Global Cement News

Iran: Iranian cement production surpassed 49.14Mt in the first eight months of the current Iranian calendar year which began on 20 March 2012. The figure is 6% higher than in the same period of 2011, according to the IRIB News Agency. Iran also exported over 9.38Mt of cement and clinker over the same period, a 30% increase compared to the same period of 2011.

Some 8.25Mt of cement and 1.14Mt of clinker were exported during the same period. Iraq, central Asian countries, the United Arab Emirates and Afghanistan were its main customers.

Iran's cement production capacity currently stands at 86Mt/yr, according to the Iranian president Mahmoud Ahmadinejad. He said that the country currently produces some 76Mt/yr.

"Six year ago Iran was dependent on importing cement and nobody would believe that one day the country could become an exporter in the field. However, as we see today, Iran has become one of the world's greatest cement producers and exporters," said Ahmadinejad.

In August 2012 Iran's Industry, Mine and Trade Minister Mehdi Ghazanfari said that the country's cement production capacity would reach 110Mt/yr by 2015.

Nigeria: The 4Mt/yr Dangote Cement plant in Gboko, Benue State, is due to shut because of glut of cement in the market, according to an announcement from the company.

The move was necessary because of the increase in local production of cement and also the continued import of subsidised cement into the country, according to the group's head of corporate communication Anthony Chiejina. He said in a statement that the production figures for the first 11 months of 2012 show that local supply now exceeds demand.

The total supply of cement to the Nigerian market at the end of November 2012 was a record 11.4% higher than by the same point in 2011. Chiejina said it was disheartening to note that despite the glut in the local cement market, cement imports, though reduced, have continued, thus calling to question the rigorous implementation of the backward integration policy, which was introduced to encourage local production.

Explaining why the Gboko plant should be shut, Chiejina said, "With the dumping of subsidised imported cement in the south-eastern market there is no way that our Gboko Cement plant can survive. The inventory of finished products is beginning to build up at our plants. Don't forget that projects from our investments of about US$1.8bn in additional capacity are already on stream, with lines three and four at Ibese and line four at Obajana, coming on stream early this year."

Chiejina said that other Nigerian manufacturers are also experiencing the same problem of low sales and high inventory. He advised that the government should vigorously implement the provisions of the cement backward integration policy, which he said is needed to protect local manufacturers from dumping. Chiejina said that he wants the government to consider the total ban on cement imports, in view of the fact that local production now surpasses demand for cement and in the interim also increase duty and levy on imported cement to the maximum permissible level.

Australia: Building products maker Boral is cutting 90 jobs as it reduces some manufacturing at a cement plant in Geelong, Victoria, in favour of imports. About 90 staff at the Waurn Ponds cement plant will be affected by the suspension of clinker production. Boral intends to import clinker due to the high Australian dollar and low shipping costs and use the plant as a cement milling facility only. It is thought that the kiln will be shut down by April 2013.

The Australian Workers' Union (AWU) said that it will work with the company to try and save as many jobs as possible. Talks will be held with the workers over coming weeks to explore all options, to avoid or mitigate job losses and to organise redundancies or redeployment within the company.

"A continued low level of demand associated with the downturn in Australian building and construction activity is also adversely impacting the profitability of Boral's cement business, where high fixed cost manufacturing assets continue to be under-utilised," said Boral's CEO Mike Kane said in a statement. "Across all of our businesses we need to ensure that we are aligning our domestic production with demand levels and that our cost structures are globally competitive and can be sustained through the cycle."

UK/US: In anticipation of tighter regulations for mercury emissions, SICK has developed the new MERCEM300Z mercury measuring system, a high-accuracy continuous-flow gas analyser for emissions down to the 0–45µg/m³ range from a wide range of combustion sources.

According to SICK, the patented gas spectrum of the MERCEM300Z rapid monitoring system offers superior performance with better long term, drift-free accuracy and lower running costs. The system requires minimal maintenance, is self adjusting and uses no chemical consumables.

"Awareness of the pollution caused by mercury and its compounds in combustion emissions is increasing in the UK and Europe," explained John Exford, Process Automation Division Manager, SICK (UK). "From power generation, cement kilns and hospital waste to crematoriums, the need to tighten up on mercury will be very important in 2013, when the EU will be following the United Nations lead in a world-wide treaty."

Mercury emissions are a particularly pertinent issue in the US cement industry, which will experience tighter mercury level controls in 2013.

Step forward UltraTech Cement into the vertical rumour mill! The Indian cement producer is the latest company reported as wanting to buy Jaypee Group's cement business in Gujarat. It follows Italcementi, Aditya Birla and CRH, who announced in October 2012 that negotiations had been 'terminated' as the parties had been unable to agree terms.

This time the asking price has risen, with Ultratech allegedly offering US$160-165/t and Jaypee holding out for US$180-185/t. Whilst UltraTech hasn't publicly confirmed the move, it pointedly hasn't denied it either. The Aditya Birla Group subsidiary only commented to the Bombay Stock Exchange that it had not issued any press releases on the subject. Aditya Birla Group itself was reported in October 2012 as pursing interest at US$130/t for Jaypee's 9.8Mt/yr operations in Gujarat and Andhra Pradesh.

Given the number of rumours and cash-rich CRH's very public failure to strike a deal it seems likely that Jaypee has a specific price in mind and it's sticking to it. Prasad Baji of Edelweiss Securities stated in a television interview with CNBC-TV18 that he thought that the cement industry cycle was starting to look up. Crucially he predicted that India's capacity utilisation was set to rise from its current level of 78% to 82% despite price declines in the current quarter.

This is in sharp contrast with Fitch Ratings which rated the Indian cement industry with a negative outlook at the start of 2012 and reports in late May 2012 that capacity ultilisation had actually fallen from 76% to 71%. Since then ICRA Research reported in late September 2012 that it expected Indian capacity ultilisation to stick to 76% for 2012 with prices showing 'resistance' in some regions to cost increases due to rising input costs.

With all this in mind it seems likely that UltraTech will join the growing list of Jaypee's spurned buyers when it fails to reach terms or when the rumours simply fizzle out. However if UltraTech does strike a deal the Indian industry will be the one to watch in 2013. According to data in the Global Cement Directory 2013, an acquisition of nearly 10Mt/yr production capacity would boost UltraTech's capacity to 62Mt/yr making it the 12th largest cement company in the world.