Displaying items by tag: SNIC

Brazil: Data from SNIC, the Brazilian Cement Association, shows that cement sales increased by 1% year-on-year in August 2023 to reach 6Mt. From January to August 2023 however, Brazilian cement sales were once again lower year-on-year, falling by 1% to 41.7Mt.

Across Brazil, construction material sales have been impacted by lower disposable income due to inflation, high interest rates and high household debt. However, the New Growth Acceleration Program, a government initiative launched in August 2023, could be a boon for cement sector. It foresees spending of US$280bn between 2023 and 2026. For highways alone, 269 restoration and construction projects are planned and duplication of roads across the country, an investment that could open up opportunities for the use of more economical road solutions, such as rigid concrete pavement.

“The implementation of infrastructure projects with an emphasis on logistics, sanitation and housing could reverse the negative performance of the cement industry recorded until August 2023. Our expectation is that the positive seasonality in sales in the sector will be confirmed in the second half of the year,” said Paulo Camillo Penna, President of SNIC.

Brazil: Data from the Brazilian National Cement Industry Association (SNIC) shows that total cement sales fell by 1.2% year-on-year to 14.7Mt in the first three months of 2023 from 14.9Mt in the same period in 2022. SNIC has blamed the decline in consumption on a poor economic situation, household debt and political uncertainty. Sales fell in all regions, except for the northeast, with a particular dip in the central-west area. Exports dropped by just under 50% to 58,000t. 12-month accumulated sales have been following a general downward trend since a peak of 64.8Mt in June 2021 compared to 62.5Mt in March 2023.

Paulo Camillo Penna, the president of SNIC, said “Projecting the government's expectation and the use of the input in the promised units until 2026, the cement industry in Brazil projects an increase of 8Mt of cement, if all constructions are made of masonry blocks, and of 12Mt, in the case of using concrete walls.”

Brazil: Data from the Brazilian National Cement Industry Association (SNIC) shows that sales of cement fell by 3% year-on-year to 63.1Mt in 2022 from 64.4Mt in 2021. Sales fell in the Nordeste, Sudeste and Sui regions but grew elsewhere. Exports declined by 14% to 0.40Mt from 0.47Mt. SNIC has blamed the falling sales on a declining real estate sector, high inflation rates and a poor response from a new house-building campaign. It also attributed the Football World Cup in late 2022 as having a detrimental effect on national cement sales! SNIC forecasts sales growth of 1% in 2023 despite considerable market uncertainty.

Brazil: Cement producers sold 47.7Mt of cement in the first nine months of 2022, down by 3% year-on-year from the same period in 2021. The Brazilian National Cement Industry Association (SNIC) has forecast a 2% year-on-year decline in full-year cement sales to 63.7Mt in 2022. The association foresees global finance-related challenges and high energy and raw materials costs during the fourth quarter of 2022. Annual cement sales previously grew by 23% to 65Mt in 2021 from 53Mt in 2019.

SNIC president Paulo Camillo Penna said “Our expectation for 2022 was to maintain the gains of this three-year period, but, unfortunately, due to high interest rates, indebtedness and cost pressure, we were not able to.”

Brazil: Sales of cement fell by 2.7% year-on-year to 30.8Mt in the first half of 2022 from 31.6Mt in the same period in 2021. Data from the Brazilian National Cement Industry Association (SNIC) shows that domestic sales and exports decreased by 2.7% to 30.6Mt and by 8.5% to 0.19Mt respectively.

Paulo Camillo Penna, president of SNIC said, “Throughout the year, with the successive worsening of the economic environment, high interest rates, inflation and commodity prices added to geopolitical instability, caused by the conflict between Russia and Ukraine, have impacted the economy and the entire Brazilian industrial sector. In view of this scenario, the cement industry's expectation of ensuring the gains obtained from 2019 to 2021 is heading towards an undesirable frustration.”

Brazil: The Brazilian cement market closed the first quarter of 2022 with a decline in sales year-on-year, according to data from the Brazilian National Cement Industry Association (SNIC). This was in part due to strong rains that affected parts of the country in January and February 2022. In March 2022, however, there was some recovery, with a 0.3% year-on-year increase in sales, to 5.53Mt.

Between January and March 2022, 14.8Mt of cement were shipped within Brazil, compared to 15.2Mt in the same period in 2021, a fall of 2.6%. Total sales, which include exports, totalled 14.91Mt, a 2.2% contraction compared to 15.25Mt in the same quarter of 2021.

SNIC said that the sector’s March 2022 performance had been bolstered by real estate projects, although this was not expected to continue. According to SNIC head Paulo Camillo Penna, self-construction, an important inducer of cement consumption, continues to slow down due to high unemployment

Brazil: The Brazilian National Cement Industry Association (SNIC) has recorded cement sales of 64.7Mt by Brazilian cement producers in 2021, up by 6.6% year-on-year from 2020 levels. Home construction work, property development and infrastructure building all contributed to the rise. Capacity utilisation rose to 69% from 65% across the country’s 94Mt/yr, 91-plant cement network.

Brazil: Members of the Brazilian National Cement Industry Association (SNIC) have committed to a 34% reduction in the CO₂ emissions of their cement production to 375kg/t by 2050 from 564kg/t in 2019. Ten cement producers including Cimento Tupi, CSN Cimentos, InterCement and Votorantim signed the commitment. With the industry's forecast rate of growth in cement production capacity, this will result in possible total CO₂ emissions of 45Bnt in 2050 compared to 36.7Bnt in 2020.

Planned CO₂ emissions reduction investments before 2032 are US$637m across the industry.

Companhia Siderúrgica Nacional (CSN) Cimentos was confirmed this week as the agreed buyer for Holcim’s Brazilian cement business for US$1.03bn. The deal includes five integrated cement plants, four grinding plants and 19 ready-mix concrete facilities. CSN is now poised to become Brazil’s third-largest cement producer by production capacity after Votorantim and InterCement. Or second place if you believe CSN’s cheeky claims about a competitor’s idle capacity!

Figure 1: Map of cement plants included in CSN Cimentos’ deal to buy LafargeHolcim Brazil assets. Source: CSN Investor Relations website.

CSN originally started out in steel production and this remains the major part of its operations to the present day. In 2020 it reported revenue of US$5.74bn. Around 55% of this came from its steel business, 42% from mining, 5% in logistics and only 3% came from its cement segment. CSN’s path in the cement sector started in 2009 when it started grinding blast furnace slag and clinker at its Presidente Vargas Plant at Volta Redonda in Rio de Janeiro state. It then started clinker production in 2011 at its integrated Arcos plant in Minas Gerais. Not a lot happened for the next decade, publicly at least, as the country faced an economic downturn and national cement sales sunk to a low in 2017. From around 2019, CSN Cimentos then started talking about a number of new proposed plant projects elsewhere in Brazil, dependent on market growth and an anticipated initial public offering (IPO). These included plants at Ceará, Sergipe, Pará and Paraná and expansion to the existing units in the south-east. Then CSN Cimentos agreed to buy Cimento Elizabeth for US$220m in July 2021.

It is worth noting that the Holcim acquisition is subject to approval by the local competition authority. For example, the Cimento Elizabeth plant and Holcim’s Caaporã plant are both in Paraíba state and within about 30km of each other. If approved, this would give CSN Cimentos two of the four integrated plants in the state, with the other two operated by Votorantim and InterCement respectively. CSN also stands to pick up four integrated plants in Minas Gerais from Holcim to add to the one it holds at present. Although this would seem to be of less concern due to the high number of plants in the state.

Holcim has made a point of saying that its divestment in Brazil is part of its strategy to refocus on sustainable building solutions with the proceeds going towards its Solutions & Products business following the Firestone acquisition that completed in early 2021. It has also stated previously that it wants to concentrate on core markets with long term prospects. In this context a major steelmaker like CSN diversifying into cement is a contrast. Both industries are high CO₂ emitters so CSN is hardly moving away from carbon-intensive sectors. Yet the two have operational, economic and sustainability synergies through the use of slag in cement production. This puts CSN Cimentos in company with Votorantim in Brazil and JSW Cement in India, two other steel manufacturers that also produce cement. Whatever else happens at the 26th United Nations Climate Change conference (COP26) in November 2021, it seems unlikely that global demand for steel or cement is likely to be significantly reduced. CSN Cimentos is now going to resume its IPO of shares to raise funds for the Holcim acquisition.

Acquisitions are all about timing. The CSN Cimentos-Holcim deal follows the purchase of CRH Brazil by Buzzi Unicem’s Companhia Nacional de Cimento (CNC) joint-venture earlier in 2021. As mentioned above, the cement market in Brazil has been doing well since it started recovering in 2018. The coronavirus pandemic barely slowed this down due to weak lockdown measures compared to other countries. The current run of sales growth may be tapering off based on the latest National Cement Industry Association (SNIC) figures for August 2021. Rolling annual totals on a monthly basis had been growing since mid-2019 but this started to slow in May 2021. Annual sales will be up in 2021 based on the figures so far this year but after that, who knows? A CSN investors’ day document in December 2020 predicted, as one would expect, steady cement consumption growth in Brazil until at least 2025, based on correlated forecast growth in the general economy. Yet fears of inflation, rising prices and political uncertainty ahead of the next general election in late 2022 may undermine this. InterCement, for example, cancelled a proposed IPO in July 2021 due to low valuations amid investor uncertainty. CSN Cimentos may encounter similar issues with its own planned IPO or face over-leveraging itself when it picks up the tab for LafargeHolcim Brazil. Either way, CSN decided to take the risk on its path to becoming Brazil’s third largest cement producer.

Our latest look at South America starts by posing the question: how far can the market in Brazil keep growing? As Graph 1 shows below, cement sales skyrocketed through the coronavirus pandemic, due to a general recovery locally that started in 2018 and relatively weak lockdown measures compared to other countries. Rolling annual totals on a monthly basis from the National Cement Industry Association (SNIC) suggest that this growth period tailed off from May 2021. SNIC was also keen to point out that, despite nearly hitting nearly a 20% growth rate at one point, the sector was still 11% behind where it was before the lull that lasted from 2015 to 2018. As ever the association has an eye on potential risks. At present these include legislative reforms, price inflation and carbon pricing. It noted that Mexico, Colombia, Chile and Argentina all price carbon already but said that the country ‘has a great ally in the Brazilian cement industry’ on the issue.

Elsewhere the big story in Brazil has been the ongoing sale of Holcim’s local assets. The latest news at the start of August 2021 was that the bidders included CSN Cimentos, Cimentos Mizu, Cimento Apodi, InterCement and Votorantim. The first three companies were reportedly working in a consortium in an attempt to buy 10 production plants while InterCement and Votorantim were focusing on smaller bids to avoid the ire of the competition regulators. Aside from this, CSN Cimentos agreed to buy Cimento Elizabeth for US$220m in July 2021 and Companhia Nacional de Cimento (CNC), part of Italy-based Buzzi Unicem’s 50% subsidiary BCPAR, acquired CRH Brasil following approval by the regulators. Of note on the production side, Votorantim Cimentos started operation of a new production line at its Pecém grinding plant in Ceará in July 2021.

Graph 1: Cement sales in selected South American countries in first half of year, 2019 – 2021. Source: Local cement associations and national statistics offices.

Over in Peru the now familiar gap-tooth pattern of stunted growth in 2020 can be seen in the sector’s cement sales, but sales rebounded far stronger than comparable sized markets in Argentina and Colombia. Sales nearly doubled to 6.42Mt in the first half of 2021 from 3.33Mt in the same period in 2020 and were significantly higher than the 4.94Mt recorded in the first half of 2020. Imports are also worth watching. Combined cement and clinker importers nearly doubled from 0.76Mt in the first half of 2019 to 1.4Mt in the first half of 2021. Clinker imports made up about two thirds of this figure and the Association of Cement Producers (ASOCEM) noted in June 2021 that 88% of the imported cement came from Vietnam while about two thirds of the clinker came from Japan and Indonesia.

Away from the market data, both Cementos Pacasmayo’s and Unión Andina de Cementos’ (UNACEM) financial results bounced back in the first half of 2021. Cementos Pacasmayo attributed the rebound to sales of bagged cement to the self-construction sector and public sector reconstruction demand. UNACEM also noted the effect of the self-construction sector and said it expected its ‘solid’ cement despatches to continue for the rest of the year despite the risk of a third wave of coronavirus in the country and the messy presidential elections. Other stories of note so far in 2021 include new developments in Cementos Interoceanicos long-held plans to build a 1.0Mt/yr cement plant in Puno and a major upgrade planned to Yura’s integrated plant in Arequipa.

In Colombia local cement despatches grew by 34% year-on-year to 6.20Mt in the first half of 2021 from 4.61Mt in the same period in 2020. Cementos Argos reported major improvements in sales, sales volumes of cement and earnings due to the lockdown in 2020. However, a national wave of protests calling for social reform that started in the spring of 2012 forced the company to shut down its integrated Yumbo plant for over a month. This represented 18% of its national sales. The output of other plants in the country was also negatively affected by roadblocks created by the unrest. Cemex reported the same problems in the country.

Finally, Argentina’s cement despatches rose by 44% to 5.52Mt in the first half of 2021 from 3.83Mt in the same period in 2020. Loma Negra reported that its sales, sales volumes and earnings were all up by a similar rate. The subsidiary of Brazil-based InterCement started up the kiln on its new 2.7Mt/yr production line at the L’Amalí cement plant in Olavarría in June 2021 and commissioning of the new mill and despatch centre on the line were reportedly coming soon in early August 2021. Earlier in the year, in May 2021, Holcim Argentina inaugurated a new 0.5Mt/yr clinker production line at its Malagueño cement plant in Cordoba. These expansion projects were ordered long before coronavirus appeared so it will take a while to see their effects upon the local market. However, the government intervened in June 2021 when it persuaded some building materials producers to agree to reference prices in a bid to curb mounting inflation.

This is what recovery looks like so far in 2021 in the larger cement producing countries in South America. The Brazilian market’s growth phase may be waning after a furious period that even coronavirus wasn’t allowed to slow. Peru’s potential seems set to take off, Colombia’s rebound should have been greater (but it was dented by social unrest) and Argentina seems to be resetting to its usual level. Whatever else happens in the coming months the story to watch going forward will be which company picks up Holcim’s assets in Brazil.