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The Construction Products Association (CPA) has just forecast a 25% drop in construction output for 2020 in the UK due to Covid-19. And this is the optimistic prediction! It blamed the decline, which is said to be the sharpest ever recorded, on the country’s coronavirus-related lockdown. 60% of planned construction output was lost in April 2020 due to social distancing measures. This compares to a 6.5% decline in gross domestic product (GDP) forecast for 2020 by the International Monetary Fund (IMF) in April 2020 for the UK. OneStone Consulting’s Joe Harder in his Covid-19 Impact Analysis CIC 2025 report has forecast a 12.7% decrease in European cement production. Readers should keep in mind that construction output, GDP and cement production are all connected but not necessarily directly related.

Further details of note from the CPA include a direct link between the strength of lockdown measures and work lost, as well as differences between types of activity. So, for example, more construction output (in percentage terms) was reported lost in Scotland, where tighter lockdown measures were implemented. On the latter point, more output was lost in residential construction compared to non-residential with a similar trend reported in the repair, maintenance and improvement sector, again worsened in the residential part of this market. The sector that suffered the least was non-residential repair and maintenance as work on, currently, mostly deserted buildings and infrastructure was prioritised. One example of this may have been Aggregate Industries, the UK subsidiary of LafargeHolcim, which said this week that it had completed major works on the A14, a major regional trunk road, ahead of schedule. It didn’t directly make the link in its press release but quiet roads would have helped.

The CPA is touting the now-familiar range of letter-shaped economic recession shapes in the report, including ‘V’, ‘W’ and the dreaded ‘U’. However, the CPA’s Economics Director Noble Francis was more confident that infrastructure projects would bounce back fastest due to favourable investment cycles in utilities, government support for its high-speed railway scheme HS2 and, “greater ability to implement safe distancing for workers on larger sites.”

That last point ties in nicely with the operational guidance that the Mineral Product Association (MPA), the UK’s trade association for the heavy building material sector in the UK, released last week. This is all crucial information on a comprehensive and detailed scale along the lines released in other countries.

Much of this will be becoming second nature to cement industry workers and/or will be familiar to anyone who has watched US consultant John Kline discuss these issues on Global Cement Live. Yet there are some points worth discussing here such as ‘Avoid Distraction.’ This one’s all about remembering to keep in mind existing health and safety practices alongside all the coronavirus-related ones. All the usual health and safety regulations and advice remain in place and in some ways become even more important as there may be fewer staff working on socially-distanced sites, or first responders may be otherwise busy elsewhere. Another point from the MPA’s guidance is to ‘Provide More Time,’ which acknowledges that working with coronavirus measures will require more time. Other implications from a business changed by coronavirus are things like notifying the police when sites are closed and considering further security for such sites to minimise risk of theft. A lot of this stuff seems obvious but it’s easy to miss things.

For a recent review of the UK cement industry readers should refer to Edwin Trout’s feature in the June 2020 issue of Global Cement Magazine. One change since it was published has been Cemex’s proposal to mothball its 0.8Mt/yr South Ferriby integrated plant in Lincolnshire. The cement producer says it is not related to coronavirus but if the CPA’s predictions are accurate then it will make it that much harder to keep the plant open.

Everyone’s hoping for a ‘V’ shaped recovery from the coronavirus downturn in the UK and everywhere else around the world. Boots on the ground operating advice like that issued by the MPA and others is part of how the construction materials industries can work towards achieving this.

Belarus: Krichevcementnoshifer exported US$2.47m-worth of cement in the first quarter of 2020, up by 41% year-on-year from US$1.75m-worth in the corresponding period of 2019. Belta News has reported that the company, whose 0.6Mt/yr integrated plant at Krichev, Mogilev region serves the eastern Belarusian and Russian markets, made total sales of US$15.4m, up by 22% year-on-year from US$12.6m. Krichevcementnoshifer CEO Vladimir Korchevsky said, “We consistently ship 5000t of cement to consumers every day. April 2020 saw shipments reach 6000t/day. We can conclude that, despite the current difficulties associated with the coronavirus pandemic, the demand for our products has not decreased.”

In April 2020 Krichevcementnoshifer completed construction of an elevated track for the unloading of bulk materials from railway cars, reducing unloading time.

France: Vicat has reported first-quarter sales of Euro615m in 2020, up by 7% year-on-year from Euro600m in the first quarter of 2019. Cement sales grew by 5.5% to Euro319m (52% of total sales), up by 5.5% year-on-year from Euro302m.

Vicat chair and CEO Guy Sidos said, “The Group's performance over the first quarter of 2020 was solid despite a sharp slowdown at the end of the period in France, India and Italy.” In spite of the coronavirus crisis, “Industrial and commercial activity was maintained on almost all sites, in line with market evolutions.” Sidos says that the group expects ‘a significant impact on first-half results’ in 2020.

Colombia: Cementos Argos’ first quarter profit was US$1.00m, down by 73% year-on-year from US$3.76m in the corresponding period of 2019. Sales fell by 0.2% to US$545m from US$547m. The volume of cement it sold fell by 6.1% to 3.62Mt from 3.86Mt in the corresponding period of 2019. The company launched RESET, a savings initiative in response to the coronavirus outbreak, which aims to save between US$75.0 and US$90.0m in 2020.

Cementos Argos’ CEO Juan Esteban Calle said, “Given the US$154m-strong cash position of the company, the saving initiatives within RESET, the support from our stakeholders, and the passionate commitment of our more than 7000 employees, we firmly believe that Argos is fully prepared to face the current market conditions.”

Colombia’s coronavirus lockdown ended on 13 April 2020 for infrastructure projects and on 27 April 2020 for cement production and residential and commercial construction. On 5 May 2020 Cementos Argos said that domestic demand was at 50% of pre-lockdown levels.

Austria: RHI Magnesita has published a trading update in which it says that ‘the difficult market environment of the second half of 2019 continued into the first quarter of 2020, with limited impact from the COVID-19 outbreak.’ Demand remained consistent year-on-year, with its industrial division continuing to perform well, particularly in cement.” The company noted lower raw material costs due to ‘reduction in overall demand and uninterrupted supply from China.’ RHI Magnesita has increased its focus on cost management, temporarily closing one Mexican and three European plants, introducing short-time working and deferring at least Euro45.0m of capital expenditure in 2020.

In the second quarter 2020, RHI Magnesita said, “The trading environment has become increasingly challenging” as a result of the COVID-19 outbreak, which caused a drop in ‘customer activity and order book levels.’ In spite of this, cement sector sales ‘remained relatively resilient,’ with some producers ‘accelerating maintenance work in shutdowns,’ partially offsetting the effects of project postponements.

France: Cem’In’Eu has announced plans to establish a Euro23.0m grinding plant at Portes-lès-Valence in Drôme department. The La Tribune newspaper has reported that the plant will receive imported clinker produced at Adana Çimento’s 5.2Mt/yr integrated Adana plant in Turkey by river and rail from the port of Sète. Cem’In’Eu president and Vincent Lefebvre said that the location “allows us to be in the middle of a Lyon-Marseille-Montpellier triangle but also to be connected to the Alpine valleys.”

The grinding plant is due for commissioning in mid-July 2021, however the coronavirus has delayed the start of construction.

Switzerland: LafargeHolcim has reported sales of Euro5.03bn in the first quarter of 2020, down by 11% year-on-year from Euro5.66bn in the corresponding period of 2019. Cement sales over the period fell by 10% year-on-year to 45.0Mt from 50.0Mt. The group’s earnings before interest and taxation (EBIT) was Euro249m, down by 14% from Euro290m.

LafargeHolcim CEO Jan Jenisch said that the results showed the group’s ‘resilience, despite the COVID-19 outbreak in China’ in January 2020. Other markets were disrupted from mid-March. “I am confident that LafargeHolcim will emerge from this pandemic as an important contributor to economic recovery as building activity gets back to normal,” he added.

LafargeHolcim’s coronavirus action plan consists of a Euro380m year-on-year capex reduction, a Euro285m year-on-year fixed cost reduction, realisation of energy price reductions, a review of all third party products and services and a reduction of net working capital in line with the level of activity.

Mexico: Cemex has recorded a consolidated net income of US$47.2m in the first quarter of 2020, down by 13% year-on-year from US$54.1m in the same quarter of 2019. Net sales rose by 6% to US$260m from US$245m. Cemex said, “The world is going through an unprecedented time due to the COVID-19 pandemic. Construction activity across most of our markets is being impacted to varying degrees.”

In 2019 Cemex’s net income was US$179m, down by 69% year-on-year from US$570 in 2018. Net sales were US$13.1bn, down 3.0% from US$13.5bn in 2018.

Egypt: Suez Cement, a HeidelbergCement subsidiary has implemented of a 20% reduction in pay for members of the management committee and a 30% reduction in pay for the managing director in the second quarter of 2020. The cuts are intended as a ‘cost-saving measure’ in line with the company’s aim to reduce expenses. Suez Cement said, “During the last few years the Egyptian cement industry has been going through very challenging times caused by oversupply and a sustained decrease in the demand, and Suez Cement Group has posted negative results. The COVID-19 crisis has complicated market conditions, affecting demand and increasing our costs. Moreover, it has affected our main shareholder, HeidelbergCement. In many countries it has suffered complete shutdowns and it is currently enduring complications in most of the countries that is present.”

Suez Cement continues to employ all staff.

Australia: Germany-based Siemens subsidiary Flender has published plans for a drives production plant in the Tonkin Highway Industrial Estate, West Australia. The plant will serve the gear needs of the energy, minerals and cement industries. The unit is equipped with a 1.5MW test bench capable of testing drive systems of up to 6.6kV. Flender Australia chief executive officer (CEO) and managing director Kareem Emara said, “Western Australia has been an excellent market for us in the recent years. It’s only natural for us to reinvest in this key market and be where our customers are to offer them the combined brains trust of over 50 facilities worldwide through this new state-of-the-art centre.”