Displaying items by tag: MEDCEM

The Ministry of Trade in Türkiye said this week that it was monitoring developments in the construction industry. Specifically, the ministry is reacting to complaints it has received about the high price of cement and supply issues. It has been looking at exports of clinker and cement. The statement noted that prices had risen particularly in the last one to two months and that the government was prepared to take unspecified action to alleviate the situation.

The comments hark back to the autumn of 2021 when members of the Construction Contractors Confederation (IMKON) stopped working for two weeks in response to high prices including cement. At the time the ministry tightened its rules on exporting cement and clinker. This followed the start of an investigation into alleged anti-competitive behaviour by the regulator Rekabat Kurumu into nine cement producers in the first half of that year. Around the same time Türk Çimento, the Turkish Cement Manufacturers' Association, had also been warning about growing raw material and energy costs. It noted that declining domestic sales between 2017 and 2019 had encouraged its members to focus on export markets more. All of this was overshadowed in February 2022 when Russia invaded Ukraine and global energy prices spiked. Türk Çimento then warned of the trouble that high coal prices were causing the sector.

Graph 1: Domestic and export cement sales in Türkiye, January – September, 2017 – 2022. Source: Türk Çimento.

Graph 1 above shows that the trend towards exports that Türk Çimento pointed out in mid-2021 has continued. Domestic sales fell to a low of 33.2Mt in 2019, recovered to 2021 and dropped somewhat so far in 2022. As an aside, that decline in domestic sales from 2017 to 2019 was the first the local cement industry had experienced a fall in sales since at least 2002. Exports fell year-on-year in 2018 but have increased steadily since then to 14.6Mt in the first nine months of 2022. Exports represented 10% of total sales in 2017. So far in 2022 they have accounted for 27% of total sales. Türk Çimento’s take on the picture so far in 2022 is that it expects the domestic market to decline by 10% in 2022 in all regions of the country principally due to high commodity prices. Cement exports are expected to increase but clinker exports to decrease.

Commercially, Türkiye-based cement producers have reacted to high energy prices by upping their own product prices in turn. OYAK Çimento, for example, reported significant rises year-on-year in sales revenue and earnings in the first nine months of 2022. Net sales grew by 160% year-on-year to Euro403m and earnings before interest, taxation, depreciation and amortisation (EBITDA) increased by 202% to Euro106m. Akçansa and Çimsa reported a similar situation.

Despite the high energy costs, both investment and merger and acquisition activity has continued in the cement sector in 2022. In August 2022 Fernas Group completed its purchase of two integrated cement plants, a grinding plant and associated ready-mix concrete assets from Çimsa Çimento for US$110m. Later in the year, in November 2022, Safi Çimento acquired Sancim Bilecik Çimento’s integrated plant from Aşkale Çimento. Various upgrade projects to cement plants were also reported including projects at KÇS Kipaş Çimento’s Kahramanmaraş plant, Nuh Çimento’s Hereke cement plant, MEDCEM’s Silifke plant and OYAK Çimento’s Ünye plant.

Recent reporting by the Economist newspaper suggests that the government is targeting the domestic housing sector in response to higher than inflation price rises even compared to Türkiye’s high consumer price inflation rate. The next general election in June 2023 may also be encouraging legislators to look at the accommodation needs of their constituents. Whether this is connected to the Ministry of Trade’s recent decision is unknown. Cement producers have followed the money to lucrative export markets in recent years. How far the government is willing to intervene in this strategy could mark a change in direction for the sector.

Turkey: MEDCEM plans to expand its Silifke cement plant's clinker capacity by 90% to 6.5Mt/yr. Germany-based Aumund will supply the upgrade with 41 different machines. The package comprises six belt bucket elevators, two chain bucket elevators, four pan conveyors and 11 drag chain conveyors, with capacities up to 900t/hr. The order also includes 13 silo discharge gates for belt conveyors and five telescopic chutes for truck loading. The supplier will deliver the goods in October 2022, for scheduled commissioning in January 2023.

Turkey: Medcem has appointed Ruhi Bilge as the director of its integrated Mersin cement plant. He has worked in the cement sector for over 20 years, most recently holding the position of production director for Kümaş Refractories. Prior to this he worked for cement companies including Bursa Çimento, Vicat’s subsidiary Baştaş Çimento and Norm Cement.

There have been a couple of news stories worth noting in the Turkish market this week. First, it was revealed that Medcem had chosen Sintek Group to build a new production line at its integrated plant in Mersin. Second, Çimko Çimento agreed to buy two integrated plants and a grinding plant from Çimsa.

The Medcem upgrade project will see the subsidiary of Eren Holding add a second production line, with a clinker capacity of 9000t/day. Sintek Group reportedly has agreed to do this for US$128m. This follows an announcement from Medcem in late May 2021 that it was intending to invest over US$200m towards increasing its plant’s overall production capacity to 6.5Mt/yr from 3.5Mt/yr. The plan at this point was to start construction work in August 2021 with eventual commissioning of the second line in the first quarter of 2023. In addition the cement producer said at the time that it was going to open a new terminal in the US shortly. This was intended to join the company’s existing grinding plants in Cameroon and Tunisia and terminals in Russia and Northern Cyprus. On a side note, Medcem likes to point out that the 11,500t/day clinker production capacity on its existing line at its plant is the biggest in Turkey and Europe.

The Çimko Çimento deal with Çimsa was for US$127m. It includes the Nigde Kayseri integrated plants, the Ankara grinding plant and seven ready-mix concrete plants. As would be expected, the transaction is subject to the approval of the local competition authority.

Graph 1: Domestic and export cement sales in Turkey, January – June 2017 – 2021. Source: Türk Çimento.

Graph 1 above gives an idea why some cement producers might have decided that it’s time to expand either through upgrades or acquisitions. The general Turkish economy suffered a jolt in mid-2018 when the value of the Turkish Lira dropped and interest rates rose. The coronavirus pandemic hit in 2020 but after a slowdown at the start of that year the economy managed to grow. The growth has continued so far in 2021 but inflation rates have also soared. In the cement sector, annual domestic sales fell consecutively from 2017 to 2019. They started to recover in 2020 and so far in 2021 it looks like they are continuing to grow. As domestic sales fell the sector focused on exports and they have grown steadily on an annual and half-year basis since 2018. Annual exports hit a high of 16Mt in 2020 or 23% of total sales.

Despite this, in June 2021 the Turkish Cement Manufacturers' Association, Türk Çimento, was warning that input costs were mounting, particularly in the last year. It reported that the price of petcoke had nearly tripled in this period. It also warned of mounting production overcapacity, estimated at over 20Mt/yr in 2019 although down to 7Mt/yr in 2020. Coupled with a fall in annual domestic sales from 2017 to 2019, in its words, “The contraction in domestic consumption during that period steered our companies toward exports.” Some of the larger cement producers, including Oyak, Akçansa and Çimsa all reported healthy rises year-on-year in revenue and operating profit in the first half of 2021. They also reported mounting costs which have risen by 35 – 80%.

The other recent stories from Turkey to note are a two week strike organised by the Building Contractors Confederation (IMKON) in September 2021 due to high costs, particularly cement. The confederation claimed that the price of cement had tripled over the last year. Earlier, in late April 2021, the Turkish competition authority Rekabat Kurumu launched a probe into alleged collusion by nine cement producers including Oyak, Çimsa and Limak. We are not saying these two stories are connected. The current state of the Turkish economy is more than enough to cause input costs for cement producers to spike. Yet headlines like this cannot be reassuring to builders wondering why the cost of cement is going up.

In summary, it’s an uncertain time for the Turkish cement industry. Sales are recovering but this has been achieved by pushing exports more than a rally at home. Alongside this, currency instability and high inflation rates are raising costs for cement producers and end-users. This hasn’t been enough though to stop growth activity from a couple of producers in the last week.

For more on the Turkish cement sector read ‘Cement in Turkey’ in the October 2021 issue of Global Cement Magazine

Turkey: Medcem has chosen Sintek Group to build a new 9000t/day production line at its integrated Mersin cement plant. Sintek Group’s part of project has a budget of US$128m, according to CemenTürk magazine. The supplier will provide civil works, mechanical equipment manufacturing, supply and assembly, technological manufacturing and assembly, structural steel manufacturing and assembly, auxiliary equipment supply and commissioning services. Medcem, a subsidiary of Eren Holdings, previously said that the overall project to upgrade its Mersin plant has a budget of over US$200m. It originally intended to start construction work in mid-2021, with commissioning scheduled for early 2023.

Turkey: Medcem Çimento has obtained the ISO 14001-2015 certification for environmental management. The ISO 14000 family of standards provides tools for companies to manage their environmental responsibilities.

Cameroon: The Ministry of Finance forecasts that demand for cement will rise by 10% due to various infrastructure projects. The government department also indicated that some cement producers are increasing their production capacity, according to Business in Cameroon.

Cimencam, a subsidiary of LafargeHolcim, is planning to build a 0.5Mt/yr grinding plant at Nomayos in Yaoundé. It is expected to be complete in 2019. Dangote Cement plans to build a 1.5Mt/yr plant in Yaoundé and Ciments de l'Afrique (CIMAF) is upgrading its plant Douala to 1.5Mt/yr from 0.5Mt/yr. The CIMAF project is scheduled for completion also in 2019. Following commissioning of all the new projects, the market share of each cement producer is expected to be Dangote Cement with 45%, Cimencam with 30%, CIMAF with 22% and Medcem with 3%.

Cameroon: Medcem Cameroon, a subsidiary of Turkey’s Eren Holdings, is set to inaugurate its cement grinding plant in Douala in mid-December 2016. The plant originally started selling cement in October 2015 before it left the market, according to the African Press Agency. It has since resumed selling its cement. The plant has an investment of US$21m it has a production capacity of 0.6Mt/yr. It is the fourth cement plant in the country bringing the national production capacity to 43Mt/yr.

Cameroon: The share capital of Medcem Cameroon has risen to US$689,000 from US$17,200, the company has revealed in a statement. However, the cement grinding plant has not produced cement for the local market in at least six months according to the Agence de Presse Africaine. Medcem’s production stopped after several shutdowns earlier in 2015 and a period of testing in late August 2015.

Medcem Cameroon, a subsidiary of Turkish company Eren Holding, has a cement production capacity of 0.6Mt/yr. Les Cimenteries du Cameroun (CIMENCAM), a subsidiary of LafargeHolcim, and Ciments de l'Afrique (CIMAF), part of the Moroccan Addoha group, both operate integrated cement plants in the country. Dangote inaugurated a cement grinding plant in August 2015 and Mira is also planning to build a grinding plant in the country.

Cameroon: The launch of Ciments de l'Afrique Cameroun's (CIMAF) new 500,000t/yr cement plant brings Cameroon's cement plant number to three. The Moroccan-based company has been supplying cement to Cameroon for several months and intends to increase production to about 1Mt/yr in the near future.

The other two cement plants in the country are Les Cimenteries du Cameroun, the oldest company in the country that produces 1.6Mt/yr, as well as Dangote Cement Cameroon, which was commissioned several few weeks ago and produces 1.5Mt/yr of cement. Estimated domestic cement demand stands at 2.8Mt/yr. Turkey's MEDCEM is also constructing a 600,000t/yr cement plant in Douala.