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Brazil: Cement sales have fallen by 14.5% year-on-year to 13.9Mt in the first quarter of 2016 from 16.3Mt in the same period in 2015 according to the Sindicato Nacional da Indústria do Cimento (SNIC). Local cement companies estimate that sales and apparent consumption will fall by up to 13% in 2016.
A survey by SNIC shows the sales began falling in mid March 2014 due to problems in the construction industry. However, SNIC president José Otávio de Carvalho said that this is not the worst crisis faced by the cement industry. In 1982 cement consumption fell to 19Mt from 27Mt in 1982.
Taiwan Cement pins hopes on stronger second half of 2016 14 April 2016
Taiwan: Taiwan Cement Corp has conceded that its business has remained weak since 2015. It hopes to see rise in sales in the second half of 2016 said Taiwan Cement chairman Leslie Koo in comments reported by the Tapei Times.
Cement shipments to China grew by 18% year-on-year to 10.8Mt in the first quarter of 2016 from 9.2Mt in the same period in 2015. Taiwan Cement senior vice-president Edward Huang said that overall demand for cement and clinker in 2016 should remain the same or improve from 2015. He citied transportation infrastructure projects in Taiwan and potential demand in China as measures for growth.
It expects cement production overcapacity to end in 2016 as the Chinese government continues to close cement plants. It also expects cement prices to start to grow again throughout the year based on price rises in the first quarter of 2016. The company plans to build four production lines in 2016. A new cement plant in Shaoguan, China, is expected to start production in the first half of 2017.
Taiwan Cement’s net income fell by 47% to US$178m in 2015 from US$334m in 2014. Sales dropped by 21% to US$2.89bn from US$3.65bn. It blamed the result on falling prices and demand in China due to oversupply of cement.
India: The Competition Appellate Tribunal has delayed the sale of Lafarge India following an appeal by Dalmia Cement Bharat. The sale has been halted until a hearing on 9 May 2016.
"Operation of order dated 2 February 2016 passed by the Competition Commission of India (CCI)... shall remain stayed," the COMPAT order passed by its chairman GS Singhvi said. LafargeHolcim has been asked to reply to Dalmia's appeal before the hearing in May 2016.
Lafarge India is selling all of its assets in India including a cement production capacity of 11Mt/yr. It received approval from the CCI in February 2016.
IKN places order for A TEC GRECO kiln burner 14 April 2016
Germany: IKN has placed an order for a A TEC GRECO kiln burner for the HeidelbergCement’s cement plant at Burglengenfeld. The project will be completed by the end of 2016. It is part of a general upgrade being conducted at the plant by IKN.
The scope of A TEC GRECO’s supply includes the engineering, design and manufacturing of a tailor-made combustion system including the required peripheral systems for operation. The burner thermal power will be 75MW. The burner is intended use with lignite, sewage sludge, refuse-derived fuel (RDF), diesel and solvents.
A TEC GRECO is a subsidiary of A TEC specialising in burners for kilns and calciners.
Update on HeidelbergCement acquisition of Italcementi
Written by David Perilli, Global Cement
13 April 2016
HeidelbergCement released more detail on its plans to buy Italcementi last week. The main points were that Italcementi’s operations in Belgium will be sold, the Italcementi brand will be retained, its research and development (R&D) centre will assume responsibilities for the entire group and up to 260 job losses are expected in Bergamo. The integration plan is expected to be complete by 2020.
Following an update in HeidelbergCement’s preliminary financial results for 2015 in February 2016, this was more focused on the practicalities of taking over a company. Sales of assets in Belgium were expected from the moment the deal was announced in July 2015. Between them the two companies operate three of the country’s four cement plants, holding 73% of the market by cement production capacity. Selling up Italcementi’s Belgian subsidiary Compagnie des Ciments Belges will maintain the existing market balance. Once this is done, from a cement sector perspective, interaction from the European Commission on the deal should merely be a formality.
Interestingly, no plans to sell assets in the US were announced. This is more ambitious on HeidelbergCement’s part because the acquisition has far bigger implications in that country. Merging Italcementi’s Essroc subsidiary and HeidelbergCement’s Lehigh Hanson subsidiary will see HeidelbergCement become the new second largest cement producer in the US with around 16.4Mt/yr. LafargeHolcim had a relatively easy ride from the Federal Trade Commission (FTC) having to sell two integrated cement plants, two slag grinding plants and a series of terminals. As HeidelbergCement will become the second largest cement producer it seems unlikely that the FTC will be too demanding. However, post-acquisition the cement producer will own cement plants within 75 miles of each other in Pennsylvania and in Maryland and West Virginia. The FTC may take exception to this but perhaps HeidelbergCement is trying their luck to see if it can get away with it.
The decision to retain Italcementi’s i.Lab R&D centre in Bergamo, Italy raises questions about what will happen to the Heidelberg Technology Centre (HTC) in Leimen, Germany. The focus here is on making Bergamo the ‘product’ R&D division for the entire group. i.Lab was opened in early 2012 to fanfare, based in a building designed by architect Richard Meier and it cost Euro40m to build. How this fits with HeidelbergCement’s existing Global R&D team at the HTC remains to be seen.
Job losses of up to 260 personnel at Bergamo are regrettable but hardly unexpected. It may not be much comfort for any staff members facing redundancy but this figure is well below the figures bandied about in the media in late 2015 of first around 1000 and then nearer 500. Another 170 personnel will also be offered relocation packages taking the impact of the reorganisation up to about 400 of Italcementi’s 2500 workforce in Italy.
Looking at the wider situation with the acquisition this week, HeidelbergCement announced a record contract for Norcem, its Norwegian subsidiary, to supply 280,000t of cement over three years for an infrastructure project. Then, Carlo Pesenti, the chief executive officer of Italcementi, was reported making comments about the business’ expansion plans in Thailand and the Association of Southeast Asian Nations (ASEAN). Projects in Myanmar and Cambodia look likely once the acquisition is complete. Finally, the ratings agency Moody’s was drumming up attention for a market report by pointing out the implications for the multinational cement producers in India if a proposed rise in infrastructure spending gets approved. In summary HeidelbergCement and Italcementi are unlikely to benefit due to their southern Indian spread of assets and local production overcapacity.
HeidelbergCement may not be getting it all its own way but the acquisition of Italcementi remains on track so far. All eyes will be on how the US FTC responds to the deal.