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Argentine cement sales set to grow in 2015 despite setbacks
Written by David Perilli, Global Cement
16 September 2015
Cement shortages have been reported again in western Argentina this week. The story has been simmering over the summer in Mendoza and San Juan Provinces with local construction firms becoming irate with delays to their projects.
The cause is reported by local media to be a broken raw mill at Holcim Argentina's Capdeville cement plant north of the city of Mendoza. Production has been reduced by 2400t/month of cement from the 0.66Mt/yr capacity plant. Unfortunately, cement plants in neighbouring states have lowered their deliveries. Subsequently prices are estimated to have risen by 8 – 10% in July and August 2015 alone..
To put some perspective on the cement shortage, the Cuyo region of Argentina (comprising Mendoza, San Juan and San Luis Provinces) consumed just over 1Mt of cement in 2014 compared to 11Mt for the entire country. However all three provinces in the region are above the national mean cement consumption of 271kg/capita.
Despite the bottleneck in the provinces, the Asociacion de Fabricantes de Cemento (AFCP) recently revised its cement sales forecast for 2015 upwards to over 12Mt, the highest level on record. It attributed the rise demand to public infrastructure projects, house building and the Argentina Credit Programme (ProCreAr). Total despatches to the end of August 2015 were 7.99Mt, a rise of 8.73% or 641,664t from 7.35Mt in August 2014.
This followed a poor year in 2014 when national cement consumption fell by 3.5% year-on-year according to local press. The AFCP reported a fall in production by 4.1% to 11.4Mt.
Notably for the current news story, San Juan Province saw one of the biggest sales drops in 2014 at 10.5%. As InterCement (through its subsidiary Loma Negra) commented in its annual report, the country suffered both a gross domestic product (GDP) contraction of 1% in 2014 and instability in its financial markets that adversely affected consumption. Both the other major cement producers, Cementos Avellaneda (a subsidiary of Cementos Molins) and Holcim Argentina, also reported poor sales in 2014. Under these conditions it is unsurprising that consumers have angered due to localised cement shortages. There should be lots of cement available!
Into 2015, Holcim reported increased cement volumes in the first half of 2015 due to high demand in the Cordoba Province that neighbours Mendoza Province. By contrast, InterCement forecast in its 2014 annual report that it expected sales to remain lower than the high set in 2013. However it also expected continued demand for cement to reflect a response to the economic situation in Argentina with private investors moving to real estate for security.
InterCement and the rest will be monitoring Argentina's economy very closely for the remainder of 2015. Presidential elections are due in October that may change the current scenario. For the moment though the country remains in recession but it has managed to bring in foreign investment. Regardless of this though, the quicker Holcim Argentina and the others address the shortage in Mendoza the better. Demand may not last forever.
Zambezi Portland Cement on the backfoot following Dangote launch 16 September 2015
Zambia: Zambezi Portland Cement (ZPC) says it has been losing US$2.5/bag (50kg) of cement it has sold since Dangote Cement entered the market. Operations director Daniele Ventriglia said that, despite maintaining its market share, the competition in the cement business was stiff.
Ventriglia said that ZPC would invest US$4m in new state-of-the-art block-making machinery, which will provide a higher proportion of value-added products. "The machines are expected to arrive from Italy in the next three months, before the year ends. Production of blocks will increase by 20%. An additional 25 people will be employed," he said. Ventriglia added that ZPC had remained competitive in block production because its product was of high quality and at an affordable price.
Sengileevsky Cement sends first cement batch by barge 16 September 2015
Russia: Sengileevsky Cement Plant has begun sending cement by barge. The company sent its first batch of 1700t of cement to a distribution centre in Cheboksary during the last week of August 2015.
"Our company is developing further opportunities to ship, not only cement in bulk, but also bagged cement by water transport," said Mikhail Skorokhod, President of Eurocement.
The Sengileevsky Cement Plant is situated on the bank of the Volga River, making it easy to transport cement to the Ulyanovsk region and surrounding areas, as well as further afield. Shipping by barge is relatively low cost, which should help to stabilise cement prices.
New general director of Kavkazcement
Written by Global Cement staff
16 September 2015
Russia: Igor Nikolenko has been appointed the new General Director of CJSC Kavkazcement, part of Eurocement. A Eurocement statement stated that the new appointment was highly qualified with a 'deep knowledge of Eurocement group's business processes and long experience in the field of construction materials.'
Igor Nikolenko was born in Belgorod in 1965. Having graduated from Belgorod Technological Institute of Building Materials in Mechanical Engineering in 1990, he came to work in the Belgorod cement plant. He worked as a Deputy General Director and Technical Director of Balcem, a General Director at Savinskiy cement plant and Deputy General Director and Technical Director of Eurocement Ukraine. Most recently he was the head of Mikhailovcement plant from 2012 until 2015.
Arr Thit Man plans to double cement capacity in Mandalay 15 September 2015
Myanmar: Local cement producer Arr Thit Man plans to double its cement production capacity from 5000t/day to 10,000t/day by 2016, according to senior officials. The company makes the Double Rhinos brand cement from its plant in Kyaukse, Mandalay. It claims to be the country's largest cement plant.
"We are a new brand, but we are focused on the quality of cement and fulfilling market demand," said the company's managing director. For the time being, Arr Thit Man plans to focus on meeting growing domestic demand rather than exports.
A number of other cement manufacturers are also looking to increase their local presence. Siam Cement Group is building a 1.8Mt/yr cement plant in Mon, which it expects to be operational in 2016. Several companies also import their cement to Myanmar.