Displaying items by tag: Price

Cement scalpers in Tanzania have been threatened with jail time for hoarding cement! The country faced a shortage of cement and other building materials in October 2020 and Prime Minister Kassim Majawali ordered an investigation into the issue following the conclusion of the presidential election earlier that month. Both regional commissioners and the National Prosecution Service have been dragged into the initiative. Director of Public Prosecutions Biswalo Mganga promised to local press that wrongdoers could face up to 30 years in prison for daring to hoard products or distort the market.

Rhetoric aside, the situation is curious given that HeidelbergCement’s local subsidiary, Tanzania Portland Cement, seemed to think in its 2019 annual report, that the country faced a 5Mt/yr overcapacity from integrated and grinding plants compared to a total production base of 10.6Mt/yr. However, the East African newspaper reported that despatches fell to 150,000t in October 2020 from 450,000t in September and August 2020, with a 30% surge in the price in some parts of the country.

In the wake of this, Dangote Cement apologised publicly for failing to communicate a planned stoppage at its Mtwara plant to the wider public. Tanga Cement then denied that its production was down. It said instead that production was at the highest level and that large chunks of its output was servicing government-backed infrastructure projects like the Standard Gauge Railway (SGR) and the Kigongo-Busisi Bridge, which will span the southern end of Lake Victoria. It also blamed a lack of trains on the Tanga-Moshi, which was reopened in mid-2019. It seems reasonable that cement prices might vary quite markedly, even before the profiteers got involved, due to the reasons above. Other issues locally include poor transport links, long distances in a country like Tanzania, the recent election and lingering hiccups from the blockage of imports from Kenya in 2018 that may not have helped either. The investigation continues.

A wider issue here is how much cement production capacity the country and the region can support given a propensity for spikes in prices. As Global Cement has covered previously (GCW456 and prior issues) Chinese producers have been heading into Sub-Saharan Africa over the last decade. Huaxin Cement bought ARM Cement’s assets in Tanzania in May 2020. It renamed the company African Tanzanian Maweni Limestone and then started trial production of clinker at the newly upgraded 0.75Mt/yr Maweni Limestone clinker plant in July 2020. Depending on how long ARM Cement’s former subsidiary was out of action, this one seems unlikely to rock the market too much. Tanga Cement also took the opportunity in November 2020 to say that talks with the government about a new 0.5 – 0.75Mt/yr grinding plant in Arusha were progressing

The proposed 7Mt/yr CNBM/Sinoma ‘mega’ plant is another matter entirely. Most of its output is intended for export but any disruption to local transport links, current or future, could swamp the local market. The export of Chinese infrastructure development around the world through its loan system could offer (occasionally literal) bridging solutions here as cement from a Chinese-backed factory is used to build the transport networks backed by Chinese loans that allow exports to proliferate. Tanzanian President John Magufuli’s comments that the poor terms for a US$10bn Chinese loan supporting a port project could “…only be accepted by a drunken man,” may not have helped international diplomacy. Still, Chinese money is actively getting things built here and elsewhere around the world at a rate previously unheard of.

Returning to the present, it makes a change to highlight a market where cement is truly demanded. A coronavirus-related lockdown may have slowed sales in the first half of 2020 but Dangote Cement estimated that the total market for cement in Tanzania was about 4.2Mt in the first nine months of 2020 and it reported its highest ever orders and dispatches in September 2020. That the country’s prime minister decided to discuss cement prices is a reminder of how important the commodity remains in parts of the world.

Tanzania: Prime Minister Kassim Majawali has ordered regional commissioners to investigate a cement shortage that has reportedly caused a price rise. The Daily News newspaper reports that, in response to price rises first noted in October 2020, Majawali has requested a report by 20 November 2020, and questioned the part that cement producers had played in the issue. He said, “For those who use coals, we have enough to supply them. Clinker is also available at the same market price. We need an explanation behind cement price hiking."

Producers have refuted the accusation that they caused cement prices to rise.

Uzbekistan: Cement sales volumes has decreased by 29% to 5000t/day from 7000t/day at the Akhangarancement cement plant in Toshkent and by 55% to 5000t/day from 11,000t/day at the Almalyk Mining and Metallurgical Combine cement plant in Jizzakh. Uzbekistan Newsline has reported the cause of the decline as the breakdown of two kilns at the plants. This has led to a decrease in domestic cement production to 37,000t/day and sales to 35,000t/day, resulting in a slight price increase. Prices had previously been falling due to the effects of the post-coronavirus lockdown economic recovery.

Ethiopia: The Ministry of Trade and Industry says that it is granting licences for the import of 16Mt over the financial year ending 7 July 2021, the 2021 financial year. The Ethiopian Press Agency has reported that the cause of the measure is a cement shortage resulting in inflated prices. The order requires importers to import a minimum of 3000t of cement, and to begin importing before 8 December 2020.

Director of communication affairs Wondimu Flate said, “The directive was prepared in order to enable cement factories to produce at their full potential and to connect those engaged in the sector from the manufacturer and importer to the retail business, with supply and distribution being monitored and used.”

Zambia: Dangote Cement Zambia says that it has no source of reasonably priced gypsum following the closure of Chambeshi Minerals. The Mast newspaper has reported that other local suppliers are quoting prices for the raw material in US dollars because of currency devaluation due to the weak economic situation following a coronavirus-related lockdown.

The immediate effect of the supply chain disruption has been a rise in cement prices. Copperbelt Provincial Minister Japhen Mwakalombe said, “For us to develop, we need infrastructure development. We can’t build without cement and our people can’t afford these prices. Quoting in dollars shows that gypsum dealers want to sabotage the economy and we need the law to address this. It shows that some companies are not patriotic and do not want to support the government of the day.”

El Salvador: LafargeHolcim subsidiary Holcim El Salvador has announced an alteration to the composition of its flagship product, Cuscatlán cement, developed in laboratories in France and Mexico. Strategic marketing manager Amalia Palacios said, “The new formula offers the end user higher quality and less waste, that is to say a yield of around 20% more for the same price, so that we are improving quality without an impact on the customer's pocket."

India: The state government of Telangana has instructed cement producers that the price of cement must fall to support the construction sector. Telangana Minister for IT, Industry, Municipal Administration and Urban Development Rama Rao said, “There is a need to extend a helping hand to the sector and the government is therefore seeking cooperation of the cement companies in bringing down the prices so that real estate picks up momentum.” The Hindu newspaper has reported that producers “responded positively to the request.” Each will decide internally on the measure of price reductions.

All Telangana producers will continue to supply cement to government projects at a pre-agreed rate.

Democratic Republic of Congo: China-based Sinoma International Engineering has announced the construction of a 1.0Mt/yr-capacity integrated cement plant in Lubudi Territory, Lualaba Province. Dow Jones Newswire has reported that the cost of the plant, which includes a lime production line, will be US$236m.

Switzerland: LafargeHolcim has reported sales of Euro5.03bn in the first quarter of 2020, down by 11% year-on-year from Euro5.66bn in the corresponding period of 2019. Cement sales over the period fell by 10% year-on-year to 45.0Mt from 50.0Mt. The group’s earnings before interest and taxation (EBIT) was Euro249m, down by 14% from Euro290m.

LafargeHolcim CEO Jan Jenisch said that the results showed the group’s ‘resilience, despite the COVID-19 outbreak in China’ in January 2020. Other markets were disrupted from mid-March. “I am confident that LafargeHolcim will emerge from this pandemic as an important contributor to economic recovery as building activity gets back to normal,” he added.

LafargeHolcim’s coronavirus action plan consists of a Euro380m year-on-year capex reduction, a Euro285m year-on-year fixed cost reduction, realisation of energy price reductions, a review of all third party products and services and a reduction of net working capital in line with the level of activity.

India: ACC Cement has awarded an engineering, procurement and construction (EPC) contract for work on its upcoming 1.0Mt/yr integrated Ametha plant in Kathnl, Madhya Pradesh to Larsen & Toubro. The Press Trust of India has reported that the 9500t/day cement plant will have a clinker capacity of 3.0Mt/yr. The value of the contract is reportedly US$131m.