Displaying items by tag: Taiheiyo Cement

April 2020 data from the Japanese Cement Association (JCA) suggests that Japan has avoided the worst effects of the coronavirus outbreak. The industry’s total sales fell by 2.4% year-on-year to 16.4Mt in the first four months of 2020 from 16.8Mt in the same period in 2019. This is the kind of change associated with business as usual market trends, rather than the 20% declines seen elsewhere around the world in association to the coronavirus. In part this reflects the country’s case and mortality rate, which are far lower than other Group of Seven (G7) countries. The reasons for this may be due to lower levels of testing, less stringent lockdown measures and a more effective public health strategy. That last point is perhaps even more impressive given the population’s high median age (47.3). Whatever the reasons, the overall effect on the construction materials business seems low.

Graph 1: Cement production, sales, imports and exports in Japan. Source: Japanese Cement Association.

Graph 1 above shows the Japanese cement market in a historical context. Production peaked in the mid 1990s at a little below 100Mt/yr followed by a decline to above 40Mt/yr since 2010. This informs the current situation once one removes any effects from the health emergency. As Naoki Ono, the chairman of the JCA and the chief executive officer (CEO) of Mitsubishi Materials, described it in late May 2020, domestic demand for cement fell by 3.8% year-on-year to 41Mt in 2019. He blamed this on the completion of construction work for the 2020 Tokyo Olympic and Paralympic Games, the end of a period of rebuilding following natural disasters and a shortage of manpower.

All of this may explain why Taiheiyo Cement announced the acquisition of a 15% stake in state-owned Semen Indonesia subsidiary Solusi Bangun Indonesia in April 2020. At the time the producer said explicitly that the partnership with Semen Indonesia was part of Taiheiyo Cement’s response to a, “forecasted long-term decline in domestic cement demand in Japan.” Given the competiveness of the Indonesian market it seems like a brave move given the country’s overcapacity, the departure of LafargeHolcim and the arrival of China’s Anhui Conch. Meanwhile at home, Mitsubishi Materials and Ube Industries said in February 2020 that the companies were discussing a potential merger of their cement businesses. The letter of intent suggests a schedule of late September 2020 to sign a definitive agreement and a target of April 2022 to complete the integration. This follows the two companies working together since 1998 on a joint venture called Ube-Mitsubishi Cement, which integrated their cement sales and logistics operations. Mitsubishi Materials and Ube Industries are the third and fourth largest producers by production capacity in the country. A merger would potentially give the combined entity the same production base as the largest producer, Taiheiyo Cement.

Taiheiyo Cement’s experience in its 2020 financial year to 31 March 2020 was in line with Naoki Ono’s summary above, with both sales and profits down. Its domestic sales volumes decreased by 5% to 14.5Mt, although exports rose by 11% to 3.9Mt. In its financial report it highlighted its key foreign markets in the US, China, Vietnam and the Philippines. Despite increasing its sales in its 2020 financial year, Sumitomo Osaka Cement’s operating income and profits fell. It blamed this on energy costs, principally coal, and other raw material inputs. It has since published its next medium-term management plan. This includes a number of measures such as cutting costs and looking at overseas expansion. Both Mitsubishi Materials and Ube Industries reported similar reductions in their sales and profits. Mitsubishi Materials noted that it had observed a decrease in cement shipment due to the construction delay caused by the coronavirus.

Ratings company R&I is optimistic about the Japanese market following the start to 2020. In a recent news release it concluded that domestic cement demand is ‘solid’ for the next few years due to order backlog and anticipated infrastructure projects. In its assessment local producers have been improving their cost structures since 2010 in ways that should support ‘certain levels of profit’ provided domestic demand remains around 40Mt/yr. In the medium to longer term though it still expects domestic demand to decrease slowly. Hence, the overseas expansion, merger and acquisition activity and cost cutting plans of the larger producers. Long trends aside, the Japanese cement sector is coping well so far with the global health pandemic.

Japan: Taiheiyo Cement has nominated Shinhachiro Emori as a new director. He is currently the president of Taiyo Vinyl Corporation, a subsidiary of Tosoh Group. The proposed appointment will be decided upon at Taiheiyo Cement’s shareholders meeting in late June 2020. At the same time the cement producer announced that Yuzo Arima is retiring as a director.

Indonesia: Japan-based Taiheiyo Cement has announced its acquisition of a 15% stake in state-owned Semen Indonesia subsidiary Solusi Bangun Indonesia for between US$186m and US$232m, subject to the terms of a partnership agreement with Semen Indonesia.

Under the ‘2020 Mid-Term Management Plan,’ Taiheiyo Cement says that it aims to ‘become a corporate group with a strong presence in the Pacific Rim.’ Its partnership with Semen Indonesia is part of Taiheiyo Cement’s response to a forecasted long-term decline in domestic cement demand in Japan.

In the first quarter of 2020 Semen Indonesia sold 9.36Mt of cement, up by 7.0% year-on-year from 8.74Mt in the corresponding period of 2019. InsiderStories News has reported that domestic demand in the period fell by 4.9% to 14.9Mt from 15.7Mt, while exports fell by 2.5% to 1.39Mt from 1.42Mt but rose by 6.2% on a month-by-month basis in March 2020 to 3.09Mt from 2.91Mt in February 2020. April 2020’s cement sales are expected to be lower due to the impacts of the coronavirus outbreak.

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.”

Japan: Taiheiyo Cement has set out the measures by which it aims to achieve its July 2019 target to ‘reduce net CO₂ emissions per unit of cement production’ by 80% between 2000 and 2050. The measures consist of: the introduction of energy-saving equipment, the promotion of alternative fuels (AFs) and the development of lower-CO₂ cements, accounting for a minimum 15% reduction; development and introduction of new technologies to the production process, targeting especially indirect emissions by modernising energy sources, accounting for a minimum 15% reduction; assumption of future technologies, accounting for a minimum 50% reduction.

US: The Environmental Protection Agency (EPA) has awarded Energy Star certification to Japan-based Taiheiyo Cement subsidiary CalPortland’s 1.3Mt/yr integrated Rillito plant for the eighth consecutive year for its superior energy performance compared with other plants of comparable capacity in the country. CalPortland president and CEO Allen Hamblen said, “We continue to demonstrate our commitment to environmental stewardship and ENERGY STAR while also reducing our energy costs through the hard work of our employees and our corporate energy management culture.”

Japan: Equipment supplier Kawasaki has announced that its Vega class of boiler will be used in Taiheiyo Cement’s 8MW waste heat recovery (WHR) power plant at its 1.4Mt/yr integrated Saitama cement plant. Kawasaki says that the advantages of the Vega boiler are a compact design, a shorter installation time, a reduced induced draft (ID) fan power consumption and excellent dust-removal performance.

Japan: Taiheiyo Cement recorded a net profit of US$278m in the nine months to 31 December 2019, the first three quarters of the Japanese 2020 fiscal year. This corresponds to a 10% fall from US$310m in the nine months to 31 December 2018. Its nine-month sales fell by 4.3% year-on-year to US$6.04bn in the first three quarters of the present financial year, compared to US$6.31bn one year previously.

Taiheiyo Cement revised its forecasted full-year (to 31 March 2020) net profit down from US$570m, published in its six-month results on 12 November 2019, to US$364m.

Japan: Ofunato biomass power plant began generating electricity on 1 January 2020. The 75MW plant is the result of a 65:35 partnership between Taiheiyo Cement and electrical engineering firm Elex formed in July 2016, with a total investment of US$36.5m. It will primarily burn coconut matter to provide electricity for sale and supply to Taiheiyo Cement’s 1.9Mt/yr integrated Ofunato plant. Taiheiyo Cement says that its will generate 520,000MWh/yr, replacing fossil fuels responsible for 0.3Mt/yr of CO2 emissions.

Japan: Taiheiyo Cement has installed an ash washing facility at a waste incineration plant in Kumagaya, Saitama prefecture for desalination and lowering of chloride content. After rinsing, the installation will supplement cement production at Taiheiyo Cement’s 1.8Mt/yr integrated Kumagaya plant with up to 69,400t/yr of ash. The total cost of investment was US$7.17m.