, the turnover of its Greece and Western Europe region fell by 4.8% to Euro249m. In Southeastern Europe turnover rose by 10.5% to Euro226m due to increased demand for building materials. Turnover in the Eastern Mediterranean region fell by 36.5% to Euro158m due to negative currency effects in Egypt and a fall in cement demand.

Turkey: The first clinker has been produced at the Limak Anka Entegre Cement plant. Turkish engineering company Sintek added that the flame was first lit in mid-march 2018 for the 5000t/day production line. Turkish cement producer Limak signed a US$155m contract with China’s Sinoma and local company Sintek to build the plant in early 2015. The project was originally scheduled to be completed in early 2017.

India: National Company Law Tribunal (NCLT) of Kolkata has asked Binani Cement to consider taking an out-of-court offer between the cement producer and its lenders. The NCLT has asked the committee of creditors (COC) to take up a proposal by Binani Industries, the parent of Binani Cement, to pay off all lenders' dues for 'appropriate consideration', according to the Economic Times. Binani Industries had approached the NCLT, seeking to stop insolvency proceedings after getting a ‘letter of comfort’ from UltraTech Cement, which proposed to pay US$1.11bn to help Binani pay off its debts and buy a 98.43% stake in the company.

The decision appears to pave the way for UltraTech Cement to win the on-going fight for control of Binani Cement. A consortium led by Dalmia Bharat won an auction for Binani Cement with a bid of US$974m in early March 2018. UltraTech Cement then made its direct bid to Binani Cement a few weeks later.

India: Kakatiya Cement, Sugar & Industries plans to reopen its 2.97Mt/yr cement plant at Dondapadu in Telangana following its closure on pollution grounds in October 2017. Following the installation of online SPM stack monitoring equipment and connections to the Central and State Pollution Control Board servers, the company is ‘hopeful’ that the plant will be able to restart operations by the end of April 2018. The cement producer is currently obtaining clearance from the Telangana State Pollution Control Board.

Kenya: Bamburi Cement’s turnover fell by 6% year-on-year to US$357m in 2017 from US$380m in 2016. The subsidiary of LafargeHolcim attributed the decline to poor weather, a prolonged election period and lower construction activity, especially in the individual home builder segment, in Kenya. In Uganda it described the market as ‘broadly flat’ for both domestic and export sectors. The cement producer’s profit fell by 66.5% to US$19.6m from US$58.4m.

Chairman John Simba said, “While the 2017 results reflect a mixed performance in a challenging market environment, we remain positive that the market conditions in both countries will continually improve and rebound in line with the projected growth in both domestic and regional markets. The expected commissioning of the new capacity in the second half of 2018 will see the business enhance its market leadership position and underscores our belief in the growth of East African economies, underpinned by a robust construction industry.”

Indonesia: Semen Grobogan has ordered two MVR 5000 C-4 mills for cement grinding and one MVR 5000 R-4 for raw material grinding from Germany’s Gebr. Pfeiffer. The package also includes an MPS 3350 BK mill for grinding lignite. The mills will be set up at Grobogan cement plant near Semarang in Central Java.

The cement mills, each featuring a drive power of 4000kW, will be capable of grinding 190t/hr of Ordinary Portland Cement at 3600 Blaine or PPC at 4000 Blaine. In addition, the mills will be suitable for grinding blast-furnace cements. The MVR 5000 R-4 with a drive power of 4300kW is guaranteed to achieve a capacity of 500t/hr of raw meal ground to a fineness of 12% R 90µm. The lignite to be processed has a high feed moisture (37%), which is typical for Indonesia. The inherent moisture content in the lignite is 14%. The MPS 3350 BK with a drive power of 800kW will dry the material to a surface moisture content of 1% while at the same time grinding it at 50t/hr to a fineness of 15-25 % R 90µm. The order also includes a spare parts package for two-year operation.

The order was placed by the Chinese general contractor Nanjing Kisen. Commissioning of the mills is scheduled for the first half of 2019.

China: Huaxin Cement’s sales revenue grew by 54% year-on-year to US$3.33bn in 2017 from US$2.15bn in 2016. Its net profit more than tripled to US$331m from US$72m. Cement production rose by 33% to 66.1Mt from 50Mt.

In 2017 Huaxin Cement obtained permission for upgrade projects including 3000t/day at Tibet Shannan, 3000t/day at Shigatse, 4000t/day at Yunnan Luquan and 2.85Mt/yr at Huangshi. Work at Tibet Shannan and Shigatse started in 2017. Construction at Yunnan Luquan and Huangshi is due to start in 2018.

The cement producer reported that an unnamed pilot plant was the first to adopt a co-processing rate of 100% of alternative fuels at the ‘head and end’ of the kiln. It also said that all of its domestic cement plants have been licenced for pollution discharge.