Displaying items by tag: GCW556

China Daily ran a story this week entitled “Steel and cement don't reflect China's growth story any more.” The piece reassured English-language readers that the country’s economy is moving on and that recent falling production of cement simply reflected the “profound changes China's economic structure is undergoing.” Profound is the right word here given that China is home to the world’s largest cement sector.

Graph 1: Cement output by quarter in China, 2019 - 2022. Source: National Bureau of Statistics of China.

Data from the Ministry of Industry and Information Technology shows that cement output fell by 12% year-on-year to 387Mt in the first quarter of 2022. This compares to 7% and 15% falls in the third and fourth quarters of 2021 respectively. On an annual cumulative rolling basis, output previously hit a low of 2.22Bnt in March 2020 as the initial coronavirus outbreak was brought under control. Output then surged to a high of 2.53Bnt/yr in April 2021 before it started to fall in the autumn of 2021. On a monthly basis, output volumes fell by 5.6% year-on-year to 187Mt in March 2022.

As covered in last week’s column (GCW 555), the financial results from the larger Chinese cement producers have also suffered in the first quarter of 2022. CNBM’s total operating revenue fell by 1% year-on-year to US$7.29bn in the first quarter of 2022. Anhui Conch’s revenue fell by 26% to US$3.85bn and China Resources Cement’s (CRC) turnover fell by 18% to US$889m. Of these three only CRC has released cement sales volumes. Its sales volumes of cement and clinker decreased by 34% and 12% respectively.

In its own analysis, the China Cement Association (CCA) has summarised the current situation as one of rising costs, falling demand and declining benefits. The latest large-scale coronavirus lockdowns and a poor real estate market have hit demand. Rising energy and freight prices have increased the cost of cement. Together, higher costs and falling demand have hit the profits of the cement producers. CNBM’s net profit, for example, fell by 9% to US$420m. Regionally, the CCA observed that the losses of the northern-based producers had increased and that the profits of the southern producers had started to fall sharply also. Another interesting point it made was that the year-on-year decline in March 2022 was slower than compared to the first quarter as a whole and that high levels of inventory may have made March 2022 look worse than it actually was. The association is now pinning its hopes upon demand and prices picking up again later in the second quarter after the current quarantine controls are eased and the government curbs high coal prices.

The CCA’s take doesn’t seem unreasonable, although the first quarter of 2022 was previously deemed to be a continuation of the trouble the Chinese cement sector experienced in the autumn of 2021. Possibly the first quarter has turned out worse than expected but the monthly output in March 2022 has started to look like it might be a tail-off from the worst. The period to watch remains the second quarter of 2022. Looking more widely, energy shocks from the war in Ukraine couldn’t be easily predicted but coal prices were already becoming a concern in the autumn of 2021. China’s renewed zero-Covid policy meanwhile is starting to look unpalatable both economically and socially. Throw in a continued slowdown of the real estate sector and China Daily’s profound pronouncement about the future of cement may prove accurate.

Canada: Progressive Planet Solutions has appointed Ian Grant as its chief operating officer. He has been promoted from Vice President of Business Development. In his new role Grant will work with chief executive officer Steve Harpur to oversee operations and development of its micronised mineral technologies in addition to supporting the growth of the company's current business.

In May 2022 Progressive Planet completed the acquisition and integration of Absorbent Products and the expansion of its regenerative fertiliser operations. It also changed the name of its new subsidiary to Progressive Planet Products. As part of his work on the company's plan, Grant will be managing the shutdown of the seasonal regenerative fertiliser pilot plant in Spallumcheen by moving key equipment to expand the full commercial plant in Kamloops. Grant will be based at the company’s new joint head office for Progressive Planet Solutions and Progressive Planet Products in Kamloops.

Progressive Planet sells products with sustainable benefits to the agricultural, construction and industrial sectors including micronised minerals such as a proprietary supplementary cementing material made from recycled glass.

India: Dalmia Bharat sold 22.2Mt of cement in its 2022 financial year, up by 7.2% year-on-year from 20.7Mt in the 2021 financial year. During the year, Dalmia Bharat recorded earnings before interest, taxation, depreciation and amortisation (EBITDA) of US$314m, down by 11% year-on-year from US$356m in the 2021 year. The producer says that it is 'on track' to achieve a capacity of 48.5Mt/yr by the end of the 2023 financial year.

Speaking about the company's fourth-quarter 2022 financial year performance, managing director and chief executive officer Mahendra Singhi said "Through proactive cost containment measures, our teams have successfully mitigated the adverse inflationary impact and delivered one of the lowest total cost per ton of cement alongside a volume growth in-line with the industry. The recent strong recovery in demand and prices across all our operating regions is highly encouraging." Singhi continued "While the margins may continue to remain under pressure, we are undertaking proactive measures to retain our cost leadership and deliver sustainable earnings growth."

India: Dalmia Cement (Bharat) plans to invest US$38.9m in an upgrade to 2.5Mt/yr Belagavi cement plant. The work will consist of a capacity expansion and the installation of a new 9MW solar power plant at the facility. The latter is expected to halve the plant's grid electricity consumption. When commissioned in March 2024, the expanded plant will directly and indirectly employ 700 additional people.

India: UltraTech Cement has taken legal advice for its planned bid for Holcim's Indian business and says that it will volunteer to divest 15Mt/yr-worth of cement assets in order to accelerate the Competition Commission of India (CCI) approval process which would follow on from the acceptance of any offer. The Economic Times newspaper has reported that UltraTech Cement has filed five long form merger notifications for acquisitions of this type since 2013. These included its purchases of Binani Cement and Century Cement, and of Jaypee Group's Gujarati cement assets.

The Financial Express newspaper has reported that fellow contender Adani Group has offered 'more than' US$10bn for the assets, while JSW Group plans to offer US$7bn. BusinessLine Online News has reported that a fourth company, steel producer ArcelorMittal, has also held initial talks with Holcim over the assets.

In considering possible competition issues arising under any future deal, the CCI will factor in planned and upcoming cement capacity. In Gujarat, where Holcim India subsidiaries ACC and Ambuja Cements operate 6.8Mt/yr-worth of capacity, Adani Group plans to build a new 10Mt/yr cement plant at Lakhpat.

Pakistan: Cement producers in Pakistan sold 44.3Mt of cement in the first 10 months of the 2022 Pakistani financial year, which runs from 1 July 2021 to 30 June 2022, down by 8.2% year-on-year from 48.3Mt in the corresponding period of 2021.Members of the All Pakistan Cement Producers Association (APCMA) record domestic deliveries of 39.5Mt, down by 1.8% from 40.2Mt, and exports of 4.8Mt, down by 40% from 8.02Mt.

The association said that political and economic uncertainty in March 2022 had stalled construction sector investments. It called on the government to help to increase sales and reduce the cost of cement production.

US: The state governments of Arizona, Maryland and Vermont have approved the use of Portland limestone cement (PLC) in public construction projects. The rule changes bring the total number of states in which PLC may be used in this way to 44.

The Portland Cement Association (PCA) has welcomed the decision. The association said "Widespread acceptance of PLC marks a significant step to reducing the carbon footprint of concrete construction and advancing the goals laid out in the PCA Roadmap to Carbon Neutrality."

Mexico: The local government in Santiago de Anaya has revealed that Cementos Fortaleza is planning to build a second production line at its integrated El Palmar plant in Hidalgo. The project is expected to cost US$210m, according to the El Sol de Mexico newspaper. Cementos Fortaleza currently operates a 1Mt/yr plant at the site.

Sweden: UK-based Samson Materials Handling is supplying an Eco Hopper product for installation at the Port of Slite in Gotland. The hopper will be designed to receive clinker, limestone, coal and refuse-derived (RDF) fuel pellets. These materials will be unloaded at the quay area via crane grabs. The hopper will then discharge direct to trucks via a telescopic chute.

The Eco Hopper installation under normal operating conditions and based on the client’s grab sizes and cycle time, will achieve peak discharging rates of: 353t/hr - based on clinker with a bulk density of 1.4 t/m³; 454t/hr - based on limestone with a bulk material density range of 1.8 t/m³; and 420t/hr - based on RDF Pellets with a bulk material density of 0.6 t/m³.

The Eco Hopper product design concept comprises of a specialised reception hopper unit incorporating Integral filter arrangement with a reverse jet filter media cleaning system which returns all material back in to the material stream. In addition, the inlet system of the hopper is based on the Samson Flex-Flap design which reduces the volume of air necessary to control dust both from the opening grab and displaced air from material falling into the inner hopper below. This contributes to the reduction of airflow reducing filter and power requirements of the equipment.

Commissioning and operator training will be provided by Aumund Group Field Services.

Germany: Holcim Deutschland says that the preliminary test phase of a new CO₂ separation unit at its Höver cement plant in Lower Saxony has delivered positive results. Plant manager Stephan Hinrichs said that the company was “delighted” with the results so far. In late 2021 Cool Planet Technologies and Hereon signed a memorandum of understanding with Holcim Deutschland to deliver a carbon capture system for a carbon capture and storage (CCS) trial at the plant based on Hereon’s PolyActive membrane technology.

The next stage of the project will start in August 2022 and it will last until late 2024. This will include a one-year active test phase, in which the system is to be examined in long-term operation, planned to start in September 2023. If the results are good enough then the carbon capture unit will be expanded step-by-step so that after the final expansion stage it can separate around 90% of the CO₂ emissions and deliver high-purity CO₂ in liquid form for sequestration or further use. The ultimate aim of the project is to demonstrate performance, economy and operational behaviour on a larger scale in order to check whether the technology can be used at both Höver and other cement plants. Continued funding for the scheme is dependent on an application to the Competence Centre on Climate Change Mitigation in Energy-Intensive Industries (KEI) as part of the Decarbonisation in Industry program.