Displaying items by tag: Tax

Kazakhstan: Steppe Cement’s cement sales in the first quarter of 2021 were US$11.3m, up by 22% year-on-year from US$9.27m in the first quarter of 2020. Volumes increased by 13% to 266,000t from 236,000t. The company said that it remained close to full capacity utilisation. It says that it increased its Kazakh cement market share to over 13%. The market grew by 12% year-on-year in total. The producer reported an 11% price rise and constant levels of tariffs and rental expenses.

Steppe Cement forecast an increase in domestic cement demand due to government infrastructure and housing projects.

Kenya: Bamburi Cement, Savannah Cement, Ndovu Cement and Rai Cement have written to the National Treasury opposing a proposal by the Kenya Association of Manufacturers (KAM) to raise tariffs on clinker imports to 25% from 10% at present or to implement at outright ban on imports. The cement producers say that increasing the tariffs would lead to unfair competition and destroy investments, according to the Kenyan Star newspaper. However, the KAA argues that the move will promote the manufacturing sector and create jobs.

Seddiq Hassani, the managing director of Bamburi Cement, said in a letter from the cement producers to the government, that they opposed the review at the current time but that they conceded that it was the right direction for the industry in the longer term to safeguard local manufacturing. He added that the four companies should be given a window of between four and five years to set up their own integrated plants to provide a predictable policy framework for investors.

Uzbekistan: The government has suspended tariffs on cement imports from all countries until 1 October 2021. The UzDaily newspaper has reported that the suspension is part of a raft of measures aimed at ‘providing the population with housing’ by bolstering construction. The measures consist of funding for multi-story housing developments, a separate trading exchange for cement and the roll-out of a new standard design for residential buildings from 1 May 2021.

Philippines: The Department of Trade and Industry (DTI) has issued an order amending its previous order on cement safeguards. The Manila Bulletin newspaper has reported that the amendment extends safeguard measures to 13 new countries which now exceed the necessary 3% import volume share. These are Chile, the Czech Republic, Estonia, Hungary, Israel, Indonesia, Latvia, Lithuania, Poland, Slovenia, Slovakia and South Korea. Imported cement from these countries will now face a safeguard duty of US$0.2/bag. An official source quoted by the newspaper called the surge in importation from these countries "trade diversion" tactics by importers since these countries were previously exempt from the safeguard duty.

Cement imports were one of the themes in this week’s news, with stories on the topic from South Africa and Ukraine. The former concerned the latest chapter in that industry’s saga on slowing down imports. The International Trade Administration Commission (ITAC) has started a review on tariffs imposed on cement from Pakistan that were introduced in 2015.

Local producers in South Africa have experienced mixed fortunes since 2015, such as PPC and AfriSam’s failed merger attempt or the introduction of a local carbon tax, and were starting to complain again about imports even before the effects of coronavirus in 2020. This led the Concrete Institute to lobby ITAC in 2019 about rising imports from other nations, principally Vietnam and China.

Back in 2013 cement imports from Pakistan to South Africa were 1.1Mt. This represented the vast majority of all imports to the country. Tariffs of 14 – 77% were imposed on Pakistan-based exporters in mid-2015, initially for six months, but this was then extended. Roughly a year later in mid-to-late 2016, Sephaku Holdings said that imports of cement had ‘significantly’ declined on a year-on-year basis, particularly from Pakistan. By the end of June 2016 approximately 0.16Mt had been imported compared to 0.5Mt in the previous period. However, it noted that 75% of the volume was from China. Since then imports started to creep up. Cement imports reportedly rose by 84% year-on-year in 2018 and then by 11% in 2019. Data from construction industry data company Industry Insight suggests that Vietnam accounted for 70% or 0.47Mt of the 0.68Mt of cement imported into South Africa in the first nine months of 2020. The remaining 30% or 0.20Mt came from Pakistan. In this kind of environment it seems unlikely that ITAC will do anything other than extend tariffs.

Meanwhile in the northern hemisphere, in Ukraine this week a court in Kiev dismissed a challenge by the Belarusian Cement Company to remove cement import tariffs from Russia, Belarus and Moldova that were introduced in mid-2019 for five years. Notably, a law firm representing Dyckerhoff Cement Ukraine, HeidelbergCement Ukraine, Ivano-Frankivsk Ukraine and CRH subsidiary Podilsky Cement commented favourably upon the court’s decision to uphold tariffs. These producers form UKRCEMENT, the association of cement producers of Ukraine. However, the association doesn’t include Russia-based Eurocement, which operates Ukraine’s largest cement plant at Balakleya. Relations have been poor between Russia and Ukraine since a war between the countries that started in 2014. So any trade tariffs implemented upon Russia and/or Commonwealth of Independent States (CIS) members will inevitably carry the whiff of geopolitics. Yet, in Ukraine’s defence, it also started an anti-dumping investigation into cement imports from Turkey in September 2020. Nationalism may be relevant but let’s not discount hard-nosed economics just yet.

Turkey’s involvement in Ukraine leads to last week’s presentation at Global Cement Live by Sylvie Doutres, DSG Consultants on cement and clinker trade in and out of the Mediterranean region. Readers can watch the presentation here but the headline story here was the trend of reducing exports away from southern European countries such as Spain, Italy and Greece, to greater exports from North African countries and Turkey over the last decade. Turkey particularly has pushed its share of exports even more in 2020 despite (or perhaps because of) a tough domestic market. The general trend here away from southern Europe has been blamed on European Union-based (EU) producers becoming less competitive often against newer plants in nearby countries.

Battles between producers and government tariff policies are a perennial feature of any market in commodities such as cement. The ebb and flow of import and export markets cover many factors including production costs, distribution networks, tariff structures and more. Distinctive features of cement trading, for example, are the high cost of transporting heavy building materials over land and the world’s chronic cement production overcapacity. In the EU’s case one reason that often gets blamed is the emissions trading system (EU ETS) and the mounting cost it is imposing upon cement production. For example, today’s story that Holcim España wants to convert its integrated Jerez plant into a grinding unit has been blamed on falling exports and a reduction in ETS credits. It is noteworthy then that the EU ETS rate breached the Euro30/t level in December 2020. This may be good news for the sustainability lobby but the exodus of exports away from Southern Europe tells its own story. What form the EU ETS carbon border adjustment mechanism takes as part of the EU Green Deal will be watched closely by producers both inside and outside the EU.

Global Cement Live continues on 21 January 2021 with Kevin Rudd, Independent Cement Consultants, presenting 'Independent or third party factory acceptance testing of major cement plant equipment and critical spare parts and the challenges of Covid’

Trinidad & Tobago: Rock Hard Cement says it will close during January 2021 in Trinidad due to alleged changes in government tariffs on imported cement. It hopes to reopen In February 2021, according to the Trinidad & Tobago Guardian newspaper. The company has published advertisements in local media warning of potential price rises of up to 80% in 2021. As well as changes to import costs the cement importer claims that the quantity of imported cement will be restricted to 75,000t/yr. The Ministry of Trade and Industry said it couldn’t comment on the matter as it is currently undergoing legal proceedings.

Pakistan: The government has extended its construction industry fixed tax regime by a further year until 31 December 2021. In a live address to the country, Prime Minister Imran Khan said that the move was in response to ‘big’ demand from the sector, according to the Dawn newspaper. Other incentives unveiled during the broadcast included an exemption for builders from disclosing sources of income to tax authorities until 30 June 2021. The measures follow the government’s introduction of the foreclosure law, under which banks are aiming to allocate US$2.36bn towards house building until 31 December 2021. Khan called 2021 a ‘year of growth.’

Philippines: The Tariff Commission (TC) has said that it was unaware of a Department of Trade and Industry (DTI) order imposing higher-than-scheduled duties on imports of cement. The Manila Bulletin newspaper has reported that TC commissioner Ernesto Albano said that it was legally ‘impossible’ for rates to rise above the previously scheduled US$0.19/bag. The DTI order in December 2020 set a duty of US$0.20/bag in the second year of the three-year tariff scheme. Albano said, "The DTI cannot do that. The schedule has been set.” He added, “The industry should improve so the duty should go down."

The Bureau of Customs (BOC) has implemented the new rate imposed by the DTI.

India: The Ministry of Finance Central Board of Direct Taxes (CBDT) says that its Income Tax department has detected US$95m-worth of tax evasion by Chettinad Cement and Anjani Portland Cement owner Chettinad Group. The Deccan Herald newspaper has reported that following raids on its offices the tax department found evidence of inflated expenditure, unaccounted receipts and complex financial arrangements including bogus liabilities in order to reduce capital gains. The investigation continues.

Pakistan: The Ministry of Commerce has advised the government that a concessionary rate for cement companies for the supply of electricity would reduce costs and increase international competitiveness. The Business Recorder newspaper has reported that the ministry proposed the measure due to the industry’s ‘immense’ potential for exports. In the 2020 financial year, the country exported US$266m-worth of cement. The ministry said that the current government’s policies would cause this to ‘substantially’ increase.