Global Cement Newsletter

Issue: GCW435 / 11 December 2019

Headlines


In case you’ve missed it there’s been a boom in cement demand in China during the current quarter. Henan province saw a run on cement prices in November 2019 that the local press described as ‘crazy.’ Some companies were issuing price adjustments twice a day, according to the China Cement Association. The article on the CCA’s website also includes a video showing dozens of cement trucks queuing at a mill with the caption ‘all the plants are like this, don’t ask the price any more.’

The CCA’s blamed the situation in Henan on pollution controls on production and a rebound in cement demand. Weather-based pollution controls enacted in late October 2019 shut-down or limited production at 66 of the province’s 72 clinker production lines. Builders were then forced to source cement from neighbouring Shanxi, Hebei and Shaanxi provinces. At the same time demand for cement from real estate and infrastructure sectors picked up in the fourth quarter of 2019. Following advice from the local cement manufacturers’ association, the provincial government relaxed the rules on peak shifting that normally run from November to February in a bid to control the situation. Cement prices in Henan hit a high in mid-to-late November 2019 and have since subsided somewhat.

Nationally, Chinese cement prices hit a high in late November 2019 beating the highest level in 2018 and also setting the highest price since 2011. The key regions driving the increase have been in central and south China, including Guangxi, Guangdong and Henan. One more thing to note here is that peak shifting or seasonal shutdown of production capacity has different dates in different provinces. So, potentially, the situation could repeat itself if unexpected demand continues and provincial governments fail to monitor the situation.

Recently a couple of economic indicators in China have suggested a recovery in infrastructure spending in recent months, supporting increased cement demand. Data from Wind quoted by the Financial Times newspaper suggests that the cement price rose by 15% since September 2019 in large cities. Reinforced steel (rebar) and aggregates prices have increased similarly. At the same time the South China Post newspaper has reported a growth in the Purchasing Managers’ Index (PMI), an indicator of manufacturing activity that could also point to renewed infrastructure spending. Central government is also reported to be taking measures to support provincial infrastructure development.

If true then this may be creating some pretty direct lessons in economic interventionism. The Chinese government appears to be stimulating demand for cement via infrastructure growth while restricting production at the same time. Cement prices have reacted in a ‘crazy’ fashion. The real tension here is between two conflicting desires: protecting the economy and protecting the environment. The state planners may be grappling with this one for a while.


Argentina: Holcim Argentina has appointed Christian Dedeu as its new chief executive officer (CEO) from January 2020. He is the first Argentine national to hold the position, according to the Mercado magazine. Dedeu graduated in economics from the Universidad del Salvador and he holds a MBA from the Universidad Austral (IAE) in Buenos Aires. He worked for ExxonMobil for eight years before joining Holcim in 2007. At LafargeHolcim he has worked in Argentina and Costa Rica in a variety of commercial, marketing and retail roles. He has been the commercial director for Argentina since January 2019.


Germany: Martin Stillger has been appointed as the chairman of the executive board of ThyssenKrupp Materials Services. This follows the appointment of Klaus Keysberg, who has moved to the executive board of ThyssenKrupp where he is now responsible for the businesses of Steel Europe and Materials Services.

Stillger has held various leadership and management positions at ThyssenKrupp Materials Services since 2008, most recently as chief executive officer (CEO) of ThyssenKrupp Schulte and the Western Europe and Technical Services operating units. Prior to joining ThyssenKrupp, the qualified mechanical engineer spent 17 years with Barmag, including five years as Chief Sales Officer and five as CEO. He will be succeeded as CEO of ThyssenKrupp Schulte and the Western Europe operating unit by Detlef Schotten, currently CEO of the Eastern Europe and Asia/Pacific operating unit, in January 2020.

In addition, Ilse Henne has also been appointed as Chief Transformation Officer (CTO) with immediate effect to drive transformation and growth. Previously she became Chief Operating Officer (COO) in January 2019 and this role will no longer be filled. The finance and human resources directorates on the board of ThyssenKrupp Materials Services will remain unchanged. Daniel Wodera will continue as chief financial officer (CFO) and Markus Bistram as chief human resources officer (CHRO).


Saudi Arabia: In a report on 17 Saudi cement companies including itself, Yamama Cement recorded a year-on-year increase of 24% in sales volumes to 4.27Mt in November 2019 from 3.45Mt the previous November. The volume produced was 4.30Mt, up by 22% from 3.54Mt in November 2018. Mubasher has reported that the country has 1.22Mt of cement in inventory, 3.8% more than the 1.18Mt it held at the end of November 2018. Southern Province Cement Company (SPCC) led the month’s sales, with 0.61Mt.


Venezuela: Venezuelan Chamber of Construction (CVC) president Mauricio Brin has estimated a capacity utilisation of 12.5% - corresponding to a production of 1.5Mt of cement from an installed capacity of 12Mt/yr. Noticias Financieras has reported that, according to Brin, production, which was hampered by power shortages, was sufficient to meet the construction sector’s demand. “Public construction has stalled and private investment is restricted to limited office developments in state capitals,” said Brin. He estimated a contraction of 95% year-on-year in construction compared to 2018.


US: A fire was successfully fought at Lehigh Cement’s 0.8Mt/yr integrated Tehachapi plant near Bakersfield, California on 8 December 2019. The Bakersfield Californian has reported that there were no injuries and no cause of the fire has been identified. Access difficulties exacerbated by extreme weather conditions caused fire crews to make two additional assistance calls.


Spain: The National Association of Mortar Manufacturers (AFAM) and the Association of Mortar Manufacturers and SATE (Anfapa) have announced their unification as a single organisation under the name of Anfapa. Alimarket has reported that the body will serve the interests of over 40 members and associates as ‘the qualified voice of an important subsector of the construction industry, giving it a broader and unanimous front.’


Netherlands: Germany’s HeidelbergCement’s subsidiary Eerste Nederland Cement Industrie (ENCI) announced on 9 December 2019 the upcoming closure of its former 1.8Mt/yr integrated Maastricht plant in 2020. Het Belang van Limburg has reported that the Maastricht plant, which stepped down to grinding-only in March 2019 after 91 years’ kiln operation, received an insufficient supply of clinker from ENCI’s sister company CBR Cement’s 1.5Mt/yr Lixhe plant in Wallonia, Belgium to guarantee profitable production.

Clinker grinding continues at ENCI’s 1.4Mt/yr IJmuiden and 0.6Mt/yr Rotterdam grinding plants, each of which has better access to clinker imports due to their proximity to deepwater ports.


US: Colombia’s Cementos Argos has sold 28 ready-mix concrete plants. ValorFuturo has reported that Smyrna Ready Mix Concrete (SRM) has acquired the company’s Arkansas, Georgia, South Carolina and Virginia assets. Cementos Argos stated that the reason for the divestments was the failure of the plants to generate operational efficiency due to their small and isolated nature.

In 2018 Cementos Argos produced 5.3Mm3 of concrete at its 236 ready-mix plants in the US region, making it the second biggest domestic producer after Cemex. It ranked fourth for cement production over the period, supplying the US market with 4.7Mt of cement from its four integrated and three grinding plants.


Indonesia: Switzerland-based Sika has begun producing concrete admixtures and mortars at its Bekasi plant on the island of Java. “This new facility in Greater Jakarta will enable us to further expand our strong position relative to the rapidly growing demand for quality building materials in Indonesia,” said Sika Regional Manager Asia/Pacific Mike Campion. He noted a Euro293m infrastructure investment by the government of Indonesia, Asia’s fifth-largest construction market, which he predicted will grow at 7% for the next 10 years.


Malaysia: Cahya Mata Sarawak (CMS) has responded positively to the government’s announcement that it will be subdividing its annual contracts for road maintenance between new concessionaries besides CMS’s 51% subsidiary PPES Works in 2020. “Competition in any market naturally breads competitive efficiency. This can only be good for the public and road users,” said CMS Group Managing Director Isaac Lugun. “We maintain the lion’s share,” he added.


US: Ireland’s CRH’s subsidiary Ash Grove Cement has engaged the education technology services provider Zovio Employer Services for the development of its higher education opportunities programme in partnership with Ashford University. “This provides employees with access to education to gain the right skill-set to advance into management positions. We also see the programme as a tool to attract new talent,” said Darcy Pugh, Ash Grove Cement Employment and Compensation Manager. Ash Grove plans to offer a tuition assistance benefit to 3000 employees for bachelor’s or master’s degrees at Ashford University. The university will also provide some full tuition grants.


Uzbekistan: Russia’s Eurocement has revealed that construction work underway at its 2.0Mt/yr integrated Akhangarancement cement plant in Tahskent region includes the installation of a second plant on the site, bringing its total capacity to 5.0Mt/yr. Trend News Agency has reported that suppliers have delivered 4500t of machinery to Akhangarancement, including a clinker refrigerator, clinker conveyor and heat exchanger as well as electrical equipment and building materials for a raw materials warehouse. Eurocement’s total investment in the project has amounted to US$200m.

Eurocement Group Holding International president Mikhail Skorohod said, “Taking into account the growing needs of the Uzbek market in building materials, Eurocement is committed to creation of a building materials cluster based around the Akhangarancement plant.” The company said that the upgraded 5.0Mt/yr plant would become operational in 2020.


Bangladesh: HeidelbergCement Bangladesh has announced the completion of its acquisition of Emirates Cement and Emirates Power from UltraTech Cement Middle East Investment. Financial Express has reported the value of the deal as US$21.5m.


Egypt: Alexandria Development Ltd, which owns an 88.93% stake in Alexandria Portland Cement, has submitted an offer for the remaining 11.07% of the company. In a statement to the Egyptian Exchange it stated its intention to delist Alexandria Portland Cement after completing its acquisition of the latter. Alexandria Development Ltd’s indirect owner is Greece-based Titan Cement.


Algeria: Algeria’s estimated value of exported cement in 2019 is US$60m, up by 200% from US$20m in 2018. Algerian Trade Minister Saïd Djellab noted increases to grinding capacity in Guinea Bissau, Senegal, Gabon and Mali as a potential source of revenue from clinker exports, according to L’Expression. “Algeria can meet the needs of these markets and become their leading supplier of clinker in 2020.” The minister estimated that the total value of cement and clinker exports ‘will reach US$400m by 2021.’


India: Demonstrations are underway at the gates of Uma Cement Industries’ Udhampur plant. Early Times has reported the cause as the alleged laying off of drivers without legal cause or notice. Drivers’ union president Rakesh Raina alleged harassment by Uma Cement Industries as well as irresponsible practices in forcing employees to drive overloaded vehicles.


Spain: Brazilian-based Votorantim Cimentos’ subsidiary Cementos Cosmos has received authorisation for the combustion of tyres to fuel the kilns at its 1.6Mt/yr Toral de los Vados plant in León. Diario del León has reported that the government of Castile and León will complete bureaucratic procedures finalising the permit before 25 December 2019.


India: UltraTech’s 3.2Mt/yr integrated Rajashree plant in Aditya Nagar, Karnataka received its first petcoke delivery by rail, dispatched from Mangalore Refinery Private Limited (MRPL)’s new mechanised handling facility. The installation cost US$23.4m and can load 3600t of coke at a time into 59 cars, enabling it to process MRPL’s refinery’s 1.0Mt/yr quickly and in a way that reduces the load on road transport.


Spain: Cement Portland Valderrivas’ 1.6Mt/yr integrated Alcalá de Guadiara plant in Andalusia one of five participants in an initiative for the prevention of operational risks called ‘Share It PRL.’ The initiative entails implementation of integrated business activity coordination software and communication stations throughout the Alcalá de Guadiara plant.


Russia: SLK-Cement has launched a website that combines the functions of its previous websites, which served its Sukhoi Log and Korkino plants individually. Slkcement.com will serve as an information base and communication channel, based on the architectural platform of Buzzi Unicem’s website, according to AMF. The website’s inception coincides with the launch of rebranded SLK-Cement cement.


Pakistan: Cement producers in Pakistan have increased volumes in the five months to 30 November 2019 by 5.8% year-on-year to 20.5Mt from 19.9Mt. This represents 82% utilisation of its 55.9Mt/yr capacity. Exports over the period were 3.61Mt, up by 22% year-on-year from 2.97Mt in the same period of 2018. The All Pakistan Cement Manufacturer Association (APCMA) released a statement lobbying the government to intervene in replacing bricks, the production of which it says causes smog in central Punjab, with concrete blocks. “Government should start work on announced housing projects that would have a positive impact on uptake of cement,” it said.


US: A LafargeHolcim employee who died at the company’s Holly Hill plant in South Carolina ‘had an accident’ according to Orangeburg County Chief Deputy Coroner Sean Fogle. Fogle has yet to determine the cause of death of the 65 year-old, who fell from the fourth to the third floor before 9:00AM on 4 December 2019 and died at the scene. The State newspaper has reported that the Orangeburg County Coroner’s Office and Sheriff’s Office are investigating the fatal incident. Neither body has ruled out the possibility of criminal sanctions against the deceased’s former employer.


Nepal: Udayapur Cement has started work on an upgrade to its 0.3Mt/yr integrated plant aimed at bringing its capacity to 0.4Mt/yr with an investment of US$92,000 from the Ministry of Industry, Commerce and Supplies. Republica has reported that the company’s Sindhali mine has resources to supply 200 years’ production. “The company is self-sufficient in all raw materials except coal,” said Nawal Kishor Shah, Udayapur Cement general manager.


Nigeria: 157 of Cement Company of Northern Nigeria (CCNN)’s 170 accredited shareholders have voted in favour of the company’s planned merger with Obu Cement. The Nation newspaper has reported that the company will submit the result to the Securities and Exchange Commission, which will duly ratify it with the federal High Court, formalising the merger in law.


Spain: Cementos Molins has obtained loans from CaixaBank, Sabadell, BBVA, Santander and HSBC to a total value of Euro180m. EuropaPress has reported that the funds, consisting of a loan of Euro40m and a Euro140m revolving credit facility, of which Euro50m will be immediately available, will be used to clear the company’s debt and for future projects. The interest will be Euribor plus 0.9%.