Displaying items by tag: Production

Many Saudi Arabian cement producers have reported increased annual sales and profits in recent weeks. Southern Province Cement’s sales revenue rose by 27% year-on-year to US$440m in 2020 from US$347m in 2019. Net Profit after zakat and tax increased to US$162m from US$123m. Other producers enjoyed similar boosts. The reason can be seen in the country’s domestic cement sales. They rose by 21% year-on-year to 51Mt in 2020 from 42Mt in 2019. After a promising start to the year the coronavirus pandemic hit local production hard in the second quarter of 2020. However, it nearly doubled year-on-year in June 2020 and kept up the pace thereafter.

Graph 1: Domestic cement sales in Saudi Arabia, 2010 – 2020. Source: Yamama Cement.

Graph 1 above puts the cement sales in 2020 into context over the last decade. Sales hit a high in 2015 but then started to wane as infrastructure spending dried up due to lower oil prices and decreased government spending. A ban on exporting cement was subsequently relaxed but the general market appeared to adapt to the new situation. This changed significantly in 2020 with analysts attributing the turnaround to programs organised by the Ministry of Housing. This growth has carried into 2021 with NCB Capital forecasting an increase of 3.5% in local cement sales in 2021 due to the ongoing housing programs, the country’s so-called ‘Giga’ projects and investment by its sovereign wealth fund, the Public Investment Fund (PIF), as part of its 2021 - 2025 strategy. They reported that demand created by the country’s large-scale projects began to be felt along the supply chain in the fourth quarter of 2020 and associated contracts have started to be issued.

To give an example of the scale of some of these schemes, one of the proposed giga projects is to build a new city called Neom from scratch near the Red Sea coast. The resulting conurbation is intended to showcase new technologies and diversify the Saudi Arabian economy away from hydrocarbons. It has a price tag of US$500bn. An airport was built in 2019 and a next step was announced in January 2021, introducing a 160km linear city without roads called ‘The Line.’ Doubtless it will require lots of cement to realise the dream in whatever forms it happens to end up taking.

The wider picture here is that global oil prices hit a low in April 2020 as coronavirus lockdowns triggered a worldwide drop in demand although they then started to recover. The International Monetary Fund (IMF) estimates that Saudi Arabia’s gross domestic product fell by just under 4% in 2020. In response the PIF has upped its investment in the local economy including in the ‘Giga’ projects like Neom. There has been scepticism internationally about whether these projects will progress any further beyond press releases and actually get built. However, the cement producers’ financial results, cement sales figures and reporting from analysts like NCB Capital show that some investment is happening and it’s having results. The sector still faces a battle against overcapacity. It had a production utilisation rate of just under 70% despite the increase in cement production in 2020. Yet cement producers in Saudi Arabia have done well. While the Saudi Arabian government continues to spend on infrastructure in order to rebalance its economy this looks set to continue.

Kazakhstan: Kazakhstan’s cement production increased to 10.8Mt in 2020. Kazakhstan Newsline has reported that 2020 is the first year in which domestic cement production has exceeded 10Mt. Capacity utilisation across the nation’s 16.5Mt/yr of installed cement capacity was 66%.

HeidelbergCement’s 0.8Mt/yr Caspi Cement plant exceeded its rated capacity by 10%. Kazakhcement’s 1.0Mt/yr Shar cement plant and ACIG’s 0.5Mt/yr Khantau cement plant both produced no cement in 2020. Gezhouba-Shiyeli Cement’s Shiyeli cement plant stood idle for several months in early 2020 when management and engineering staff became stranded in China due to the coronavirus outbreak.

Kazakhstan Association of Cement and Concrete Producers executive director Erbol Akymbaev said, “The production capacities of Kazakhstani factories exceed the needs of the domestic market by 41%: domestic consumption in 2020 amounted to just over 9Mt. Access to neighbouring markets is complicated by the fact that states protect their own producers. For example, in Russia, according to GOST, additional certification of imported products is required." He added that the cement industries of the two main cement exporters to Kazakhstan – Iran and Russia – are unregulated in terms of CO₂ emissions. Kazakhstan’s commitment to a reduction in its emissions of 15% by 2030 gives it a competitiveness disadvantage.

Turkmenistan: Full-year cement production reached 1.9Mt in 2020. The Trend News Agency has reported that industrial production, construction work and services grew by 8% year-on-year during the period. The nation exceeded its reinforced concrete building construction plan for the year by 4%.

In January 2021, cement production increased by 29% year-on-year.

Peru: Cement and clinker production fell by 14% year-on-year to 9.14Mt and 39% year-on-year to 5.54Mt respectively in 2020. Data from the Association of Cement Producers (ASOCEM) shows that production fell significantly during March to May 2020 at the same time as a coronavirus-related lockdown. However, ASOCEM reports that cement sales from August to December 2020 were higher than the historical monthly averages. Exports of cement and clinker fell by 28% to 0.14Mt and 56% to 0.31Mt. Imports of cement decreased by 7% to 0.72Mt but clinker imports grew by 7% to 0.67Mt.

Jamaica: Caribbean Cement says that it produced a record 0.94Mt of cement in 2020 due to market demand. This has been attributed to capital investment, positive government policies in response to the coronavirus pandemic, the company’s own reaction and the ‘expertise’ of its employees. It said it did not experience an overall loss of productive time due to closures related to the public health situation. Heavy rainfall, inconsistent power supplies and disruptions to mining in the third quarter of 2020 prevented the cement producer from surpassing 1Mt for the year.

“The market responded opposite to what might have been expected given the pandemic. Instead of slowing down, construction grew, and we kept in step with our customers by meeting their demand consistently. We will continue to ramp up production as the market grows,” said Yago Castro, General Manager of Caribbean Cement. He added, “The Government of Jamaica assessed the situation well and allowed critical sectors to continue operating once certain protocols were followed. Prioritising health, while keeping economic goals in mind, have mitigated against the negative impact on our sector.”

Cuba: Corporacion Cementos Cubanos’ Siguaney plant produced over 90,000t in 2020. Centrovision News has reported that the plant produced 87,000t of grey cement and 3000t of white. It had planned to produce 10,000t of white cement, but still exceeded its cement target overall. Cost per tonne of cement was also lower than planned.

The company said that grinding operations were disrupted when the Cienfuegos cement plant delivered less clinker than expected. As a result, the Siguaney plant’s kiln produced 18,000t of additional clinker. It achieved this through the use of refractory bricks from another kiln. Disruptions to imports also caused the company to hire Cuban Lubicrants Company (Cubalub) to provide lubricants for the plant’s compressors.

The producer said that it foresees no increase in cement production in 2021. It will launch two new pozzolanic cements, PP-35 and PZ-25.

General manager Gonzalo Reina said "PP-35 and PZ-25 have similar benefits to other cements, but their constitution saves clinker, a raw material that generates the greatest cost and constitutes the greatest difficulty in maintaining stable production.”

Vietnam: The Vietnam National Cement Corporation (VICEM) aims to increase cement production by 1% year-on-year to 22Mt in 2021. The Viet Nam News newspaper has reported that the company is targeting a sales increase of 7% to US$1.5bn and a profit increase of 13% to US$99m. The company says that it expects domestic cement consumption to rise by 5% to 30Mt.

The group has set out six solutions by which to achieve its goals: continue to ‘optimise and improve production capacity’ through promoting research and application of advanced science and technology, focus on ‘investment in depth,’ reduce consumption, use resources economically and reduce environmental impacts throughout the supply chain.

VICEM chair Bui Hong Minh said, “Implementing the comprehensive restructuring project of the corporation in the period of 2019 - 2025 approved by the Ministry of Construction, VICEM is focussing on promoting innovation and creativity to bring new development space and motivation to the Bim Son Cement unit in particular and the cement industry in general.”

In 2020 VICEM increased its full-year profit by US$30m.

Algeria: Groupe des Ciments d'Algérie (GICA) subsidiaries Société des Ciments de Hamma Bouziane (SCHB) and Société des Ciments de Ain El Kebira (SCAEK) are planning to export 50,000t of cement to West Africa. The L’Expression newspaper has reported that SCHB will supply 35,000t of the cement, and SCAEK will supply the remainder. SCHB produced 0.8Mt of cement in 2020.

Dominican Republic: The Dominican Association of Portland Cement Producers (ADOCEM) estimates that local production fell by 8% year-on-year in 2020 due to the coronavirus pandemic. Julissa Báez, the executive director of ADOCEM, said this compared to a 16% drop in the construction industry generally, according to local media. She added that local cement plants were allowed to continue production during a local lockdown that started in March 2020.

China: Companies increased total cement production in the first 11 months of 2020 by 1% year-on-year to 2.16Bnt from 2.14Bnt in the first 11 months of 2019. Xinhua News Agency has reported that estimated total building materials sector operating revenues rose by 1% to US$700bn. The sector’s estimated profit for the period rose by 3% to US$61.9bn.