Displaying items by tag: demand

India: The India Ratings and Research credit ratings agency has said that demonetisation of the economy is likely to reduce growth in the cement industry by 2% to 4% in the 2016 – 2017 financial year that ends on 31 March 2017. Previously it had predicted growth of up to 6% in this period. The agency reported that cement production grew by 0.5% in November 2016 following rates of 5.5% and 6.2% in September and November 2016 respectively. It added that all India volumes fell by up to 25% in November and December 2016. The agency expects demand for cement from the housing sector will to decline further from its current contribution of 65% of all demand.

Vietnam: Nguyen Quang Cung, chairman of the Vietnam Cement Association, has predicted that the country will face an oversupply of nearly 50Mt in 2020. The local industry’s cement production capacity was nearly 88Mt/yr in 2016. It is expected to reach 108Mt/yr in 2018 and up to 130Mt/yr in 2020, according to comments made by the association to the Saigon Times. Domestic demand is estimated to be 82Mt in 2020 thereby creating the shortfall. The association is also lobbying for a two-year delay in regulation changes made in 2016 that are expected to make exporting cement more expensive for producers.

India: Demonetisation of high value Indian rupee currency notes reduced cement demand by 45 – 50% in November 2016. Demand for cement fell across regions with the central region including Uttar Pradesh and Madhya Pradesh suffering the least, according to the Hindu newspaper. The decline has hit the industry when it was expecting an increase in demand stimulated by infrastructure development following the monsoon season.

A slowdown in real estate activity has particularly affected the cement industry as the majority of cement in the country is used by the realty sector. RP Gupta, chairman and managing director of Shiva Cement, said that contractors are finding it difficult to make cash payments for buying raw materials such as sand, bricks and stones as well as paying wages. Cement companies are reportedly trying to help dealers install bank or credit card payment machines to reduce cash-based transactions.

Zimbabwe: Sino Zimbabwe Cement Company may cut shifts in response to poor local demand for cement. Managing director Wang Yong told the Business Chronicle that local demand for cement has fallen by 25% due to a poor construction market. The cement producer is considering reducing its current pattern of three shifts to just one day shift.

Despite market concerns, the company has spent US$1m towards building storage space for raw materials and transport infrastructure improvements. In 2015 it completed a US$5m upgrade to double its production capacity to 0.4Mt/yr.

India: The credit ratings agency ICRA has predicted that cement demand is likely to increase by 6% year-on-year in the 2016 – 2017 financial year from 5% in the previous period due to a government focus on developing infrastructure and better weather. The growth in demand is also likely to lead to higher prices, especially in the northern and eastern states. Infrastructure development is expected to arise from road and house building.

"With the pace of new capacity addition slowing down, we expect capacity utilisation and the supply-demand scenario to show an improvement, especially in the 2017 – 2018 fiscal year, which should support cement prices and profitability indicators for cement manufacturers," said ICRA Ratings’ Senior Vice-President Sabyasachi Majumdar.

ICRA report that growth in demand for cement slowed to 3.4% in April and May 2016 from 9 – 13.5% in January to March 2016. It attributed this to weak rural demand, especially in Maharashtra, and a slowdown in infrastructure development partly due to a drought. However, demand grew faster in north and east India.

Russia: Filaret Galchev, the owner of Eurocement, expects that demand for cement in Russia will fall by 8% - 10% in 2016 after falling 12% in 2015. The cement producer will sell about 20Mt of cement in Russia and about 3.5Mt in other regions including Uzbekistan and Ukraine in 2016. He added that average production costs at the group will produce cement at around US$25/t.

In an interview with Rossiya 24 television reported upon by Interfax, Galchev also described Eurocement’s sale of its 6.1% stake in LafargeHolcim in February 2016 as ‘unexpected’. The Russian cement producer sold its share in LafargeHolcim after they lost nearly half of their value in six months.

"No, I did not expect it. We analysed the situation for a long time, but that is the decision that was made," said Galchev. He added that he had no issues with Sberbank, the Russian bank that restructured Eurocement’s debt after the sale of the shares in LafargeHolcim.

Originally Eurocement was a shareholder in Holcim and it received a stake in LafargeHolcim after that company was formed in a merger. The stake was subsequently transferred to Sberbank of Russia in January 2016 after the shares, which Galchev had acquired with financing from Bank of America, lost over 40% of their value in half a year. At the beginning of February 2016, Sberbank sold the 6.12% LafargeHolcim stake to investors from the UK, Switzerland, the US and other countries.

Cameroon: Cameroon's demand for cement has risen dramatically despite the increasing volume of imports and local production, according to sources at the Ministry of Economy and Planning. According to the ministry, Cameroon's cement demand grows by 8%/yr and the country currently has a deficit of 2.5 – 3Mt. In 2014, local cement production was estimated at 1.3Mt and imports were around 1.2Mt.

Despite the government's bid to ban imports to boost domestic production, foreign producers continue to have significant market share in the country, importing to almost 1.3Mt in 2014 compared with 561,190t of cement in 2011. Cameroon's cement production is presently estimated at 3.6Mt/yr.

Bolivia: Itacamba Cemento intends to import 50,000t of cement in 2015 to guarantee supplies in Santa Cruz. Itacamba Cemento will also raise its production by 6% in 2015 to 3.6 million bags.

Cement demand in Bolivia is expected to increase by 8 - 10% in 2015 according to estimates by the local cement industry. However, due to insufficient local production, cement has to be imported. In 2014 the government used Insumos Bolivia to import about 600,000 bags of cement. A similar amount is planned for import in 2015.

Guillermo Schrupp, the president of the Construction Chamber in the Santa Cruz department of Bolivia, Cadecocruz, has said at least two or three more cement plants are needed in the medium to long term in order to meet rising demand until the Rositas hydroelectric dam is completed in 2018.

Saudi Arabia: Demand for cement has dropped by 5% as production surpluses reached 22Mt, an amount that can cover cement consumption for five months. Jihad Al-Rashid, head of the National Committee of Cement Producers, said that total production of the national companies reached 57Mt/yr, according to local media. The committee is working with the Ministry of Commerce to allow companies to export cement as a solution. Al-Rashid attributed the existence of big surpluses of cement to a delay by the Ministry of Housing and a subsequent decline in the construction pace.

The fall in demand has occurred when cement producers predicted that demand would rise by 5%. Cement prices cannot be reduced as prices are fixed by the Ministry of Commerce. As a temporary solution some of the producers may extend maintenance periods. Abdulrahman Al-Qarni deputy president of Abawain Holding Company said that cement demand normally drops towards the end of each year, when the majority of construction companies have finalised their projects and begun to explore orders for the new year.

El Salvador: The cement industry in El Salvador is expected to grow by just 1% in 2014, according to the executive director of Holcim in the country, Ricardo Chavez Caparroso. Holcim itself will grow very little, with lower exports expected. Investments into property projects have been low and planning permission rules are 'too tight' according to Chavez Caparroso.

Chavez Caparroso believes that the government should come up with a new strategy to boost the cement sector and that housing projects should be supported via clear and well-defined policies, especially given the country's current housing deficit. He added that Holcim hopes to secure a lucrative road contract in the country, which would help its sales.