Displaying items by tag: South Korea

The Coronavirus Disease 2019 (COVID-19) took on direct implications for the international cement industry this week when an Italian vendor infected with the virus visited Lafarge Africa in Ogun state, Nigeria. The cement producer said that it had ‘immediately’ started contact tracing and started isolation, quarantine and disinfection protocols. This included initiating medical protocols at its Ewekoro integrated plant, although local press reported the unit’s production lines were still open. Around 100 people were thought to have had contact with the man.

Global Cement has been covering the epidemic since early February 2020 when the virus’ effect on the construction industry in China started to become evident. First, an industry event CementTech was postponed, financial analysts started forecasting negative financial consequences for producers and plants started going into coronavirus-related maintenance or suspension cycles. Then at least one plant started to dispose of clinical waste and now China National Building Material Group (CNBM) is considering how to restart operations at scale. Also, this week Hong Kong construction companies reportedly laid off 50,00 builders due to a lack of cement due to the on-going production suspension in China.

The major cement companies have identified that their first business risk from coronavirus comes from simply not having the staff to make building materials. LafargeHolcim’s chief executive officer Jan Jenisch summed up the group’s action in its annual financial results for 2020 this week when he said, “We are taking all necessary measures to protect the health of our employees and their families.” Other major cement producers that Global Cement has contacted have placed travel restrictions for staff and reduced access to production facilities.

The next risk for cement companies comes from a drop in economic activity. The Organisation for Economic Co-operation and Development (OECD) forecasts a global 0.5% year-on-year fall in real gross domestic product (GDP) growth to 2.4%, with China and India suffering the worst declines in GDP growth at around 1%. The global figure is the worst since the -0.1% rate reported by the International Monetary Fund (IMF) in 2009. The OECD blamed the disease control measures in China, as well as the direct disruption to global supply chains, weaker final demand for imported goods and services and regional declines in international tourism and business travel. This forecast is contingent on the epidemic peaking in China in the first quarter of 2020 and new cases of the virus in other countries being sporadic and contained. So far the latter does not seem to have happened and the OECD’s ‘domino’ scenario predicts a GDP reduction of 1.5%. All of this is likely to drag on construction activity and demand for cement and concrete for some time to come.

Moving to cement markets and production, demand is likely to be slowed as countries implement various levels of isolation and quarantine leading to reduced residential demand for buildings directly and as workforces are restricted. Business and infrastructure projects may follow as economies slow and governments refocus spending respectively.

The UK government, for example, is basing its coronavirus action plan on an outbreak lasting four to six months. This could potentially happen in many countries throughout 2020. This has the potential to create a rolling effect of disruption as different nations are hit. Assuming China has passed the peak of its local epidemic then its producers are likely to report reduced income in the first quarter of 2020. The effect may even be reduced somewhat due to the existing winter peak shifting measures, whereby production is shut down to reduce pollution. Elsewhere, cement companies in the northern hemisphere may see their busy summer months affected if the virus spreads. The effect on balance sheets may be visible with indebted companies and/or those with more exposure to affected areas disproportionately affected. The wildcard here is whether coronavirus transmits as easily in warmer weather as it does in the cooler winter months. In this case there may be a difference, generally speaking, between the global north and south. Exceptions to watch could be cooler southern places such as New Zealand, Argentina and Chile. Shortages, as mentioned above in Taiwan, potentially should be short term, owing to global overcapacity of cement production, as end users find supplies from elsewhere.

The cement industry is also likely to encounter disruption to its supply chains. Major construction projects in South Asia are already reporting delays as Chinese workers have failed to return following quarantine restrictions after the Chinese New Year celebrations. As other countries suffer uncontrolled outbreaks then similar travel restrictions may follow. Global Cement has yet to see any examples of materials in the cement industry supply chain being affected. On the production side, raw mineral supply tends to be local but fuels, like coal, often travel further. Fuel markets may prove erratic as larger consumers cut back and suppliers like the Organisation of the Petroleum Exporting Countries (OPEC) react by restricting production.

On the maintenance side cement plants need a wide array of parts such as refractories, motors, lubricants, gears, wear parts for mills, ball bearings and so forth. Some of these may have more complicated supply chain routes than they used to have 30 years ago. On the supplier side any new or upgrade plant project is vulnerable if necessary parts are delayed by a production halt, logistics delayed and/or staff are prevented from visiting work sites. Chinese suppliers’ reliance on using their own workers, for example, might well be a hindrance here until (or if) international quarantine rules are normalised. Other suppliers’ weak points in their supply chains may become exposed in turn. This would benefit suppliers with sufficiently robust chains.

Chinese reductions in NO₂ emissions in relation to the coronavirus industrial shutdown have been noted in the press. A wider global effect could well be seen too. This could potentially pose problems to CO₂ emissions trading schemes around the world as CO₂ prices fall and carbon credits abound. This might also have deleterious effects on carbon capture and storage (CCS) development if it becomes redundant due to low CO₂ pricing. In the longer-term this might undesirable, as by the time the CO₂ prices pick up again we will be that much nearer to the 2050 sustainability deadlines.

COVID-19 is a new pandemic in all but name with major secondary outbreaks in South Korea, Iran and Italy growing fast and cases being reported in many other countries. The bad news though is that individual countries and international bodies have to decide how to balance the economic damage disease control will cause, versus the effects of letting the disease run unchecked. Yet as more information emerges on how to tackle coronavirus, the good news is that most people will experience flu-like symptoms and nothing more. Chinese action shows that it can be controlled through public health measures while a vaccine is being developed.

Until then, frequent handwashing is a ‘given’ and many people and organisations are running risk calculations on aspects of what they do. It may seem flippant but even basic human interaction such as the handshake needs to be reconsidered for the time being.

South Korea: Asia Cement has awarded a contract to Germany’s Humboldt Wedag, a subsidiary of KHD Humboldt Wedag International, to supply and provide engineering for the modernisation of its third clinker production line at its Jecheon plant. The target of the upgrade project is to increase the alternative fuel substitution rate to above 85% of calciner fuel, as well as the reduction of NOx to satisfy local emission limits.

KHD’s scope includes the engineering and supply of mechanical equipment for the clinker production as well as electrical equipment for the overall modernisation of the production process. During the project, the existing preheater will be modernised with the installation of a new Pyroclon R calciner, as well as a Pyrorotor rotary combustion reactor for low-processed alternative fuel.

The overall project scope consists of: a Pyroclon R calciner with Pyrotop mixing chamber; a Pyrorotor alternative fuel combustion reactor; a Pyrobox coal firing system for process start-up and operation balancing; replacement of stage five cyclones with new high-efficiency cyclones for calciner connection and an overall pressure drop reduction; bypass mixing chamber installation; and a new kiln inlet chamber with orifice.

The commissioning of the modernised production line is planned for the first quarter of 2021.

South Korea: South Korea’s leading ready-mix concrete producer Eugene Concrete is exploring the possibilities artificial intelligence (AI) offers to its vertical supply chain. Singaporean construction and logistics technology specialist Pan-United says it has signed a memorandum of understanding with Eugene Concrete, allowing the latter to evaluate the possibility of integrating Pan-United’s AiR scalable digital system into its existing operations. The aim is to accelerate digital transformations in areas including the replenishment of raw materials, management of customer orders and e-billing and quality control checks at batching plants. Chung Jinhak, Eugene Group CEO, said, “Through this partnership with Pan-United, we seek to digitalise our entire end-to-end operations.”

Switzerland: Maerz has reported the successful installation of two Maerz PFR lime kilns with a capacity of 200t/day and 300t/day at Daesung MDI in South Korea, which was commissioned on 19 October 2019. The company also installed a 150t/day E2 two-shaft lime kiln at Easternbulk Lime Products Private Ltd in July 2019. Three further new plants with Maerz kilns are scheduled to enter operation in 2020 in China, Mexico and Russia and a second kiln will increase production of petcoke at Caleras’ San Juan plant in Argentina beginning in mid-2020.

South Korea: The Korea Cement Association (KCA) says its members will increase the use of coal ash from local thermal power plants or source alternative raw materials from domestic clay mines. The decision follows a trade dispute between South Korea and Japan, according to the Aju Business Daily newspaper.

The Environment Ministry started to tighten rules concerning the import of coal ashes from Japan in August 2019 citing fears of radioactive and heavy metal contamination. Importers are now required to submit an authorised radioactive inspection report and the analysis of heavy metal components. The KCA said its members use 3.15Mt/yr of coal ash and 1.28Mt/yr is imported from Japan.

South Korea: SsangYong Cement Industrial’s sales revenue rose by 5.9% year-on-year to US$626m in the first half of 2019 from US$591m in the same period in 2018. Its net profit grew by 26% to US$58.1m from US$56.3m. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) increased by 17.1% to US$151m from US$129m.

South Korea/Thailand: Austria’s Unitherm Cemcon has commissioned a MAS kiln burner at a cement plant in South Korea. The order was issued in late 2018 for three MAS burners. The first burner was delivered in February 2019 and the other two in March 2019. In May 2019 Unitherm Cemcon says it supported the commissioning of the first burner.

The scope of supply included two 43MW MAS/4/KO SO type burners for coal and heavy oil and one 87MW MAS/7/KO SO.X type rotary kiln burner for coal, heavy oil and solid secondary fuels. All three burners have been executed with a divisible burner jacket tube. One MAS/7/KO.SO.X is already successfully operating in another line, firing up to 6t/hr of coal and around 10t/hr of solid secondary fuel.

The burner manufacturer has also been awarded a contract to supply a hot gas generator for a plant in Thailand. The scope of supply includes: engineering and manufacturing drawings for the hot gas generator combustion chamber; a combined 45MW oil and coal burner; a primary air fan; a gas electric pilot burner; a flame monitoring device; and an oil valve train with burner management system.

Peru: Local cement despatches rose by 3.2% year-on-year to 11.1Mt in 2018 from 10.8Mt in 2017. Consumption rose by 3.7% to 11.2Mt from 10.8Mt. Data from the Asociación de Productores de Cemento (Asocem) showed that cement exports fell by 26% to 0.27Mt from 0.36Mt. Imports increased by 60% to 0.98Mt from 0.61Mt. Clinker exports rose by 63% to 0.9Mt and imports rose by 49% to 0.78Mt. 85% of cement imports came from Vietnam. 33% of clinker imports came from South Korea and 31% came from Vietnam.

Peru’s been the place over the last week with news reports of new production capacity and its targeting as a key export market by Vietnam.

Local press reported this week that three new cement grinding plants are planned to start production in 2019. Cemento Inka plans to build a 0.6Mt/yr grinding plant at Ica near Pisco. It also plans to upgrade the kilns at its plant at Cajamarquilla near Lima. Then Mixercon, a ready-mix concrete firm, wants to spend US$20m towards building two new plants in northern Lima, also in 2019. It also has plans to open distribution centres around the capital too.

For a local industry generally dominated by local often family-controlled producers this is quite a change. The larger companies – Pacasmayo, UNACEM and Yura – normally dominate the headlines and the market here. Unsurprisingly then that Pacasmayo and Yura also have upgrades planned for their plants in 2019 too.

Changes to capacity started in late May 2018 when Salaverry-based importer Invecem was said to be buying equipment for a 0.25Mt/yr grinding plant. Then things really started moving when Unacem bought Cementos Portland (Cempor), a joint venture between Chile's Cementos Bío Bío and Brazil’s Votorantim Cimentos. The foreign companies were planning to build a plant near Lima but the project was delayed by a legal battle over environmental issues intitiated by Unacem. This was followed by Cal & Cemento Sur (Calcesur), a subsidiary of Grupo Gloria, announcing that it was going to add a new production line to its cement and lime plant in Puno.

With this level of interest in grinding plants going on it’s unsurprising that Vietnam, a major exporter of cement, has taken an interest. Imports of cement to Peru rose by 65% year-on-year to 0.94Mt in the 12 months from December 2017 to November 2018 from 0.57Mt in the same period previously. Imports of clinker rose by 37% to 0.78Mt from 0.57Mt. This compares to a rise of 21% to 0.61Mt in cement imports in 2017 and a fall of 1.2% to 0.51Mt in 2016. In the 12 months to the end of November 2018 most of that imported cement (81%) came from Vietnam followed by 14% from China and 3% from Mexico. Clinker imports have been more varied with 39% from South Korea, 31% from Vietnam, 19% from Ecuador and 11% from Japan. The general situation for the clinker producers has been a slight increase in cement production to 10Mt for the 12 months to the end of November 2018 and slightly higher increases in despatches.

So, it looks like an apparent cement demand is up in Peru and the importers are rushing to meeting demand. The question, then, is why haven’t the clinker producers announced projects to squeeze out the grinders? As mentioned above Pacasmayo and Yura have upgrades planned but nothing really large seems to be coming yet. Also, given the tough time Cempor was given by the local companies what kind of opposition are the new projects by Cemento Inka, Mixercon and Invecem likely to face? The country’s gross domestic product (GDP) growth rate is below the glory days of the 2000s when it topped 6% but it is still one of the strongest in South America with 3.8% forecast for 2019 by the World Bank. This is the country in the region to watch in 2019.

South Korea: Ssangyong Cement has launched what it says is the world’s largest waste heat recovery unit at its Donghae plant in Gangwon. The 43.5MWh unit had a budget of US$889m and was originally planned to 2016, according to the
Maeil Business Newspaper. 11 boilers plus turbines and cooling towers have been installed on six cement kilns at the site. The new system will also work in conjunction with an energy storage system (ESS) that was installed in April 2017.