Displaying items by tag: Russia

Russia: Soyuzcement, the national cement manufacturing union, has appointed Vyacheslav Shmatov as its chair. He is currently the general director of Eurocement Group and has worked in the cement industry for over 11 years. He was previously the head of BaselCement.

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.

Russia: LafargeHolcim Russia plans to restart its integrated Voskresensk cement plant near Moscow. The 1.3Mt/yr unit was originally stopped in 2016. The subsidiary of Switzerland-based Holcim says it will spend Euro23m on restarting the plant. It also intends to build a dry construction mix unit at the site.

Russia: Siberian Cement’s concrete arm SiberskyBeton produced 243,420m³ of concrete and mortar in 2021, a 14% increase compared to 2020. The growth is a result of increased demand for building materials in 2021. According to Artem Safyanov, managing director of SibirskyBeton, the company pays close attention to quality of its mixes, which helps the company to hold leadership positions in the market of Siberian Federal District.

An acquisition in Uzbekistan by Russia-based Akkerman Cement this week highlights resurgence in the local market.

The subsidiary of USM has just purchased a majority stake in Akhangarancement with the help of financing from Gazprombank. No value for the acquisition has been disclosed. However, the move follows the sale of Russia-based Eurocement to Smikom in early 2021. Then in June 2021 Eurocement sold off its majority stake in Akhangarancement to Cyprus-based Lamanka Enterprises for US$53m. Now, as part of the sale to Akkerman Cement, the start of a new 2.5Mt/yr dry process production line at Akhangarancement in 2021 has also been highlighted. As for Akkerman Cement’s interest in become a multinational cement producer, it said that, “The investment in Akhangarancement, like all USM investments in Uzbekistan, is primarily aimed at the development of this country, the small homeland of Alisher Usmanov, the main shareholder of USM.”

Aside from any potential sentimental yearnings from a billionaire, the Akhangarancement deal follows a few developments in the Uzbek market in recent months. At the start of January 2022 the state assets management agency UzAssets agreed to sell the government’s majority stake in Qizilqumcement for US$174m to United Cement Group (UCG). This was a significant move locally given the size of UCG in the Central Asian states. UCG operates two integrated plants and one grinding unit in Uzbekistan. The acquisition of Qizilqumcement’s 3.4Mt/yr plant now makes UCG the largest cement company by production capacity in the country. It has also been building a new production line, like Akhangarancement, with commissioning last reported as scheduled as sometime in 2022.

Finally, the other recent development in Uzbekistan occurred in December 2021 when China-based Anhui Conch announced that it had started building a new 2.5Mt/yr cement plant in the Akhangaran district in Tashkent. The project has a price tag of US$200m.

Graph 1: Cement production in Uzbekistan, 2016 – 2020. Source: State Committee of the Republic of Uzbekistan on Statistics.

In early 2021 the government suspended tariffs on cement imports and this was then later extended into late 2022. President Shavkat Mirziyoyev says he signed the decree to keep house prices low. Subsequently, imports grew by 26% year-on-year to 2.2Mt in the first nine months of 2021. The main importers were Kazakhstan (44%), Tajikistan (25%) and Kyrgyzstan (25%). Graph 1 above shows recent annual production trends over the last five years. So far in 2021, to September 2021, overall domestic cement production rose by 17% to 9.08Mt. In 2020 annual production was about the same as the country’s production capacity of 10.3Mt/yr.

The mixture of Russian and Chinese companies involved with the recent plant acquisitions and new projects chimes with the general position of the Uzbek economy and its geographical position between the larger economies of Russia and China. For example, January 2022 data from the Uzbek State Statistics Committee showed that bilateral trade with Russia overtook that with China in 2021 for the first time since 2014. The two countries have had similar trade turnover with Uzbekistan over this period. Since the mid-2010s the national economy has liberalised and investment by foreign companies into industries like cement reflects this. The sale of Qizilqumcement also shows the further movement of state assets into private ownership. With apparent production utilisation closing to 100% and the government encouraging imports, it’s a good time to be a cement producer in Uzbekistan. Accordingly, foreign cement companies are investing.

Russia: Iskitimcement, part of Siberian Cement, manufactured 1.18Mt of cement in 2021, a 20% rise year-on-year compared to 2020. It said that increase was primarily caused by demand growth. Iskitimcement shipped 0.45Mt of cement to customers by rail and 0.74Mt by road in 2021. Sales of bulk cement grew to 0.95Mt, around 80% of all sales. The manufacturer supplied 86,000t in 1t big bags and 145,000t in paper bags.

Uzbekistan: Russia-based Akkerman Cement has acquired a 98.6% stake in Akhangarancement. Gazprombank provided a loan to the subsidiary of USM to support the deal after previously supporting Akkerman Cement’s acquisition of its Gornozavodsk plant in 2018. Eurocement started selling its majority stake in Akhangarancement in early 2021 prior to its own acquisition by Smikom later in the year. No value for the latest Akkerman Cement deal has been disclosed.

“The investment in Akhangarancement, like all USM investments in Uzbekistan, is primarily aimed at the development of this country, the small homeland of Alisher Usmanov, the main shareholder of USM. All the profit that will be generated here will remain in Uzbekistan and will be directed to the socio-economic development of the republic. We see great potential in this. A growing population, demand for quality new housing, and in the long term support for consumer demand through mortgage lending, all this will contribute to the growth of cement consumption,” said Anton Selyavko, chairman of the board of directors of Akkerman Cement. He added that growth in Uzbekistan might not be easy due to production overcapacity and high levels of imports from Kazakhstan, Kyrgyzstan and Tajikistan but that Akkerman Cement had experience of this from the Russian market.

Founded in 2002 Akkerman Cement was previously known as the South Ural Mining and Processing Company. It operates two integrated cement plants in Russia, at 2.3Mt/yr unit at Novotroitsk and a 2Mt/yr unit at Gornozavodsk, and 12 terminals including sites at Ekaterinburg, Izhevsk, Kazan, Moscow, Orenburg, Perm, Samara, Tumen and Ufa. The company also runs metal and lime divisions. Akhangarancement reportedly started a new 2.5Mt/yr dry process production line in late 2021.

Russia: Spasskcement’s Novospassky Cement Plant in Primorsky reached a clinker production record of 1.96Mt in 2021. Clinker output beat the previous record set in 1988 by 20,000t and exceeded the design capacity of the unit of 1.84Mt of clinker by over 100,000t. Victor Ivanov, manager of Spasskcement, attributed the result to new equipment, longer lasting refractory material, the gasification of the plant and a good team of staff.

Russia: Germany-based Wacker has opened an additional laboratory in Moscow. The development site will focus on water-repellent silicone additives for cement and concrete. Mechanical pressure tests and ultrasound and temperature measurements are among the services that the new laboratory offers for water-repellent treatment of cement and concrete. The site is part of Wacker’s Innovation Hub for Cement and Concrete.

Wacker opened its first technical laboratory in Moscow in 2003. Both Wacker Silicones and Wacker Polymers now operate multiple labs in Moscow for construction chemical products. The new laboratory also hopes to collaborate with local universities and testing facilities and the first projects have already been commissioned.