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Pakistan: Thatta Cement recorded net sales of US$19.1m during its 2022 financial year, up by 75% year-on-year from US$10.9m in its 2021 financial year. This included gross export sales of just US$3160, down by 99% from US$394,000 in the 2021 financial year. Thatta Cement's total cost of sales increased by 96% to US$18.1m from US$9.24m. Its raw material costs tripled to US$1.64m from US$546,000, while its fuel and power costs more than doubled to US$12.5m from US$5.89m. As a result, the producer recorded a profit for the year of US$387,000, down by 68% year-on-year from US$1.19m.
Chair Khawaja Muhammad Salman Younis said "The company showed better performance during the year, despite the tough market conditions, coupled with significant challenges and uncertainties due to political instability and the Russian-Ukraine war. Due to these factors, Pakistan’s economy remained under pressure throughout the year. Other economic factors such as the rise in energy prices in local and international markets, significant currency depreciation and a sudden hike in interest rates severely affected the industry's, as well as the company’s, performance." Noting the 'changing and challenging economic environment,' Younis said that Thatta Cement 'remained successful in achieving budgetary targets in terms of volumes and retention price.' He added "Our sales and marketing team put extra efforts into identifying the needs of our valued customers and explored new markets for the company, despite severe competition in the cement industry."
Update on Peru, October 2022
05 October 2022Cemento Yura said it was considering expanding cement and lime production this week. The announcement, made in an interview to business newspaper Gestión, follows a strong second quarter for the subsidiary of Grupo Gloria with clinker production volumes jumping up by 36% year-on-year to 0.51Mt. Overall for the half-year its clinker and cement production rose by 12.8% year-on-year to 0.86Mt and 12.7% to 1.47Mt. The success was attributed to consistent demand from the domestic sector as well as various large-scale mining projects. Julio Cáceres, the commercial director for its Cement, Concrete and Lime Division in Peru, Chile and Bolivia, wouldn’t say where the company was considering heading next, other than that remarking that it was attentive to new markets.
As Cáceres’ job title implies Cemento Yura also operates cement plants outside of Peru. At home it runs one integrated plant in the south of the country near to Arequipa as well as a lime plant at Juliaca. Outside of Peru though it also runs two integrated plants and a grinding unit in Bolivia, via its Sociedad Boliviana de Cemento (SOBOCE) subsidiary, and two integrated plants in Ecuador, via its Union Cementera Nacional (UCEM) subsidiary. The company also has assorted concrete assets. The international aspect to Cemento Yura’s business is interesting given that the larger cement producers in Peru are dominant in different parts of the country with Cementos Pacasmayo in the north, UNACEM (Unión Andina de Cementos) in the centre around Lima and Cemento Yura in the south. Notably, UNACEM also runs a plant in Ecuador and one in Arizona, US. It is also worth mentioning that competition issues have been reported in the local market previously. In mid-2021 Peru’s competition authority, the National Institute of the Defense of Competition and Intellectual Property Protection (INDECOPI), investigated Cemento Yura.
Cemento Yura’s rise in clinker production in the second quarter of 2022 is worth considering because in a previous interview with the local press Humberto Nadal, the chief executive officer of Cementos Pacasmayo, said that importing clinker had become more expensive in 2021. Subsequently, the company started a US$70m upgrade at its Pacasmayo plant to increase its production capacity by 0.6Mt/yr. In its second quarter financial results for 2022 Cementos Pacasmayo directly credited a 27% increase in its earnings on higher operating profits arising from decreasing costs by using less imported clinker. Sure enough data from Association of Cement Producers (ASOCEM) shows that both cement and clinker imports started to fall in October 2021 and have mostly followed a downward trend since then. Clinker imports fell by 41% year-on-year to 0.66Mt from January to August 2022 compared to the same period in 2021.
Graph 1: Cement production in Peru, 2014 – present. Source. Association of Cement Producers (ASOCEM).
Looking at the wider picture in Peru, cement production has stayed fairly consistent since 2014 at around 10Mt/yr. An upward trend probably started in 2019 but then the Covid-19 pandemic cut it off in the first half of 2022 before the market surged back in the second half of that year. 2021 was a good year with production peaking at 12.9Mt. So far the first eight months of 2022 have seen production rise by 5.3% year-on-year to 8.64Mt.
In summary, cement production is rising in Peru, importing clinker appears to have become more expensive for at least one of the producers and some of the larger local companies are investing in new production capacity, considering it or thinking about acquisitions elsewhere. Local clinker producers appear to be in a good place; clinker importers, or those reliant on it, not so much.
UK: Breedon Group, together with Australia-based First Graphene, Morgan Sindall Construction & Infrastructure and the University of Manchester, is developing a new reduced-CO2 graphene-enhanced cement. The consortium is currently formulating the cement using varying doses of First Graphene’s PureGRAPH graphene-enhanced grinding aid. The project received a research grant from the UK government earlier in 2022. First Graphene says that the study involves one of the largest commercial trials of its kind to date globally. It is simultaneously collaborating on another similar trial with a Europe-based speciality chemicals producer.
On 29 September 2022, First Graphene launched its latest range of graphene-enhanced cement grinding aids and concrete additives. These join recent launches PureGRAPH AM, an admixture developed in collaboration with South Africa-based Nanoproof/Glade Chemicals, and HexMortar, a dry mortar mix which will be distributed by New Zealand-based GtM Action.
First Graphene says that its cement and concrete segment’s order pipeline totals US$113m in value. Managing director and chief executive officer Michael Bell said “It is pleasing to see our efforts, and those of our collaboration partners, coming to fruition at a commercial scale. One of the primary drivers for the adoption of graphene solutions in this segment is the reduction of CO2 emissions. We’re seeing considerable benefits both in the immediate reductions that can be achieved through the use of graphene-enhanced grinding aids, as well as the potential reductions in concrete usage because of the enhanced physical properties these products provide.” Bell concluded “Working with industry-focused partners such as Nanoproof/Glade Chemicals, GtM Action, Breedon Cement and Fosroc opens the way to an estimated addressable market of more than 12,000t of PureGRAPH across the medium to long term.”
Indian cement market profits expected to fall in 2023 financial year
28 September 2022India: Ratings agency Crisil forecasts that the operating profitability of cement producers will decline by around 15% year-on-year to around US$11/t in the 2023 financial year due to growing fuel costs. However, it added that a 17% growth in cement demand in the quarter from April to June 2022 would mitigate the impact of this. It expects that growth in the cement market in the 2023 year will be driven by non-residential sectors such as infrastructure development and commercial projects. By region, growth is anticipated to increase fastest in eastern regions, followed by central and southern regions but the northern and western regions could be more subdued. It added that any significant delay in the reduction of petcoke and coal prices or any company that was unable to increase its cement prices would add further pressure to the market.
Lafarge Zimbabwe to increase cement capacity
13 September 2022Zimbabwe: Part of Lafarge Zimbabwe’s approved US$25m capital expenditure investments will go towards further expanding the company’s cement capacity in order to meet local demand. The company also plans to establish a new dry mortars plant. Lafarge Zimbabwe is on track to commission a new vertical roller mill at its Manresa grinding plant in early 2023. Lafarge Zimbabwe’s chief executive officer Geoffrey Ndugwa said, “The overall market demand continues to grow, driven by the segment of individual home builders as well as the ongoing major government infrastructure development projects. The company is confident that volumes will recover and grow as the availability of cement stabilises.”
Vietnam’s cement and clinker export tariff to rise from 1 January 2023
12 September 2022Vietnam: Cement producers and exporters will pay an additional 5 – 10% tariff on their exports of cement and clinker from 1 January 2023. Viet Nam News has reported that the move aims to bring down local cement prices by increasing supply in the country. These have risen over the past six months, while export prices have remained level.
The Vietnam National Cement Association (VNCA) says that its members are struggling to increase exports in a highly competitive export market. In the six months up to the end of August 2022, China, the Philippines, Bangladesh, Malaysia and Taiwan all reduced their imports of Vietnamese cement. The decline included a ‘substantial’ reduction of imports by China and the Philippines. Exporters faced logistical difficulties in shipping cement to the Philippines, while China’s consumption dropped due to new Covid-19 restrictions and low residential construction activity there.
The VNCA forecasts cement production of 108Mt in 2022, against a national demand of 65Mt. It projected that a series of infrastructure projects will bolster domestic consumption between 2022 and 2025.
Armenia to reduce cement and clinker tariffs
12 September 2022Armenia: The tariff on cement imports has been reduced by 35% to US$22/t, from US$34/t previously, following changes to import rules by the government. Imports of clinker will be subject to no tariffs.
News.am has reported that seven-month cement imports to Armenia rose by 1.7% year-on-year in the period up to 31 August 2022, to 84.7Mt from 83Mt. The cause of the growth is variously the cancellation of an income tax refund on mortgages from 1 July 2022, the increased immigration of Russian citizens into Armenia and the growth of tourism.
Argentine cement despatches grow by 11% to 8.54Mt so far in 2022
09 September 2022Argentina: Total despatches of cement grew by 11% year-on-year to 8.54Mt in the first eight months of 2022 from 7.67Mt in the same period of 2021. Data from the Asociación de Fabricantes de Cemento Portland (AFCP) shows that local despatches increased by 11.5% to 8.47Mt but exports fell by 10% to 67,800t.
Chilean cement despatches fall by 10% to 2.25Mt so far in 2022
09 September 2022Chile: Despatches of cement fell by 10% year-on-year to 2.25Mt in the first seven months of 2022 from 2.51Mt in the same period in 2021. Data from the Cámara Chilena de la Construcción (CCHC) shows that cumulative annual despatches have been falling month-on-month since January 2022.
Pakistan’s cement sales fall by a quarter in August 2022
07 September 2022Pakistan: Cement sales fell by 24% year-on-year in Pakistan in August 2022, due to increased energy, fuel and transport costs. Total despatches for the month came to 3.3Mt, against 4.3Mt a year earlier, according to data from the All Pakistan Cement Manufacturers Association (APCMA). Local shipments for August 2022 came to 2.9Mt against 3.8Mt in August 2021, a fall of 24%. Exports fell by 26% to 0.39Mt from 0.52Mt in August 2021.
APCMA officials are of the view that the government needs to generate a viable policy for the construction industry, keeping in view the huge damage to national infrastructure after unprecedented recent flooding.