Displaying items by tag: Price

Malaysia: Sharuddin Omar Hashim, the managing director of Cement Industries of Malaysia Berhad (CIMA), says that rising input materials, especially coal, are driving up the cost of cement. He blamed the mounting price of coal on Indonesia’s export ban and the war in Ukraine, according to the Malaysian National News Agency. Sharuddin said that coal had previously cost up to US$70/t but it was now US$200/t, with the possibility of reaching US$400/t. Other raw material costs were also reported to have risen sharply due to logistic problems following the Covid-19 pandemic. Sharuddin added that his company is trying to optimise production and reduce production costs through the use of other alternative materials.

Oman: The Ministry of Commerce, Industry and Investment Promotion has held a meeting with cement companies, importers, distributors and related government departments to discuss cement shortages in some regions of the country. One local plant has suspended production due to high input costs, according to the Oman Daily Observer newspaper. However, Oman Cement Company says it is prepared to boost its production by 10% to meet local demand. Following the meeting the ministry has taken several steps to ensure the availability of cement across the country and maintain prices. These include increasing the production output at some cement plants and increasing imports.

Thailand: Siam Cement Group (SCG) says that it is reviewing its planned US$2.4bn investment programme for 2022 due to the changing conditions it faces following the Russian invasion of Ukraine and ensuing cost rises. The Bangkok Post newspaper has reported that the company has recorded a rise in raw materials and energy costs across its businesses.

President and chief executive officer Roongrote Rangsiyopash said "We will delay some new investment projects, especially greenfield investments, and consider increasing more investments under merger and acquisition plans to avoid possible impact on our long-term financial management." Rangsiyopash added "Prices of cement and building materials will also gradually increase."

Ghana: The Chamber of Cement Manufacturers (COCMAG) has lobbied against the government’s decision to reduce the benchmark value to 30% from 50%. It says that a reduction in discounts on selected imports will result in higher production costs that could be passed on to the price of cement, according to the Business and Financial Times newspaper. Local limestone producers are also reported to be trying to increase their prices by over 60%, which could also put up prices. COCMAG has cited growing clinker, transport and fuel input costs as a potential source of higher production costs as well as negative currency exchange effects. COCMAG wants the government to maintain the benchmark value at 50% for input materials for cement production

The benchmark system was introduced in 2019 as a way of discounting the price of certain imports. Under the policy, certain commodities were benchmarked to world prices as a risk management tool.

US: Eagle Materials’ consolidated sales rose by 13% year-on-year to US$1.45bn in the third quarter of the 2022 financial year from US$1.28bn in the corresponding quarter of the 2021 financial year. Its sales of cement rose by 12% year-on-year to US$261m, while its earnings from the segment were US$79.8m, up by 13%. Cement volumes totalled 2Mt, up by 7% from third-quarter 2021 financial year levels.

Chief executive officer and president Michael Haack said that the results reflected both continued strength in US construction activity and excellent execution by Eagle Materials as Covid-19-related supply chain challenges continued. He said “We continue to see positive demand trends across our geographic footprint, driven by increased residential construction activity and expanded infrastructure investment. These trends should support growing construction activity and contribute to attractive pricing across our heavy and light materials businesses. We enter the last quarter of our fiscal year in a position of strength, with an excellent balance sheet enabling us to continue to execute on our core strategies.”

Haack added “I’m also proud to share that, during the first nine months of our fiscal year, we achieved the best safety performance in our history, demonstrating our deep commitment to our people and their wellbeing. During the quarter, we also continued to make strides towards our environmental stewardship goals. We are now producing and selling our eco-friendly Portland limestone cement (PLC) from four Eagle cement facilities.”

Russia made imports easier last week. At the end of January 2022 an order from Rosstandart, the national standisation agency, relaxed inspection controls allowing for simpler imports from countries outside the Eurasian Economic Union (EAEU). Previously each such batch required a 28 day inspection period. This has now been dropped to encourage more imports of cement. Deputy Industry and Trade Minister Viktor Yevtukhov explained the reasoning behind the measure to InterFax, “In order to avoid problems in the domestic Russian cement market in the future, it is necessary to spur competition. It will balance the prices for this basic building material and will restrain their growth in case of such risks.”

Some idea of the situation facing the Russian cement market at the moment can be gleaned from market data supplied by CM Pro. Production rose by 7% year-on-year to 56.4Mt in the 11 months to November 2021. Imports rose by 26% to 1.6Mt at the same time. The Ministry of Industry and Trade has attributed this to a construction boom created by growth in both government-funded infrastructure projects and domestic housing. It also noted a local shortage and price increases in the Central Federal District in the autumn of 2021, although it said it redistributed cement from other regions to remedy the situation. This imbalance in the country’s main cement producing and consuming region, including Moscow, can also be seen in the figures. Production was about 2Mt below consumption in this area in 2019 and 2020. Yet so far, to November 2021, this gap grew to 2.7Mt. At the same time the price of cement reportedly jumped by 20% from November 2020 to December 2021.

Graph 1: Cement production in Russia, 2015 – 2021. Source: CM Pro and estimate from Global Cement.

It has been reported that the Ministry of Industry and Trade has also been wondering publicly why a study conducted in 2021 found that the national cement sector had an apparent operating capacity of 65Mt/yr compared to a total production capacity of 105Mt/yr, including mothballed and inactive plants and production lines. In other words the sector has been operating at a 62% production utilisation rate and the government is trying to coax it higher by opening up imports. And just to make sure that there was no confusion on the matter, Yevtukhov added, “I am sure that if the domestic producers will cope with the task of increasing the real volume of cement production and will not allow prices for their products to increase above the rate of inflation, the market will self-regulate, and additional imports of cement to Russia (which are traditionally small) will not be needed."

Given the country’s large size, imports seem to be mainly a threat to producers in the big population centres around Moscow and the Volga with good international transport links. Producers appear to have received and understood the message from the government as they have pledged to increase real operating capacity by 3 – 5Mt. The bear in the room for both Russian and European cement producers though is what happens in Ukraine in 2022. With North Atlantic Treaty Organization (NATO) members threatening economic sanctions and Russia supplying a significant share of Europe’s gas supply, any progression from the current rhetoric could cause discomfort to markets in both Russia and Europe. Turkish cement exporters, manufacturing in a NATO member country and hoping to take advantage of increased exports to Russia, could be in a particular bind if events heat up. All of this indicates that Smikom picked an interesting time to buy Russia’s largest cement producer, Eurocement, back in mid-2021. There’s an ongoing construction boom but also risks aplenty.

With apposite timing, LafargeHolcim Russia announced this week that it was going to reopen its integrated Voskresensk cement plant near Moscow. The unit was originally stopped in 2016. Now it plans to spend Euro23m on restarting the plant and building a dry construction mix unit at the site. Who says big government doesn’t work?

Russia: The Federal Technical Regulation and Metrology Agency (Rosstandart) has relaxed import rules for cement originating from outside the Eurasian Economic Union (EAEU). Under the new regulations the 28 day inspection period has been cut, according to InterFax. The Industry and Trade Ministry has taken the action to cope with a rise in cement consumption created by both government-backed infrastructure projects and domestic housing. It added that the Central Federal District experienced a shortage in the autumn of 2021 with associated price rises.

"We expect that the reduction of the procedure's duration may encourage importers of cement to increase the volume of its import into the country. And this, in turn, should in fact increase competition in the market and stabilise prices. This, I repeat, is the most important thing that needs to be achieved in the domestic building materials market for its balanced operation," said Deputy Industry and Trade Minister Viktor Yevtukhov.

Mexico: The net sales of Grupo Cementos Chihuahua (GCC) increased by 10.8% year-on-year in 2021 compared to 2020, according to its fourth quarter financial report. Its net sales for the year came to US$1.04bn, while operating profit rose by 14.2% to US$214.3m from US$211.3m a year earlier.

GCC said that its stronger result was due to both volumes increases and higher selling prices in the US and Mexico. In the US market, the company’s cement volumes increased by 5.6% in 2021, with a 5.1% rise in concrete sales. Prices in the US rose by 8.9% and 5.1% respectively. In Mexico, cement and ready-mix concrete volumes rose by 6.9% and 19.1% respectively. Overall sales increased by 17.9%.

Mexico: The average price of bagged grey cement has soared by an average of 14.5% so far in January 2022. Bulk cement prices have increased by 20% month-on-month since mid December 2021.

Locally-owned multinational producer Cemex said that, to maintain margins, it increased the price of its bagged cement by 14.4% nationwide and its bulk cement by 17 - 20%. "The increases applied to our products seek to recover part of the inflation that the company has had in its costs," the company explained in a press release.

Javier Fernández, director of the materials distributor Grupo Mecasa, which has a presence in Nuevo León, Coahuila, Tamaulipas and Veracruz, said that the rest of the country's cement companies also raised prices in a similar proportion to Cemex.

Japan: Sumitomo Osaka Cement says it plans to raise the price of its cement-related products by 20% in April 2022. It has blamed this on rising raw material, energy and logistics costs.