Displaying items by tag: costs

Russia: Kavkazcement plans to spend US$224m on equipment modernisation after cement production costs rose by 30–34% in 2024, according to local news reports. The producer recorded a production increase of 11% year-on-year to 2Mt in 2024 and aims to grow output by a further 10% in 2025.

General director Sergey Bogomaz said “Cement from Kavkazcement is in demand in many regions of Russia. The main deliveries go to the Rostov Region, Volgograd Region and Krasnodar Krai. In our region, we see an increase in construction volumes. New infrastructure projects are emerging, such as the construction of the first airport in Karachay-Cherkessia.”

Pakistan: The Khyber Pakhtunkhwa (KPK) government will replace ore-based royalties on cement with a 6% royalty on the ex-factory price.

The proposed change will raise costs for producers and follows a similar royalty imposed by the Punjab government in August 2024. Analysts said that manufacturers would need to raise cement prices significantly to offset the impact of the increased royalty.

India: The Tamil Nadu government will impose a mineral-bearing land tax of US$1.82/t on limestone under the Tamil Nadu Mineral Bearing Land Tax Act 2024. This tax, payable in advance on mineral dispatch, is in addition to existing royalty charges. The announcement follows Karnataka’s recent decision to levy US$0.29/t on limestone mined.

The tax will raise production costs for cement producers in the region, particularly affecting Ramco Cements, which has 52% of its clinker capacity in Tamil Nadu, and Dalmia Bharat, which has 23%. Other Indian cement producers are less affected, with UltraTech Cement only holding 4% capacity in the area, and ACC 2%. This could mean that the cost increase is passed on to consumers, raising the price of cement.

Vietnam: The general director of Vietnam Cement Industry Corporation (VICEM), Nguyen Thanh Tung, says that Vietnam will suffer continued cement overcapacity amid high production costs in 2025. Full-year production is forecast at 125Mt, 96% greater than an expected domestic demand of 63.5Mt. Việt Nam News has reported that Vietnam’s cement exports face an on-going investigation in Taiwan, and are already subject to anti-dumping duties in the Philippines.

VICEM aims to raise its domestic clinker sales volumes by 8% year-on-year to 18Mt, in order to generate sales of US$1.16bn. To this end, Tung urged the government to adopt cement reinforcement in roadbuilding, as well as lifting the export tax on cement.

Saudi Arabia: Northern Region Cement has announced a projected 10% increase in production costs following Saudi Aramco's adjustment of fuel prices.

The company stated that it will explore strategies to mitigate the financial impact, focusing on cost reduction and enhancing production and operational efficiency.

India: Cement companies are expected to report weak financial results for the December quarter of the 2025 financial year due to lower demand, suppressed by reduced government infrastructure spending and weak private capital expenditure, according to The Hindu Businessline.

Large players, including UltraTech Cement and Ambuja Cements, are expected to lead demand growth by 8% year-on-year in the December quarter, but earnings before interest, tax, depreciation, and amortisation (EBITDA) may decline by 18%. Efforts to increase prices in October and November 2024 were rolled back, and a mid-December increase reportedly failed to boost profits.

Parvez Qazi, research analyst at Nuvama Research, said “We expect further consolidation in the space mostly in the southern region due to its fragmented nature. Softening fuel prices, along with cost efficiency measures undertaken by various players, are likely to provide some relief on the cost front, thereby cushioning the impact of weak realisations to some extent.”

Saudi Arabia: Tabuk Cement has announced a 10% increase in production costs following a fuel price adjustment by Saudi Aramco, effective 1 January 2025. The financial impact will reflect in the company’s results from the first quarter of 2025.

South Korea: The cement industry in South Korea faces rising costs due to a rising won-to-dollar exchange rate following the attempted impeachment of the president, and transportation disruptions from a railroad strike. This is likely to lead to an increase in coal import costs, according to Chosun Biz news.

The ongoing strike by the National Railroad Workers Union has disrupted cement transportation, though stockpiles in metropolitan areas have mitigated immediate effects. However, prolonged strikes could force production halts.

Kim Seung-jun, researcher at capital market company Hana Securities, said “In the fourth quarter, cement production is expected to decrease by 14% compared to the same period in 2023.”

Vietnam: Major cement producers Vicem Bỉm Sơn, Bút Sơn, The Vissai, Thành Thắng Group and Xuân Thành Cement will increase prices from 20 October 2024 due to rising production costs from electricity, coal and packaging, according to Viet Nam News. A representative from Thành Thắng Group said that the company has recently faced a 4.8% rise in electricity prices, impacting production costs despite measures to improve efficiency and cut costs, like utilising waste heat recovery systems. The decision to increase electricity prices by Vietnam Electricity reportedly came into effect on 11 October 2024, with ongoing global geopolitical conflicts also contributing to rising costs for coal and oil.

The Vietnam National Cement Association said that price increases were ‘inevitable’, as cement has reportedly been sold below cost ‘for years’ and companies would likely not survive if prices were not increased to cover the additional costs. The list of cement producers raising prices is reportedly expected to increase in the coming weeks.

Pakistan: The Senate Standing Committee on Science and Technology heard on 10 October 2024 that some cement producers have obtained stay orders from courts against the Pakistan Standards and Quality Control Authority over unpaid marking fees. The marking fees equate to 0.1% of cement’s ex-factory price, and go towards ensuring that cement conforms to standards. Pakistan Today News has reported that only two producers have regularly paid the fee, with combined defaults valued at US$18m across the entire industry. A delegation from Saudi Arabia reportedly queried authorities about the lack of clear labelling.

Science and Technology Committee chair Kamil Ali Agha reportedly said "No one knows what quality of cement is being produced by local manufacturers.”