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News Prices

Displaying items by tag: Prices

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Martin Marietta posts low fourth quarter revenue

16 February 2023

US: Martin Marietta Materials posted lower revenue in the fourth quarter of 2022 as a slowdown in the housing market and bad weather in Texas reduced shipments of materials, especially concrete. While the company reported a net income for the fourth quarter of US$184m, a 17% rise year-on-year compared with US$157m in the fourth quarter of 2021, its revenue fell to US$1.48bn from US$1.50bn. This was partly due to a 1.7% fall in building material revenues. Cement shipments fell by 11%, mostly due to wet and cold weather in Texas, though prices rose by 21%. Ready-mixed concrete revenue fell by 35% due to the sale of the company's Colorado and Central Texas ready-mixed concrete business.

Published in Global Cement News
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Kyrgyzstan's 10-month exports drop in 2022

12 January 2023

Kyrgyzstan: Cement producers exported 574,500t of cement during the first 10 months of 2022, down by 4.7% year-on-year from 10-month 2021 levels. Central Asia News has reported that cement prices fell by 13% to US$42/t. In value, exports fell by 17% to US$24.2m. Neighbouring Uzbekistan was the major recipient of Kyrgyz cement exports.

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Vietnam National Cement Association lobbies against power price rise

15 December 2022

Vietnam: The Vietnam National Cement Association (VNCA) has spoken about the difficulties that would arise from a proposed power price rise by state-owned Electricity Vietnam (EVN). VNCA chair Nguyen Quang Cung said that cement producers foresee 'business havoc' ensuing from any further cost increase to their operations. The industry says that reduced demand has prevented them from raising cement prices amid already high costs. Coal price growth is a significant contributor, and now accounts for 60% of the industry's operating expenses.

Cung said "Many companies are suffering losses and have suspended the operations of many production lines." He continued "We understand that EVN is claiming force majeure because they face the same challenge relating to the input cost burden."

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GCC increases second-quarter sales and profit amid rising costs in 2022

29 July 2022

Mexico: GCC increased its sales revenue by 11% year-on-year to US$320m in the second quarter of 2022. Its US cement sales volumes rose by 6%, with a 10% rise in prices, while its Mexico cement volumes fell by 2.3%, with a 12% rise in prices. The group’s cost of sales was US$220m, 69% of total sales, compared to 67% in the second quarter of 2021.

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Energy costs in Australia and beyond

21 June 2022

Boral admitted this week that high energy costs in Australia had forced it to reduce production levels. Chief executive officer Zlatko Todorcevski revealed to Reuters that the company was temporarily cutting back some unspecified areas of its operations. He also said that it was going to have to pass on growing energy prices directly on its customers.

This has followed mounting alarm at fuel prices in successive financial reports by the building materials company leading to revised earnings guidance being issued in May 2022. Bad weather was responsible for the larger share of the expected additional adverse impact to underlying earnings in its 2022 financial year but around US$10m was anticipated from rising fuel prices. Growing coal and electricity prices were said to be impacting its production and logistics costs, with price rises in January and February 2022 having proved insufficient to keep up with inflation. In a trading update in March 2022 the company said that its exposure to coal prices was unhedged for the second half of its 2022 financial year, to June 2022.

An energy crisis in Australia may seem hard to understand given that the country is one of the world’s biggest exporters of coal and gas. Yet, the country has faced a number of problems with its electricity generation sector in 2022 with disruptions to coal supplies to power stations, outages, ongoing maintenance and a cold winter that adversely affected the market. This led the Australian Energy Market Operator to suspend the country’s main wholesale market on 15 June 2022 in an attempt to stabilise the supply of electricity. New South Wales has also reportedly forced coal mines to prioritise the local market over exports. Energy minister Chris Bowen even asked the residents of New South Wales to try and reduce electricity use in the evenings in an attempt to prevent blackouts. However, with the consumer electricity market now looking more stable, attention has turned to industrial users such as Boral.

Global Cement Weekly has covered energy costs for cement producers a couple of times in the last year. There has been plenty of angst about growing energy costs on cement company balance sheets since mid-2021 as the logistics problems following the lifting of the coronavirus-lockdowns became clear. The biggest story at this time was an energy crisis in China that caused supplies to be rationed to industrial users. This then intensified with the start of the war in Ukraine in February 2022 and energy prices went up everywhere as economic sanctions were imposed upon Russia. One standout was Turkey where cement producers publicly raised the alarm about jumps in coal prices.

Recently, some North American lime producers such as Lhoist North America and the Mississippi Lime Company have been notably bold in announcing price rises due to energy costs and other factors. This week, for example, Lhoist North America said it had raised the price of its lime products by up to 45%. It cited the ‘challenging circumstance’ for all parties at an ‘unprecedented’ time. One alternative to the direct approach of simply putting up prices has been the use of energy surcharges. Japan-based Taiheiyo Cement announced earlier in June 2022 that it was going to introduce a coal surcharge for its cementitious products in September 2022 due to rising energy prices. Its system is based on the coal price with revisions planned every two months. The scheme will run for one year in the first instance. How customers will react to this remains to be seen.

We have looked above at a few disparate examples of the problems that energy costs have been causing cement and lime producers over the last month. These issues look set to continue in an acute phase while the war in Ukraine rages on, but the longer term trends from the economic recovery from coronavirus will undoubtedly last for longer. As examples in Australia and China have shown, local energy crises can easily spill over into the industrial sector as domestic users are prioritised. So, even if cement companies source their supplies carefully, they may face issues if the wider market struggles. Meanwhile, cement producers face the dilemma of justifying price rises to customers adapting to mounting inflation. Taiheiyo Cement has shown one way of doing this. The problems caused by surging energy prices to other cement companies look set to become more apparent in the next few months as reporting of the first half of the year emerges.

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Update on Russia, February 2022

02 February 2022

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.

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?

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GCC records strong 2021 performance

26 January 2022

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%.

Published in Global Cement News
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Mexican cement prices sky-rocket in January 2022

26 January 2022

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.

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Vietnamese cement producers raise prices

10 November 2021

Vietnam: Cement producers have raised their prices due to mounting coal costs. In October 2021 Bim Son Cement increased the cost of its products by 6%, according to the Viet Nam News newspaper. Other manufacturers have done likewise. Data from the Vietnam Association of Construction Contractors shows that local coal prices have grown by 7 – 10% recently. Coal represents around 40 – 45% of the production cost of cement. Prices of diesel and additives have also risen.

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Lhoist to raise price of lime products

30 September 2021

US: Lhoist will raise the price of its lime products by US$0.2/t for every US$0.05 rise in its natural gas costs above US$2.6/MMBtu from 1 November 2021. The producer says that the price rise reflects supply challenges and increased costs, of which energy costs have risen most significantly.

The producer said “We regret having to implement this energy surcharge, but believe it necessary in the face of these energy-related cost increases. Additionally, please note that this surcharge is independent of and in addition to 2022 price increases that will be necessary for Lhoist to keep pace with general inflationary factors impacting its cost structure.” It added “We appreciate your business and cooperation during this difficult time. If you have any questions regarding the above, feel free to contact your Lhoist sales representative.”

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