Displaying items by tag: Supply

Vietnam: The Vietnam Cement Association (VCA) has urged the government to stop issuing licences for the construction of new cement plants. Capacity is currently projected to reach 121Mt/yr in 2023, 188% of an estimated consumption of 64.3Mt domestically this year.

VCA chair Nguyen Quang Cung said “We must be careful to maintain a balance between regional supply and demand. As a result of the severe overstock in the north, it is crucial to encourage cement producers in the south to spend more on increasing clinker production capacity." Cung added "This will minimise the environmental effects of shipping clinker between the north and south.”

Oman: Oman Cement Company recorded cement sales worth US$173m in 2022. This corresponds to year-on-year growth of 42% from US$122m in 2021. Its cement sales volumes were 3.46Mt, up by 45% from 2.39Mt.

Chair Rashid bin Sultan al Hashmi said "The company has produced and sold record quantities of cement during the period to help the nation and the consumers in overcoming a scarcity created by various challenges faced by consumers due to short supply of cement from other manufacturers and prevailing global macroeconomic trends."

CEO Salim Abdullah al Hajri added a note of caution, saying "Though the demand for cement in Oman continues to remain reasonably stable and is expected to remain at 2022 levels, unreasonably low priced cement being supplied by competitors remains a major challenge, and the company will continue to monitor the market situation."

The Oman Daily Observer newspaper has reported that Oman Cement Company is in the process of selecting a contractor for an expansion to its Misfah cement plant. The project will increase the plant's capacity by 25% to 5000t/day from 4000t/day across its three production lines. The producer subsequently plans to build an additional line at the plant, which will triple its capacity to 15,000t/day. Meanwhile, plans for a new 5000t/day cement plant at Duqm are currently under review. The company is in discussions with the Public Authority for Special Economic Zones and Free Zones (OPAZ) to 'explore alternatives,' including possible relocation of the site of the plant, due to 'issues in the supply of gas.'

Paraguay: Industria Nacional del Cemento (INC) has suspended cement production and despatches at its Vallemí cement plant in Concepción. The La Nación newspaper has reported that torrential rain washed away raw materials stocks stored at the site. INC expects the plant to remain shut until 17 March 2023. It reassured customers that its Villeta grinding plant will continue to despatch cement as usual. CEO Ernesto Benítez said that it was 'inconceivable' that the suspension would not disrupt the domestic cement supply, given INC's 40% market share.

Mexico: The government is expected to 'implement import facilities' to support the import of more cement into Mexico. Local press has reported that the measure is a response to local cement shortages in 'several regions,' above all in Southeast Mexico. The government also expects imports to lower domestic cement prices.

Mexico has a domestic cement production capacity of 42Mt/yr. This fell short of national consumption in 2022.

Nepal: Hetauda Cement Udyog has resumed operations at its Hetauda cement plant after receiving a 1600t delivery of imported coal. República News has reported that importers sourced the coal from Bhutan, India, Indonesia and Pakistan. The Hetauda cement plant had been out of operation since 10 February 2023 due to a lack of coal. The producer said that the latest delivery will last it until 11 March 2023. The producer had ordered 8000t of coal.

India: Indian Railways has shared plans to establish dedicated rail corridors to supply raw materials to the cement sector. The Times of India newspaper has reported that the corridors will connect plants to sources of clinker, fly ash and limestone. Indian Railways says that the plans encompass ‘different parts of the country,’ and will be implemented over the 10-year period up to the end of the 2033 financial year. In addition to offering ‘better service’ and ‘attractive’ prices, the rail company will also carry out capital expenditure investments in order to maximise the volume of materials travelling on its cement corridors.

The Ministry of Trade in Türkiye said this week that it was monitoring developments in the construction industry. Specifically, the ministry is reacting to complaints it has received about the high price of cement and supply issues. It has been looking at exports of clinker and cement. The statement noted that prices had risen particularly in the last one to two months and that the government was prepared to take unspecified action to alleviate the situation.

The comments hark back to the autumn of 2021 when members of the Construction Contractors Confederation (IMKON) stopped working for two weeks in response to high prices including cement. At the time the ministry tightened its rules on exporting cement and clinker. This followed the start of an investigation into alleged anti-competitive behaviour by the regulator Rekabat Kurumu into nine cement producers in the first half of that year. Around the same time Türkçimento, the Turkish Cement Manufacturers' Association, had also been warning about growing raw material and energy costs. It noted that declining domestic sales between 2017 and 2019 had encouraged its members to focus on export markets more. All of this was overshadowed in February 2022 when Russia invaded Ukraine and global energy prices spiked. Türk Çimento then warned of the trouble that high coal prices were causing the sector.

Graph 1: Domestic and export cement sales in Türkiye, January – September, 2017 – 2022. Source: Türkçimento.

Graph 1 above shows that the trend towards exports that Türkçimento pointed out in mid-2021 has continued. Domestic sales fell to a low of 33.2Mt in 2019, recovered to 2021 and dropped somewhat so far in 2022. As an aside, that decline in domestic sales from 2017 to 2019 was the first the local cement industry had experienced a fall in sales since at least 2002. Exports fell year-on-year in 2018 but have increased steadily since then to 14.6Mt in the first nine months of 2022. Exports represented 10% of total sales in 2017. So far in 2022 they have accounted for 27% of total sales. Türk Çimento’s take on the picture so far in 2022 is that it expects the domestic market to decline by 10% in 2022 in all regions of the country principally due to high commodity prices. Cement exports are expected to increase but clinker exports to decrease.

Commercially, Türkiye-based cement producers have reacted to high energy prices by upping their own product prices in turn. OYAK Çimento, for example, reported significant rises year-on-year in sales revenue and earnings in the first nine months of 2022. Net sales grew by 160% year-on-year to Euro403m and earnings before interest, taxation, depreciation and amortisation (EBITDA) increased by 202% to Euro106m. Akçansa and Çimsa reported a similar situation.

Despite the high energy costs, both investment and merger and acquisition activity has continued in the cement sector in 2022. In August 2022 Fernas Group completed its purchase of two integrated cement plants, a grinding plant and associated ready-mix concrete assets from Çimsa Çimento for US$110m. Later in the year, in November 2022, Safi Çimento acquired Sancim Bilecik Çimento’s integrated plant from Aşkale Çimento. Various upgrade projects to cement plants were also reported including projects at KÇS Kipaş Çimento’s Kahramanmaraş plant, Nuh Çimento’s Hereke cement plant, MEDCEM’s Silifke plant and OYAK Çimento’s Ünye plant.

Recent reporting by the Economist newspaper suggests that the government is targeting the domestic housing sector in response to higher than inflation price rises even compared to Türkiye’s high consumer price inflation rate. The next general election in June 2023 may also be encouraging legislators to look at the accommodation needs of their constituents. Whether this is connected to the Ministry of Trade’s recent decision is unknown. Cement producers have followed the money to lucrative export markets in recent years. How far the government is willing to intervene in this strategy could mark a change in direction for the sector.

Türkiye: The Ministry of Trade says it is monitoring developments in the construction sector with regards to high cement prices and supply problems. It is looking at exports in particular, according to the Hürriyet Daily News newspaper. It has taken action following complaints it received in late 2022. Previously in 2021 the government added cement and clinker to the list of products which require a permission to be exported. Government bodies including the Ministry of Trade, the Ministry of Treasury and Finance and the Turkish Competition Authority (Rekabet Kurumu) have each been recently conducing inspections of cement companies looking in domestic and export prices.

Nigeria: The Daily Independent newspaper has reported that BUA Cement is allegedly preparing a 'multi-million dollar lawsuit' against its gas supplier, Greenville Liquefied Natural Gas (Greenville LNG). The supplier reportedly raised prices, as stipulated in the parties' gas supply contract, following an increase in its costs. Greenville LNG attributed the increase to the dilapidation of roads and collapse of upstream gas infrastructure due to flooding, as well as a lack of access to imports. It said that none of its 44 other industrial customers has challenged the price change.

Greenville LNG chair Eddy Van Den Broeke said "It is not a breach of contract because not only are we continuing the gas supply to the BUA cement plant in Sokoto, but also because we are discussing in good faith the changed business and economic conditions that afflict both companies." He concluded “In this case, we only activated the contractual price adjustment clause. We cannot explain how it is possible that social media misrepresented so grossly the present circumstances and the conditions of our contract, which were not reflected at all."

Dominican Republic: Cemex Dominicana has announced the signing of a new sustainability agreement with food producer Nestlé Dominicana. Under the agreement, Cemex Dominicana will co-process Nestlé Dominicana's non-recyclable high-calorific solid industrial waste as alternative fuel (AF) in its cement plant.

Cemex's Dominican Republic, Puerto Rico and Haiti regional director José Antonio Cabrera said "This agreement with Nestlé allows us to continue promoting our Future in Action strategy by operating our cement plant with AF." He concluded "We are committed to becoming a net-zero CO₂ company."