Displaying items by tag: Production

Russia: Eurocement subsidiary Belgorodsky Cement has dispatched the first batch of bagged cement from the new packing and palletising line at its 3.8Mt/yr integrated plant in Belgorod West, Belgorod Oblast. The 70t/hr-capacity line produces 50kg cement bags on pallets of 1.7t (34 bags).

Eurocement has also announced the first delivery of cement from its Belgorodsky Cement plant to Yaroslavl, Tolyatti and Nizhny Novgorod by river in 2020. Eurocement senior vice president Alexander Sapronov said, “The delivery of products by river transport is one of the most cost-effective methods of transportation. High-quality loading and reliable packaging guarantee consumers complete cargo safety.”

Eurocement has continued production throughout the coronavirus outbreak, but has restricted meetings, conferences and training sessions since 23 March 2020. The Group said, “Eurocement products are strategically important to the nation's economy. In order to ensure smooth operation of production facilities and of the group as a whole, measures have been taken to minimise the risk of spreading the coronavirus.” These include: ‘regular health check-ups and temperature measurements for employees and subcontractors, air disinfection, antiseptic treatment of operational surfaces, provision of skin antiseptics in toilets and informing employees about safety recommendations.’

Japan: Taiheiyo Cement has partnered with JFE Steel and the Global Institute for Environmental Technology to develop a carbon capture and storage system. The system will use wet alkaline earth metals extracted from steel slag to produce carbonates from exhaust gases at cement and steel plants. The partners are investigating the possibility of using these carbonates, specifically calcium carbonate and magnesium carbonate, as additives in cement production at Taiheiyo Cement’s plants. Taiheiyo Cement president Masafumi Shigehara said, “With the effects of climate change becoming apparent both in Japan and overseas, the importance of global warming counter-measures is increasing.”

Russia: Sibirskiy Cement produced 525,000t of cement at its three plants in the first quarter of 2020, up by 14% year-on-year from 460,000t in the corresponding period of 2019. The 3.7Mt/yr Topkinskiy Cement plant produced 388,000t, up by 21% year-on-year from 320,000t; the 1.1Mt/yr Krasnoyarsk Cement plant produced 97,600t, down by 17% year-on-year from 118,000t and the Timluy Cement plant produced 39,600t, up by 73% year-on-year from 22,9000t. Sibirskiy Cement’s first vice president Gennady Rasskazov said, “Cement consumption in Siberia, Buryatia and the Trans-Baikal Territory reached 845,000t in the first three months of 2020, up by 15% year-on-year from 735,000t.” He said that April 2020 has brought a ‘significant decrease in demand,’ and revised Sibirskiy Cement’s projected 2020 sales to an estimated decrease of 7-10% from 3-5% growth. Over a two-and-a-half-month period, Rasskazov predicted a 30-50% sales fall.

Armenia: The government has included cement production under a list of permitted economic activities able to resume from 16 April 2020. Azbarez News has reported that the present lockdown is scheduled to continue until 15 May 2020. Cement and clinker imports from neighbouring Iran, historically the main source of construction cement for Armenia, have continued throughout the coronavirus crisis.

India: Gujarat Sidhee Cement resumed production at its 1.2Mt/yr Sidheegram plant in Gujarat on 15 April 2020. The company said that in reopening the plant it would ‘comply with directives issued by central, state and local government,’ according to Accord Fintech News.

China: The Ministry of Industry and Information Technology has published data showing 94% domestic cement production capacity utilisation in the two-week period ending 10 April 2020, marking an end to coronavirus shutdowns in all provinces. Excavator sales in March 2020 numbered 49,400, up by 12% year-on-year from 44,300 in March 2019. Construction materials analyst Xu Xianchun said, "Demand in the construction industry has basically recovered to 2019's level, driven by new and resumed projects." Xinhua News Agency has reported that cement prices have also climbed on a month-by-month basis.

Colombia: Mexico-based Cemex has announced the resumption of operations at its 2.8Mt/yr Caracolito plant in Ibagué, Tolima Department on 13 April 2020. Noticias Financieras News has reported that Cemex Colombia will resume the supply of its products to ‘infrastructure and public works that cannot be suspended, as well as for emergency care projects and road projects.

Cemex will have to wait for the Colombian government to lift its coronavirus lockdown to restart supplies to customers.

As India reaches two weeks into its 21 day lockdown to combat coronavirus, the financial analysts are starting to publish their forecasts as to what the effects will be for the cement industry. The results are gloomy, with demand predicted to drop by up to 25% in the financial year to March 2021 by one analyst and 40% in March 2020 alone by another.

Graph 1: Indian cement production, rolling annual by month, January 2018 – February 2020. Source: Indian Ministry of Commerce & Industry.

The graph above sets the scene for what may be to come by showing the state of production in India in recent years. From early 2018 it picked up by 17% to 337Mt by March 2019 and stayed around there through the rest of year before breeching 340Mt in January and February 2020. The (relative) lull in production growth in 2019 was blamed by some analysts on the general election in mid-2019 and then the monsoon rains. In summary the market was improving and seemed set for further growth in 2020. Alas, this does not now seem to be the case.

Looking ahead, Rating’s agency CRISIL has published a research paper on the topic and here are some of the highlights. They break the damage down into two separate scenarios. The first, where the social distancing measures last until the end of April, cause a 10 – 15% fall in cement demand with the pain limited to the first quarter of the Indian financial year, which starts on 1 April. The second, where distancing measures last until June, cause a 20 – 25% decrease in demand, with the problems extended into the second quarter. Salient points that it makes about the anticipated recovery include a delay in infrastructure spending due to the government diverting funds to healthcare, reduced private and real estate markets and a divide between state-led affordable housing schemes in urban and rural areas. It pins its hopes on rural housing to grab demand first, followed by key infrastructure projects, especially transport schemes.

Examining the cement producers directly, CRISIL reckons that prices will fall in the face of dropping demand but that power, fuel and freight costs are all expected to fall also. Profit margins are forecast to drop compared to the 2019 – 2020 financial year but still remain higher than the two previous ones. Finally, it looked at the credit profiles of 23 companies, representing over 70% of installed production capacity. Together they had a total debt of US$7bn. It flagged up four of these companies as having high debt/earnings ratios and five with low interest coverage. The latter were described as ‘small regional firms with weak cash balances.’

That’s one view on what may happen but two recent general industry news stories offer snapshots on what may be to come for the Indian market. The first is an immediate consequence of a nationwide lockdown in a country with a population of 1.3bn and a low cost of labour. 400 construction workers at a grinding plant build for Ramco Cements in Haridaspur, Odisha, were stranded at the site when the quarantine restrictions stopped them travelling home to Bihar, Jharkhand and West Bengal. They took up residence at the building site and then protested when the food ran out. This point about migrant labour is noteworthy because how the Indian government relaxes the lockdown could have massive consequences upon how the construction industry recovers. A possible parallel from elsewhere in the world is the slowdown effect the Saudi Arabian cement industry suffered in late 2013 when the government took action against illegal foreign workers in the construction industry.

The second news story to keep in mind is the annual results from refractory manufacturer RHI Magnesita this week. It reported growing revenue from its cement and lime customers in 2019 but it blamed a weaker market in Europe on producers stockpiling product due to tightening magnesite and dolomite raw material availability. The takeaway here is that if supply chains supporting the cement sector and the rest of the construction industry in India at the moment are affected by the coronavirus outbreak, and government action to stop it, then there may be consequences later on. So far Global Cement hasn’t seen anything like this but the preparation for coronavirus advice from industry expert John Kilne has been to indentify and secure medium term needs, including refractory and critical spare parts and to consider potential disruption to supply chains.

In terms of what happens next once the lockdown ends in India (and other countries), one media commentator has described the response to coronavrius as the ‘hammer and the dance.’ The hammer is the economy-busting measures many governments have implemented to stop local epidemics. The dance is/are the measures that countries are using before and after an outbreak to keep it suppressed until a vaccine is developed. The worry for building material producers is how much the ‘dance’ disrupts business over the next year. All eyes will be on the East Asian producer market figures for the first quarter to see how this plays out.

Ireland: UK-based Breedon Group has announced the suspension of operations at its 0.7Mt/yr integrated Kinnegad plant in County Westmeath and all other sites in Ireland. Breedon Group guaranteed 100% to pay to all Irish and UK staff to 30 April 2020.

Two non-executive directors of Breedon Group, Susie Farnon and Peter Cornell, have taken retirement.

India: Dalmia Bharat has suspended operations across its entire integrated cement production apparatus, equalling 26.5Mt/yr capacity, as of 26 March 2020. The move is a response to a government ordnance of 25 March 2020 imposing a 21-day lockdown on the whole of India due to the coronavirus. The company will implement the closure ‘until further notice,’ according to Mint News.

Dalmia Bharat CEO and managing director Mahendra Singhi said, “While cement production is continuous in nature and the plants have requisite permission from both the state and the central governments to operate with minimum employees during the lockdown, Dalmia Bharat will only carry out mandatory activities required for safety and security of the plants in the larger interest of its staff.”

Coronavirus had claimed 13 lives in India on 27 March 2020.