Displaying items by tag: Government

Australia: Adbri says that it expects growth in domestic cement demand to continue beyond a present residential construction boom. The Australian Financial Review newspaper has reported that Adbri chief executive Nick Miller believes that house building has undergone a nationwide ‘pull-forward’ in the wake of the coronavirus outbreak. The producer says that the government’s planned US$116bn infrastructure spend would insure a medium-term increase in cement demand. It gave as an example the Western Sydney Aerotropolis, which will require 500,000m³ of concrete. The company currently derives 45% of sales from non-residential construction.

Philippines: Republic Cement has said that it expects the cement sector in the Philippines to grow strongly in 2021 following a 10% decline in demand in 2020. Speaking to local press, the company’s president and chief executive officer Nabil Francis said that the drop in demand in 2020 was actually less severe than the expected 15%. He added, “We strongly believe that we will get back to 2019 level in 2021. That means 12% growth compared to 2020.” Francis added that the industry is expected to sell 35Mt of cement during 2021. The main driver is the bagged cement segment, with infrastructure and the non-residential, likely to grow less rapidly.

Francis additionally said that he welcomed the Department of Trade and Industry’s investigation into alleged dumping of cement into the Philippines from Vietnam. He said that the imported cement is sold at very low prices, its production having been subsidised by the Vietnamese government. He said the influx of imported cement has injured the local industry.

For those not following the news in Nigeria, a nationwide row has broken out about the cost of cement in the country. Two of the three main local producers have been forced to publicly defend their pricing. Alongside this, the Senate of Nigeria has implored the federal government to encourage further local investment in cement production with the goal of keeping the end price down.

The current debacle started to take form in the autumn of 2020 when the price of cement leapt up by 35%. Builders and those immediately affected started complaining then but the argument really heated up in April 2021 when the local press started comparing the price of cement in Nigeria unfavourably against neighbouring countries. Dangote Cement, one of Africa’s largest cement producing companies and a Nigerian-based one at that, immediately defended itself by pointing out that its ex-factory price was the same or lower than in other African countries. It added that it could not control the price of cement between its factory and the end-consumer with dealers and middlemen benefiting from the gap. A week later the Senate of Nigeria intervened with its members discussing the issue in relation to a bill intended to liberalise the sector. This week, BUA Cement said publicly that it had no plans to raise the ex-factory price of its cement at the present time or in the future, “…barring any material, unforeseen circumstances.”

The roots of the current crisis go back to the mid-2010s when Nigeria declared itself ‘self-sufficient’ in cement after building up its domestic production capacity. At the same time it discouraged imports and embraced exports. Today, the country’s cement production capacity is around 49Mt/yr and annual demand is around 21Mt. This self-sufficiency path reached one milestone for Dangote Cement in 2020 with clinker exports starting from its Apapa terminal and the commissioning of its Onne Export Terminal in Port Harcourt. Under the old narrative for the sector this was a moment for congratulation. Suddenly though, instead of being seen as the saviour of the industry, members of the legislature were asking whether it was a good thing for Dangote Cement to hold a 60% share of the local market with most of the rest shared between Lafarge Africa and BUA Cement.

The price row has seen Dangote Cement promptly suspend exports from those new terminals. It also said it had reactivated its 4.5Mt/yr Gboko plant in Benue State, which was reportedly mothballed in 2018. It is worth noting here that the Gboko plant was part of that national capacity total above despite being mothballed until fairly recently. Aside from the middleman argument, the producer said that its production costs had risen over the past 15 months due to negative currency effects but that it hadn’t increased its ex-factory prices since December 2019.

A survey by the News Agency of Nigeria in the north-east of the country revealed all sorts of speculation about why the price was so high but few facts. Some of the opinions expressed included: the coronavirus outbreak; low production rates at the plants; market middlemen; and transport costs. What is clearer is that the country’s cement production capacity is more than double that of its demand. On paper at least the nation should be able to satisfy its own needs and then export the same again with plenty spare. Yet somehow this isn’t happening. If the government really believes in self-sufficiency it may be time to take another look at the cement sector, the challenges it faces and the needs of the end consumers.

Pakistan: Punjab Chief Minister Usman Buzdar says that up to 16 cement plants are being set up in the province. DG Khan will operate three of the new plants, according to the Frontier Star newspaper. Buzdar made the comments at a political meeting in late April 2021.

Philippines: The Department of Trade and Industry (DTI) has launched a probe into the possible imposition of a new anti-dumping duty on imports of cement from Vietnam. The Philippine Star newspaper has reported that Vietnamese cement continues to enter the Philippine market at allegedly dumped prices despite the DTI’s safeguard measures on the product. The DTI is authorised to investigate where prices are believed to be harmful to the domestic industry. Cemex Philippines, Holcim Philippines and Republic Cement have applied for a probe.

Nigeria: The Senate of Nigeria has called for the federal government to introduce policies, such as tax breaks, to encourage local investments in cement production. The upper legislative chamber made the resolution following a debate about a bill intended to relax rules surrounding cement policy in the country, according the Punch newspaper. It also requested the federal government to provide more industrial incentives and protections such as offering concessionary loans and larger tax incentives for new entrants in order to boost production of cement, reduce prices and encourage more ‘valuable’ local producers.

Senator Lola Ashiru, one of the co-sponsors of the bill, noted that cement was one of the few building materials in which Nigeria was self-sufficient with production capacity reportedly over twice as high as estimated consumption in 2018. However, he said that cement prices in the country were about 240% higher than the global average.

India: Road Transport and MSME Minister Nitin Gadkari says that ‘huge demand’ is being created for steel and cement companies due to the rapid construction of road infrastructure. However, he also accused the industries of creating cartels and exploiting people, according to the Press Trust of India. The minister said that the government is now looking for some alternative for steel and cement. At a webinar Gadkari said that road construction has reached 37km/day day.

Vietnam: The Provincial Department of Trade and Industry (PDTI) of the northern province of Quang Ninh has announced a second-quarter cement production target of 879,000t in 2021. Viet Nam News has reported that the figure represents a significant increase as part of a local plan to increase gross regional domestic product (GRDP) by 10% in 2021. In the second quarter of the year, the PDTI is targeting US$2.1bn-worth of private investment in the provincial economy.

Tanzania: Tanzania Portland Cement has announced plans to invest a total of US$15.0m in modernising its 2.0Mt/yr-capacity Tanzania Portland Cement plant in 2021. The Tanzania Daily News newspaper has reported that the producer says its main challenge is cargo delays at the port of Dar es Salaam. This has caused concern for potential investors, according to the company. Senior commercial manager Danford Semwenda lobbied the government to help solve the problem.

Kazakhstan: Steppe Cement’s cement sales in the first quarter of 2021 were US$11.3m, up by 22% year-on-year from US$9.27m in the first quarter of 2020. Volumes increased by 13% to 266,000t from 236,000t. The company said that it remained close to full capacity utilisation. It says that it increased its Kazakh cement market share to over 13%. The market grew by 12% year-on-year in total. The producer reported an 11% price rise and constant levels of tariffs and rental expenses.

Steppe Cement forecast an increase in domestic cement demand due to government infrastructure and housing projects.