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Algeria: Groupe Industriel des Ciments d'Algérie (GICA), the government-owned cement producer, has launched the certification process of its oil well cement ahead of plans to produce the product itself. A sample batch of 300t was produced in November 2016, according to the Algeria Press Service. Rabah Guessoum, the chief executive officer of GICA, said that the cement will produced at the company’s Setif plant and sold to Sonatrach group and foreign oil companies. A national demand of around 300,000t/yr is anticipated.
Holcim Lanka rebrands as Insee Cement 08 December 2016
Sri Lanka: Holcim Lanka has been rebranded as Insee Cement following its acquisition by Thailand’s Siam City Cement. The company will continue to use its Sanstha and Mahaweli Marine brands of cement but it will also introduce Insee Pro, Insee Pro Plus and Insee Extra brands, according to the Daily Financial Times newspaper.
Camargo Corrêa exploring sale of 40% stake in Loma Negra 08 December 2016
Argentina: Brazilian cement producer Camargo Corrêa is in talks to sell a 40% stake in Loma Negra. The company is exploring a potential sale with an unspecified number of bidders, according to Reuters and Brazil Journal. The proceeds of any successful sale will be used to reduce the debts of InterCement, the holding company that Camargo Corrêa uses to manage assets it purchased from Cimpor. Loma Nega is the largest cement producer in Argentina.
US: The Portland Cement Association (PCA) has lowered its forecast for cement consumption in 2016 to 2.7% from a previous estimate of 4%. It has also revised downwards its forecast for 2017 to 3.1% from 4.2%, attributing the declines to post-election political uncertainty, inflation and slower construction activity.
“President-elect Trump continues to shape his cabinet and policies, thus making it difficult to forecast potential outcomes at this point,” said PCA Chief Economist Ed Sullivan. “The impact of uncertainty is expected to be compounded by increased inflationary expectations which will impact long-term bonds and loans, such as mortgages – to the detriment of cement consumption.”
In the meantime the PCA has presented three potential political scenarios in its forecast that could shape policy priorities. These scenarios take into account various levels of political support from the US Congress, as well as possible shifts in the President-elect’s previously announced policy objectives that impact cement consumption.
Update on the Philippines
Written by David Perilli, Global Cement
07 December 2016
Construction firm DMCI Holdings announced plans this week to enter the Philippine cement market. The company intends to build one cement plant on Semirara and three cement grinding plants elsewhere – at Batangas, Iloilo and Zamboanga – to give it a national presence. DMCI’s managing director Victor Limlingan admitted to local press that his company was taking a gamble on spending US$368m in this way.
It has staked its money on the Duterte Infrastructure Plan, a scheme from the new administration that was elected in June 2016 to target US$165bn (!) towards infrastructure spending until the early 2020s. Even if a portion of this money makes it from political hyperbole to the diggers then it is likely to mean a sustained construction boom for an economy that is already growing at around 6%/yr. DCMI’s excitement was almost palpable in mid-November 2016 when it put out a press release calling for potential partners to help it benefit from the rush when it comes. Although the company did add that all the discussions were at the exploratory stage at this time because it was still awaiting bidding documents.
DMCI’s project joins six plants in various stages of planning and construction from San Miguel, Northern Cement, Eagle Cement and LafargeHolcim. In addition four existing plants are carrying out upgrades to increase their production capacity. Clearly, things are looking up for the local cement industry. DMCI follows San Miguel which announced that it was going to spend US$1bn on building five cement plants around the country in mid-2015.
In line with this kind of investment the Cement Manufacturers Association of the Philippines (CEMAP) said that cement sales had risen by 10.1% year-on-year to 20.1Mt in the first three quarters of 2016. This follows annual sales growth of 8.7% to 21.3Mt in 2014 and of 14.3% to 24Mt in 2015. CEMAP’s data for 2015 also shows that local demand overtook the country’s kiln capacity in 2014. Subsequently imports peaked to 314,000t in 2014, the highest level since 2002.
The country’s second largest producer Republic Cement, a joint venture between CRH and Aboitiz, reported sales growth similar to CEMAP’s one for the first three months of the year. LafargeHolcim, the largest producer, didn’t reveal any figures in its third quarter report but it marked the Philippines as one of its key contributors in the quarter. By contrast, Cemex noted lower growth in its third quarter report at 4% for the nine months to September 2016. It also said that the government transition following the election had slowed cement consumption, especially from infrastructure projects.
The Philippine cement industry is in the enviable position of being in a boom. The kind of problems it has to cope with includes provincial cement shortages, lobbying to increase usage of blended cements, scrutiny of prices by the government and a rise in technical smuggling. Once the new plants and upgrades start becoming operational the true nature of the market should become more apparent. At present it looks likely that DCMI gamble may turn out to be a wise one. The next question will be how many more companies want a piece of the piece too?