GLOBAL CEMENT INDUSTRY. KNOWLEDGE.
March/April 2017
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LEADERS Q&a:
Jose Raul Gonzalez, CEO Cementos Progreso Cement Equipment Highlights from 2016
CW Research World cement outlook 1H2017 update
Spotlight on Cement and the EU carbon market
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STAFFBOX Outlook for cement industry in 2017
ROBERT MADEIRA
In the March/April issue of CemWeek Magazine, we present an exclusive interview with Jose Raul Gonzalez, CEO of Cementos Progreso, where he discusses the key factors leading to the company's success, its main operations, and future sustainability policies.
Luísa Azevedo
We also take a look at EU’s potential new Emissions Trading System legislation and its impact on the European and global cement industry. The European Cement Association welcomed the decision of the MEPs, and is also pleased with the new system of dynamic allocation, because it provides an incentive for the capture and use of carbon, and includes an Innovation Fund and a Modernization Fund to invest in technologies. In this issue of the CemWeek Magazine we also discuss how and why 2016 was a challenging year for the cement equipment industry, as the number of both greenfield and brownfield expansions declined when compared to the previous year. Elsewhere in this issue we look at the CW Research Global Cement Volume Forecast 1H2017 update. The research forecasts that the cement volumes are expected to grow across the globe. In the next five years, the global cement volumes will be boosted by markets in regions such as Asia ex-China, North America and Africa.
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contents FEATURES 4 Q&A Leader: Jose Raul Gonzalez JosĂŠ Raul Gonzalez, Cementos Progreso CEO explained what has been the success of the company, talked about the main business and also the outlook for 2017
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10 Cement equipment: highlights from 2016 The main cement companies made large orders of equipment in 2016 16 CW Research: VFR Global Cement Volume Forecast 1H2017 24 Cement and the EU Carbon Market The carbon market regulatory framework is being revised by the European Union institutions
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DEPARTMENTS 1 EdiTor's letter Outlook for cement industry in 2017 3 numbers in brief Sales slide in 2016, but margins expand 26 research Cement Volumes Cement Energy Markets 30 people People on the move
40 Construction & building materials by bmweek.com Construction and building materials update 42 Petcoke Market update from PetcokeWeek.com Petcoke industry news update
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regional reports 32 Europe, Middle East & Africa 34 South-East Asia 36 Asia Pacific 38 Americas
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44 Equipment Equipment and notable projects 50 cw group meeting agenda CW Group’s upcoming events 51 BUZZ Top 20 CemWeek and BMWeek stories
numbers in brief
Sales slide in 2016, but margins expand
In 2016, large cement companies saw their net sales affected to a large extent by currency exchange rates, yet EBIDTA margins improved. On direct comparison, all major cement manufacturers reported falling net sales values due to currency exchange effects. All of the companies in the chart below went through a tough 2016, focused on saving on CAPEX as sales were battered. LafargeHolcim, on the other hand, reports for the second full year after the merger of the two companies, announcing that 2016 is the year the company has hit full stride in earning momentum. Nevertheless, the company relied on cost savings and price increases. For HeidelbergCement, though earnings and sales rose in the fourth quarter of the year following the acquisition of Italcementi, the performance of the rest of the year offset the growth, leading to a fall in net sales for the full year. Net Sales 2015-2016 (USD/billion) Net sales 2015
$30
Net sales 2016
$25 $20 $15 $10 $5 LafargeHolcim
HeidelbergCement
Cemex
Buzzi Unicem
Source: Company reports, CW Research
EBITDA margins increased across the board, with the exception of Buzzi UNICEM, dragged down by the lackluster performance in the US During the last quarter of the year. LafargeHolcim’s dedicated focus on synergies led to an improvement in EBITDA margins. Even in Asian markets where the company was affected by downward price pressures, EBITDa margins increased compared to 2015. EBITDA margins 2015-2016 EBITDA margin 2015
25%
EBITDA margin 2016
20% 15% 10% 5% Cemex
LafargeHolcim
HeidelbergCement
Buzzi Unicem
Source: CW Research
For Cemex, the EBITDA margin of 2016 was the highest the company achieved since 2007. In spite of volatility on the markets where Cemex is present, better operational costs across markets led to improved financial results. Overall, though 2016 was a challenging year in terms of cement demand, tight control over operations enabled the largest cement companies in the world to remain profitable. www.cemweek.com
AugustMarch/April / September 2016 2017
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Q&a: Leaders
Cementos Progreso:
Jose Raul Gonzalez Cement Market will grow in Guatemala
In an exclusive interview with CemWeek, JosÊ Raul Gonzalez, CEO of Cementos Progreso, explained the keys to the company’s success, discussed the main business and also shared his outlook for 2017.
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Q&a: Leaders ementos Progreso has been in the market for more than 100 years and its growth has been notable. Since always, Cementos Progreso has sought to maintain a strong commitment seeking the balance between economic growth, environmental sus-tainability and the social wellbeing, according to Jose Raul Gonzalez, Cementos Progreso CEO.
Q: ementos Progreso is a company with more than 118 years of history. How do you describe the role and the main focus of Cementos Progreso nowadays, as well as its positioning in the Central American manufacturing landscape? A: Cementos Progreso will continue to work hard in positioningitself as thepreferredproviderof quality building materials in Central America.In an era where choice and innovation matter more and more tothe customers, we are making important improvements to become the supplier of choice. We are striving to provideour clients with a total solution to their needs. Additionally, true to the legacy of our founder, we have a strong commitment to
Q: While South America's cement markets may have been affected by the economic downturn, some of Central American countries are hopeful of a better future. Do you believe that the market in We work hard every day to produce the best Guatemala will grow? faithfully carry forward all our operations in a sustainable manner, seeking a balance between economic growth, environmental sustainability and the social wellbeing of our employees and the communities where we operate.
product and provide exceptional service, and to be a model corporate citizen, always acting ethically and responsively, aiming at building together the country in which all would like to live.
A: Without a doubt the market will grow in Guatemala. We believe that the consumption of cement and other building materials is currently low by international standards. We see great potential and foresee an increase in demand as the government and the private sector invest more in housing and infrastructure. Clearly there is a huge opportunity to improve the quality of lives of our people,and the productivity and competitiveness of the country by prioritizing these two areas. Although we have not yet reached precrisis (2008) levels of absolute demand of cement, we are nearing that number. Hopefully, with government investment and new public-private partnerships, the number will continue to go up, hence creating new opportunities to grow.
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Q: How does lime fit within the company’s portfolio? A: Unlike other parts of the world, lime is an important construction material in Guatemala. It is a perfect fit for our portfolio. We supply our own raw material. We have the lime quarry and processing plant next to the cement factory, therefore taking advantages of economies of scale.
Q: How did operations in Honduras come about and how did they fit strategically into the company? A: We have been a minority investor in Cementos del Norte – CENOSA (Honduras) for over a decade. It came about as an opportunity to help the local investors in the complexities of operating a newly privatized cement plant. We started with a lower ownership percentage and have increased it to about 48%.
The type and quality of lime we have in our quarries is the best kept secret at Cementos Progreso. It is avery important product and we have high expectations for it.
Q: The cement industry has been seeing an increased focus on sustainability. What challenges does green cement face in the Guatemala market?
A few years ago, we started diversifying sales of lime in order to supply other local and international industries and markets that use the product not as building material, but as part of their own distinct processes.
A: Long before “sustainability” and “commitment to the environment” became household words, our founder – Carlos F. Novella –, 118 years ago, had a clear vision that his company wouldbe respectful to the environment. Hence, every generation of members of the Progreso familyhave ever sinceconducted the business of the company with that objective in mind. It is imprinted in our DNA.
“Without a doubt the market will grow in Guatemala”
We have been at the forefront in investing and implementing the latest technology to make our plants more efficient, cleaner and quieter. Additionally, we have committed to important resources, financial and human, to improve the wellbeing of the communities next to our operations. In the last fiveyears, we have invested in technology to use alternative fuels in San Miguel plant, through the implementation of a co-processing plant. This was not
Honduras and Guatemala are both markets with high potential. Additionally, they do not have exact economic cycles so, in that regard, it helps to diversify. We believe that with a new management agreement recently reached in CENOSA, we will be able to better capitalize on synergies and mutual opportunities to develop our markets. The national and local governments in Honduras have been investing recently in new infrastructure for the country and CENOSA has plenty of capacity to continue providingcement for all the needs in Honduras. www.cemweek.com
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Q&a: Leaders only a decision aimed at lowering energy costs, but also athelping communities in their responsible disposal of “trash”. For example, last year we burned in our kilns close to 6,000 tons of tires. Otherwise, these tires would have been contributing to the spread of deadly mosquito-related diseases. Also, an additional 11,000 tons of different kinds of trash werealso disposed of in our kilns, and we have not reached 10% of substitution factor yet. Now we have to continue to educate our leaders on the benefits that cement kilns have for the environment. By far,this is a win-win equation for everyone.
Q: The company has a reforestation program, the Agrobosques. What is the program about? A: The program is an extension of the commitment to the environment that I was talking about earlier. It all started in the 30´s, when the Great Depression hit and the construction industry came to almost a striking halt. Our founder decided that instead of laying off workers because of the crisis, he would have them planting trees. That is the origin of anextensive forest that still stands in the old plant La Pedreraas a clear example of the compatibility between cement and the environment. In the 80´s, that commitment got a boostwhen we started the Agrobosques program. It was originally aimed at reforesting the main watersheds next to our operations. The program has since grown exponentially. So far, we have planted over 22 million trees and counting. This program involves the communities in order for them to become committed to the sustainability of the forest. They not only participate in the physical planting of the trees but they become their future guardian. Nowadays, the program footprint has extended beyond our operations and we
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have it available almost anywhere in the country. We have been active, for example, in reforesting the area near Lake Atitlan, which is a key tourist destination and depends on rain and rivers to maintain its natural habitat and beauty.
“We have been at the forefront in investing and implementing the latest technology to make our plants more efficient”
40% of the forest area.Also, out of the 900 hectares that site where the San Gabriel project is located, we are only going to use 150 for the operation. The rest will be kept as a reserve. We are working on mitigating the deforestation not only through Agrobosques but also by donating the cement for the fabrication of wood-efficient stoves in the rural areas. This is done through a partnership with Helps Foundation. The Onil Stove uses 75% less wood for the cooking of the meals and also prevents burns in children, and lung diseases related to smoke and CO inhalation due to the widespread use of an open pit fire at homes.
Q: It is important for the company to comply with environmental standards? How do you seek to reduce the carbon dioxide footprint in Similar projects from other corporations cement production? have become a way to mitigate their CO2 emissions. But for Cementos Progreso it is more than that; it is the vertebrae column of our commitment to the sustainability of the company. Wood is more than 50% of the energy source of Guatemalans. If we do nothing,we will lose our forests. When we arrived at the new site of the San Gabriel plant 10 years ago, they had already lost
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A: As indicated before, Cementos Progreso started an aggressive efficiency program long before the issue of CO2 became another household name. We have been reducing our electricity and thermal consumption, per ton of cement, for the last decade. Investing in vertical mills (the first one in the American continent was installed in our San Miguel plant) and
several heat recovery investments have been essential to this. The use of alternative (non-fossil) fuels is part of our efficiency programs. And last, but not least, our capacity to use high levels of pozzolan to reduce our clinker factor puts our cement as one of the most ecologically friendly in the world. Complementary to that, through our Energy Division, in 2015, we sourced 98% of the electrical energy that the San Miguel plant consumed through hydrogeneration, reducing even more our total CO2 footprint. We will continue to research, invest and educate the people of Guatemalaon the benefits of protecting the environment, but alsoinform them about the qualities of cement and concrete, not only as a source of reducing the negative effects of climate change, but also as the most important material to mitigate these negative changes.When you consider the life cycle of the product, you reach the conclusion that, overall, ours is an environment-friendly material.
Additionally, by operating these twostrategically locatedplants, we will be able to give a better and faster service to our customers, a more efficientmaintenance plananda production schedule with more flexibility and optimized costs. Nevertheless, probably the most important contribution of the San Gabriel plant will be the new opportunities that it will bring to the communities next to it. Although located just 25 miles in straight line from Guatemala City, we discovered high
“We have been reducing our electricity and thermal consumption for the last decade”
Q: San Gabriel is the company’s newest planned plant. Why levels of poverty and malnutrition in the have you decided to invest in influence area of the plant. For the past 10 a new plant and what is the main objective of San Gabriel? years our foundation (Fundación Carlos A: The investment decision came about when analyzing the potential that Guatemala and the region have, basedon its low level of infrastructure and its potential for economic growth. We wanted to have what will become the lowest operating cost plant in the region, thanks to the combination of the latest technology, on-site excellent quality and plenty of availability of raw material, and logistical efficiencies. San Gabriel will be closer to the western region of Guatemala, which has the greatest potential of growth, and San Miguel, our other plant, will be able to service the eastern region. Both are close to the central region, which is the one that, for the time being, is the largest consumer of cement.
F. Novella) has invested in education, vocational training and nutrition, so that the community can improve their living standards, therefore contributing to the sustainability of our operations.
During the construction phase, about half of the 2,000 jobs were from the local communities, giving a boost to the local economy. Additionally, in conjunction with the local authorities,Cementos Progreso has contributed to the wellbeingof the people, by improving the local infrastructure (water projects, access roads, public buildings, etc.).
Q: What are the main expectations you have for Cementos Progreso in 2017?
A: In Cementos Progreso we have been trained to think the way our founder thought. We are optimisticaboutthe future of Guatemala and the region, and not only for the next year, but for the next 100 years. Our investment and our commitment to the country and the region are, by far, amortized over that period of time. Our company has gone through Great Depressions and Great Recessions; two World Wars and one internal conflict in Guatemala; plus all the political instability that you can imagine. Throughout that journey we have been fortunate enough to attractdifferent generations of teams of the most competent professionals in their respective fields. We have the obligation to continue the work of our founder and plan to take full advantage of the upside potential of the region. Come to think of it, I think he would approve and I wish he feels proud of the way we have furthered his legacy.
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FEATURE
Cement Equipment:
highlights from 2016
As cement equipment orders continue to decline, suppliers are considering other markets and services to ensure their future earnings. Offers of maintenance services, and packages that include these, seem to be becoming more popular within the industry.
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FEATURE
he previous year proved to be a challenging year for the cement equipment industry, as the number of both greenfield and brownfield expansions declined when compared to the previous year. Even though the number of orders rose in 2016 when compared to 2015, they are still quite far from the peak registered in 2008, which led major companies to diversify their offering.
Global outlook A once buoyant market for the cement equipment, Africa, is becoming selfsufficient in terms of production, no longer carrying the baton in terms of Greenfield and brownfield expansions, hence requiring fewer orders. Yet despite lower orders across geographies, margins of equipment manufacturers stood on the floating line due to services offerings. Loesche, FLSmidth, KHD, Claudius Peters, and Aumund were the top suppliers during the year, particularly in the Asian market, developing new equipment and solutions for clients. 12
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Figure: Equipment orders in 2016 Company
Country
Cementos Argos
Colombia KHD
ChinaResources Cement
China
Dangote Cement
Nigeria
HeidelbergCement Russia
Supplier
Month
Type
Material
June
Order
3 PYROJET burners
FLSmidth October
Order
HOTDISC kiln
Sinoma
April
Order
Services package
Claudius Peters
September Order
LafargeHolcim
Indonesia Claudius Peters
LafargeHolcim
Colombia Claudius Peters
LafargeHolcim
Vietnam
Claudius Peters
January
4 silos, 4 truck loading plants, optimization services
Delivery/ Installation Pneumatic transport
December
Order
2 silos, 1 mobile loading plant, 1 line packaging plant, 1 automatic bag applicator, 1 PACPAL palletizer
May
Order
PACPAL plant
Source: CW Research
Operations and Maintenance services, often celebrated in years or decades-long contracts, standalone or included with the purchase of equipment, have become a welcome safe haven for the industry, with diversification becoming key. Offers of packages and other types of services assisted equipment manufacturers on remaining afloat, despite the poor results.
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Asia-Pacific and East Asia In 2016, the market for cement equipment was stronger in the Asia-Pacific and South East Asia areas, with India, China, Vietnam, and Indonesia recording a high number of orders from leading suppliers. After these regions, South American and Middle-Eastern markets followed suit, while African and Mediterranean /
KHD is supplying Shree Cement with equipment for the companies’ three new cement projects in India, including three more kiln lines, each with a capacity of 6,000 tons per day. The kilns are 3-Pier Rotary Kilns measuring 5.4/5.0 meters x 75 meters long. One of the kilns is to be set up at Shree’s Raipur site, while another will be installed a brownfield expansion in Karnataka, and the third one was ordered for a project whose location is yet to be announced.
CHART: Order Intake (USD/ton) FLSmidth
2000
KHD
1500 1000 500
1H2008 1H2009 1H2010 1H2011 1H2012 1H2013 1H2014 1H2015 1H2016
FLSmidth and KHD have reported a decrease in orders in 2016, and have reduced their order backlog as well.
Source: CW Research
CHART: Order Backlog (USD/ton) FLSmidth
4000
KHD
3500 3000 2500 2000 1500 1000 500 1H2008 1H2009 1H2010 1H2011 1H2012 1H2013 1H2014 1H2015 1H2016 Source: CW Research
European countries were the source of the fewest orders.
silos, for companies such as Shree Cement and TANCEM (Tamil Nadu Cement).
In China, FLSmidth collaborated with China Resources Cement and Sino Environment Engineering Development (SEPETC) and created a solution that safely uses urban and industrial waste as a fuel for their cement kilns. The
The two public equipment-manufacturing companies, FLSmidth and KHD, reported higher order intakes in the first half of 2016 when compared to the same period of 2015, but smaller revenues year-onyear, reflecting the higher demand for services and other type of offers rather than equipment. When compared to 2015, order backlog has also contracted. India was a major market for cement equipment in 2016, with orders from Gebr. Pfeiffer, Aumund, KHD, FLSmidth, and Loesche for several types of equipment. Most of the received orders were for mills and rollers, as well as storing equipment, such as www.cemweek.com
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FEATURE developed pyro co-processing system consumes around 300 tons of waste per day to ensure fuel necessary for the production of 3,200 tons of cement per day. The companies involved in the process aim to extend this solution to other cement producers in the country, since it could help China deal with its waste and pollution problems, as it reduces the use of fossil fuels in the energy intensive industry. Claudius Peters supplied LafargeHolcim Indonesia with the longest pneumatic conveyor system in the world, transporting product for more than 1,100 meters away, measuring 5.1 kilometers in total. The conveyor is located in the company’s Tuban plant, which has an annual production capacity of 3.4 million tons.
Europe and Mediterranean In Europe and the Mediterranean, storage equipment was the most requested during 2016, with cement companies acquiring several silos. HeidelbergCement’s modernization investment in the Slatsev cement plant “Cesla,” in Russia, included four silos supplied by Claudius Peters, as well as a new loading plan consisting of four loading bins. In Algeria, Cements d’Algérie also requested two steel silos from Claudius Peters, each with a capacity of 500 tons. The company also ordered two packaging plants from the cement equipment manufacturer. Algeria’s cement capacity has been steadily increasing in the latest years, following government efforts to attain self-sufficiency in the cement supply, having reduced imports. The country is still ramping up production, with Cements d’Algérie, the largest cement producer in the country, planning to add more cement lines to the current eight that it operates. Cypriot Vassiliko Cement Company also requested a clinker silo with a capacity of 100,000 tons from Aumund. The company included the installation of the silo in a package, along with complete plant design 14
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and the supervision of all installation work on site, and the commissioning of the clinker transportation and silo system.
Cement demand should expand in the coming decade as housing and infrastructure projects grow globally Americas In Colombia, Cementos Argos requested a supply of three of KHD’s PYROJET burners for coal and gas firing for a plant in the Cali region. The burners will be tailored to Argos’ wet kilns, with the design
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guaranteeing low NOx gas emissions on two of the company’s direct-fired kilns, as well as one of their semi-indirect fired kilns, according to the company. The Bolivian market is also in expansion, with Fancesa ordering a complete cement production line from FLSmidth at the end of 2016, including a vertical mill for raw grinding, a rotary kiln with low NOx ILC calciner, a cooler, and a vertical mill for cement grinding. The size of the order is worth over USD 75 million, with a capacity of 2,100 tons per day, and will be executed in the first quarter of 2018. In the USA, the Leigh Southwest Cement Company upgraded their Tehachapi plant’s cement mill, located in California, by ordering a new hydraulic roller press pre-grinder from FLSmidth. This new equipment is also raising the current cement grinding capacity by up to 23 percent. In the North American region, cement demand should rise during the next four years due to President Trump’s infrastructure investment plan, a promised USD 1 trillion, including the controversial
to increased infrastructure investment but also due to reconstruction efforts post resolution of conflicts afflicting the region.. Investors and industry representatives are looking to Syria in particular, and neighboring countries with low production costs could have an advantage.
African cement equipment orders were low due to reduced number of Greenfield and brownfield expansions border wall between the United States and its southern neighbor, Mexico.
Middle East The Middle East region did not have many cement equipment orders throughout 2016, but in Saudi Arabia, Arabian Cement ordered a substantial package of machines for the brownfield cement mill being constructed in Rabigh from equipment supplier Aumund. The plant will have a clinker production capacity of 10,000 tons per day, and the package of machines ordered for the new grinding unit includes types of transportation focused on aggregates such as gypsum, additives, and pozzolana.
Africa In Africa, demand for cement equipment has slowed when compared to previous years, but certain markets still remain strong. Dangote Cement, based in Nigeria, is one of the fastest-growing cement brands in Africa, and in 2016, it ordered a new clinker production line from Sinoma, a Chinese cement
equipment manufacturer. This is the 13th cement project between the two companies in eight years, and by far the largest, spreading over an area of nearly 10,000 acres, with a capacity of 6,000 tons of clinker. Globally, it seems the cement equipment market’s performance is slowing down due to decreasing cement demand, particularly from developed markets. However, construction activity in several countries with a sizable cement markets, including China and the US, could help propel the equipment market further in the coming years, especially if M&O (maintenance and operations) services and packages continue to be a part of the manufacturers’ portfolios. Other cement markets, like India, Algeria and Vietnam, which are aiming for selfsufficiency and to boost their economies through the export of commodities including cement to nearby markets with higher prices, are seeking equipment to expand their current capacities, and, therefore, represent a good share of the cement equipment orders in 2016. Over the next decade, cement demand should increase in developed markets and regions such as Europe, as the population expands and demand for housing grows.
Iraq’s Iraq Cement had a similar request from FLSmidth, which amounted to around USD 200 million, and includes a complete package for engineering, equipment supplies, erection and construction, as well as commissioning and training once completed. The completed cement plant will produce around 6,000 tons per day and will be located in the Al Muthana region. Cement consumption in the region could increase in the coming years not only due www.cemweek.com
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cw research
cw research:
Global Cement Volume
Forecast R epor t 1H2017
The countries where the strongest growth is expected are China, India and Turkey. However, some major markets, including Brazil and Russia, are projected to fall further.
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cw research
lobal cement demand is expected to show an increasing trend, with growth in regions such as Asia ex-China and North America. In the next five years, the cement market in Asia ex-China will be boosted by the Indian, Vietnamese and Indonesian markets, according to the 1H2017 Update to CW Research's Global Cement Volumes Forecast Report.
Highlights from the 1H2017 Volume Forecast Report The Cement Volume Forecast Report indicates that developing markets will be more exposed to macroeconomic problems, which will not allow them to reach the growth levels of the past years. In 2016, the general trend for cement volumes showed recovery in key markets, but some major ones continued to decline. 18
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In the previous year, the largest cement markets that registered a big decline in cement consumption were Brazil, Russia and Italy. Last year, Saudi Arabia also emerged as one of the markets where cement consumption fell sharply.
Developing markets will be more exposed to macroeconomic problems Saudi Arabia was affected by the fall of the crude prices, which negatively influenced construction spending. Companies are
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shutting down kilns in order to save on production costs. A market that was once growing beyond limits is now overwhelmed by the cement capacity accumulated back when the market was undersupplied. The Russian cement market was also impacted by lower oil prices and international sanctions from the West. The market continues to be negatively affected by international events, with cement consumption declining around 13 percent in 2016. In Brazil, volumes have fallen at similar rates as Russia, around 13 percent. The drivers of the decrease were more internal then external. With the recession still going on, the construction sector continues to be affected. Larger markets that showed growth in 2016 were Spain, US, China, India and Turkey. In the US, even though the growth of the residential segment continued in 2016, the
increase in construction activity, but mainly by the cooperation that was created between the government and the country’s main companies. Looking at the global ex-China figures, the research done by the CW Group estimated that in 2016 total demand reached 1.3 billion tons. CW Group forecasts that until 2021 the figure will reach 2.1 billion tons, increasing by more than 2 percent CAGR in the five-year period.
Cement Consumption Year-To-Date (USD/ton)
Data as of Dec ’16
Data as of Nov ’16
10% 0% -10% -20%
Russia* Brazil
Italy*
Saudi Arabia
Spain
US
China* India* Turkey
Source: CW Research Note: * Cement Demand was estimated based on cement production trends
performance was not at the previous year’s levels. In 2015, cement demand grew by around 5 percent year-on-year and in 2016 it grew around 3 percent.
Moreover, the property markets also helped boost the cement sector in China. The Chinese growth in 2016 was driven by two important factors, namely the
Including China, global cement demand reached 4.1 billion tons in 2016. Compared to 2015, where cement demand decreased by 2.6 percent, growth last year was positive, reaching 2.4 percent year-onyear. Although the global economy continues to face challenges, the improved performance of the Chinese economy has allowed cement consumption to increase. The moderate recovery in oil prices also positively impacted cement demand in
For the next five years, the cement market in Asia ex-China will be boosted by demand from Indian, Vietnamese and Indonesian markets China bounced back from a troubled full year when demand fell by 5 percent in 2015. In 2016, however, the market recovered to about 3 percent yearon-year in terms of cement demand. Chinese market benefited from government tax incentives as well as from the implementation of multiple infrastructure projects. www.cemweek.com
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cw research 2016 and encouraged it to grow in the oil exporting markets. The research estimates that in the next few years cement growth will be driven to a much larger spread by developed markets rather than developing ones. Markets including US and a couple of European, as Spain and Ireland, are taking big steps to go out of recession and they will most likely begin to address their infrastructure and construction needs.
Outlook 2017 2017 outlook points to recovery across the globe, while markets such as Brazil and Russia will still be affected by wideranging challenges. In China, demand is expected to slow to 1 percent growth year-on-year in 2017 as a result of tapering off investments in infrastructure. In India, the new Union Budget is a source of hope for the cement market, although it showed a healthy performance in recent years. The new Union Budget points to USD 33.1 billion worth of infrastructure investment for the 2017-18 Indian financial year. Therefore, CW Group forecasts more than 7 percent year-onyear growth for 2017. For the 2017 forecast in the US, there are diverse variables that are important for the growth of the cement industry. The main factor that will increase American growth is the revitalization of the infrastructure. Another region that will see a demand growth in 2017 is Europe, particularly the Eastern European and the Scandinavian markets. In Scandinavia, especially in Sweden, the market will grow due to the growth of housing market, given the influx of refugees in the country. Similar to 2016 performance, Saudi Arabia, Brazil and Russia will continue to see a negative growth. Volumes in Brazil are expected to decrease by almost 6 percent in 2017. In Russia, cement consumption will see a decline in 2017. Consumption 20
August / September March/April 2017 2016
volumes will drop around 2 percent, which is still less than the 13 percent decline in 2016. In Saudi Arabia, the decline in government spending will be reflected in the cement sector, which will prolong the level of uncertainty. 2017 is expected to be another bad year, with consumption decreasing by around 2 percent year-on-year.
2017 outlook points to recovery across the globe
2H2016 VS 1H2017
The research done by CW Group for the first half of 2017 has resulted in a revision in the forecast for key markets.
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In 2016, some markets showed a strong performance in the cement market. In Sweden, cement demand forecast was upgraded upwards in the most recent update of the volume forecast report. Following the growth from the previous year, cement demand is expected to grow in 2017 and 2018. Growth in Sweden is driven mainly by a big upturn in housing construction and strong public consumption. In Greece, demand improved in 2016 due to a significant rebound in construction. Despite current political and economic uncertainties in the country, cement demand is expected to grow further. Nigeria is among the countries that have had the biggest downward revision. Demand prospects remain uncertain due to the impact of low oil and commodity prices. Moreover, it is estimated that more than 60 percent of large public and private construction projects have been halted. According to the CW Group's survey, demand should only begin to recover in 2020.
Chinese cement demand growth in 2016 was unexpected. Demand grew on the back of strong government spending and investments in housing. CW research forecast that stimulus effects and greater boost to construction will fade slightly, slowing the demand. In the U.S., cement demand showed healthy growth in 2016 and is expected to continue at the same pace, supported by strong investments and housing.
Regional Forecast
In terms of cement demand, South America will have the weakest performance in the next five years, being dragged down by Brazil and Argentina. For the region as a whole, demand contracted by 4.7 percent in 2016 year-onyear. According to the CW Group Volume Forecast Report, the cement industry will
only stabilize in 2018, when the Brazilian market is expected to start recovering slightly. Apart from Brazil and Argentina, hopes for the cement market stand in the construction market in Colombia. Large housing projects together with big infrastructure projects are expected to increase regional consumption. Given the weak 2016 results in South America, CW Group predicts a CAGR of 1.5 percent to 2021. The high growth that is expected in the US will help balance the regional growth in North America. Cement demand in Canada will grow at CAGR of 1.5 percent, while the US will see CAGR increase of almost 3.5 percent by 2021. Combined growth of the US and Canada will reach 3.2 percent CAGR in the period from 2016 to 2021.
2017 Change in cement deman (growith Year-on-Year/%)
Source: CW Research
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cw research In Western Europe, the main regional cement consumers, Italy and Spain, will balance the minimum growth that is expected in Germany. In Germany, cement demand is expected to grow at CAGR of 1.5 percent from 2016 to 2021. On a regional level, the demand in Western Europe is expected to grow by 1.7 percent CAGR from 2016 to 2021. For the next five years, the cement market in Asia ex-China will be boosted by the Indian, Vietnamese and Indonesian markets. Other markets in the region will have a slower but stable growth, as is the case with Malaysia and Thailand that will grow by a CAGR between 2 and 3 percent until 2021.
In Greece, demand improved in 2016 due to a significant rebound in construction The African region is expected to grow by about 3.3 percent year-on-year in 2017 and 4.1 percent CAGR from 2016 to 2021. The best performer will be Egypt, due to government projects regarding low middle income housing projects. In addition to Egypt, Kenya will also be able to achieve steady growth, since it will also benefit from investments in large infrastructure projects.
Global Capacity 2016-2021
As far as global cement capacity is concerned, CW Group estimates it will reach roughly 5 billion tons in 2017. China’s capacity accounts for roughly 50 percent of the world cement capacity. Taking into account China's efforts to eliminate the capacity, global numbers are set to fall 22
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to 2021, whereas in Nigeria capacity is expected to grow by more or less 9 percent over the years.
2016-2021 Capacity Additions (USD/TON/%) Net additions (%)
Global capacity (mt)
10%
5,430
8%
5,410
6% 4%
5,390
2%
5,370
0% -2%
2016
2017
2018
2019
2020
2021
5,350
Source: CW Research
in the next 4 years. Excluding China, the Report forecasts additions around 300 million tons until 2021. When it comes to other regions, Africa is also one of the ones that has markets which are adding new capacities. The most notable markets regarding capacities are Nigeria and Algeria. Algeria’s capacity is expected to grow by average growth rate of around 8 percent from this year
In 2017, the global capacity will reach around 5 billion tons
Some of the most notable editions in capacity country-wise from this update are seen in Vietnam, where capacity will increase by an annual growth rate of roughly 5 percent until 2021. Following Vietnam, markets that have the healthiest growth rates in capacity are Philippines and Indonesia.
About the Report The Global Cement Trade Price Report (GCTPR) is CW Research’s benchmark price assessment for monthly gray cement, white cement, clinker and granulated blast furnace slag prices and volumes. The 200+ page report, with extensive coverage through tables and charts throughout, published on a quarterly basis, serves as the industry go-to source for monthly price data for about 70 individual markets worldwide, including multiple cornerstone data series: import, export, ex-works and market prices. Additionally, the GCTPR includes extensive discussion of key players’ pricing strategies as well as trading price forecast and select trade volumes for each country. The Global Cement Trade Price Report also provides regional price indices and a review of notable trading dynamics and drivers in different regions. GCTPR is a must-have resource for all industry participants that need to know and track cementitious prices, including cement traders & exporters, accountants & controllers, producers, analysts and shippers. If you need to know pricing, CW Research’s Global Cement Trade Price Report is the go-to resource. More information about the report can be found at http://www.cwgrp. com/research/research-products/ forecasts/product/1-global-cement-trade-price-report
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AugustMarch/April / September 2016 2017
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FEATURE
Cement and the
EU Carbon Market
nder the European Union Emissions Trading System, companies acquire emission allowances either by auction or exchange on the market. Some energy-intensive industries, including the cement one, are able to get free allowances to protect their competitiveness, a provision that remains so far untouched by the new draft reform approved by the European Parliament last month. There were, however, other changes that are worth-noting as they are bound to impact the cement manufacturing sector.
What is the European Union Emissions Trading System?
Companies are then free to buy and sell allowances between them, resulting in the price of allowances being set by the market, August / September March/April 2017 2016
against, and 57 abstentions after lengthy discussion. Before final approval, the draft still has to pass a phase of negotiation between the parliament, the commission, and the council.
EU ETS annual caps between 2013-2020 (USD/tons) EU ETS annual caps
2,500
2005 Emissions
2,000 1,500 1,000 500
Introduced in 2005, the European Union Emissions Trading System (EU-ETS), or as it is commonly known, the carbon market, is a key component of the EU’s effort to combat climate change. It consists in a “cap and trade” system under which a maximum limit for greenhouse gas emissions is set, and companies in the power, industrial, and aviation sectors are able to acquire emission allowances via auctioning.
24
just as in any other “free market”. Rather than straight-forward and arbitrarily imposing emission limits upon each company or facility, this system allows for emission cuts to be distributed among the various industries based on cost and efficiency.
2013
2014
2015
2016
2017
2018
2019
2020
Source: CW Research
In July 2015, a legislative proposal launched the discussion for a reform of the system, targeting a faster pace in emission cuts and support for low-carbon innovation. On February 15 2017, the European Parliament voted a draft reform package for the EU-ETS. The draft was introduced by Ian Duncan, elected by the Scottish Conservative Party, and was approved with 379 votes in favor, 263
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Cement and the EU-ETS When the EU-ETS was created, it was decided that free allowances would be given to some sectors in order to prevent manufacturers from delocalizing to places where no emission allowances are required, a phenomenon known as carbon leakages. Since then, cement and clinker production is one of the sectors included on that provision, and therefore is not subject to auctions.
of the MEPs. The association was always uncomfortable with policies that single out the cement sector, defending what they call “sector-neutral” policies like a nondiscriminatory cross border measure. They also feared that the end of free allowances would render the European cement sector’s exports less competitive.
EU production (tons) EU production (tons)
2000,00,000 1600,00,000 1200,00,000 800,00,000 400,00,000
2010
2011
2012
2013
2014
2015
2016
Source: CW Research
Free allowances were always a transitory measure, with the ultimate goal being universalization of auctioning as the mechanism to introduce allowances in the market. Sandbag, a NGO based on the United Kingdom committed to slash the number of allowances currently on the market, believes that the cement sector will accumulate an allowance surplus of 4.5 years’ worth of emissions, equivalent to 700 million tons of CO2 or EUR 3.5 billion at current carbon prices, between 2020 and 2030. In the weeks leading up to the approval of the aforementioned reform, the European Parliament’s Committee on Environment, Public Health, and Food Safety (ENVI) proposed the end of free allowances for the cement sector. In return, cement and clinker coming from outside the European Union would be taxed. The proposed border tax, ENVI wrote in the report, would help attaining the
goal of transitioning to fully auctionedbased allocation while protecting the cement sector from unfair competition by manufacturers not subject to the EUETS and avoid carbon leakage. The tax on outside of the EU cement and clinker would also resolve the problem of surplus allowances created by free allocations. ENVI’s proposal was ultimately rejected by the parliament, a position that was immediately criticized by environmental groups. Agnes Brandt, Senior EU Policy Officer at Carbon Market Watch, said that “The border tax would have helped create a level playing field and make European cement industry a world leader in lowcarbon technologies.”
EU-ETS reform draft and its relevance for the cement sector In contrast with environmentalists, the European Cement Association, or CEMBUREAU, welcomed the decision
CEMBUREAU is also satisfied with the new system of dynamic allocation. Until now, facilities were only allowed to alter the amount of allowances they were allocated if their production levels varied by at least 50 percent, leaving some companies starved of allowances. Under the new reform, that threshold was brought down to 10 percent, resulting in an allocation system that, according to CEMBUREAU, better matches the actual production capacity of each facility. Another aspect of the draft singled out as a positive one by CEMBUREAU is the incentive for carbon capture and use. Among such incentives, the draft includes an Innovation Fund, a Modernization Fund, and a call for removal of regulatory barriers to invest in such technologies. Finally, CEMBUREAU is also supportive of a provision that will transfer up to 5 percent of allowances in the auction system in case free allowances run out. Per year, a certain share of total allowances are allocated to the free system. If those are not fully utilized, they can be passed on to subsequent years to be used if needed. However, if free allowances set aside for a year are not enough, the provision allows for part of the allowances allocated to the auction system to be transferred to the free system. For now, the EU-ETS reform leaves aside the measure that could have had the most significant impact in the cement sector, which is, a transition to the system of auctioned allowances and imposition of a duty on cement from outside the European Union. However, is important to remember that including all sectors in the auction system remains the aim of the EU-ETS and therefore that measure can be included in a future reform.
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AugustMarch/April / September 2016 2017
25
CEMENT MARKETS
CW Research
CEMENT VOLUMES
Cement production in the country had similar behavior and contracted by 6.0 percent year-on-year and 17.1 percent on a monthly basis to 0.9 million tons for the full month.
In South America, the cement sector continued to be impacted by macroeconomic challenges at the start of 2017. Some of the markets show timid signs of recovery, but given the limited size of these markets, it is not enough to offset negative impacts from large producers such as Brazil and Argentina.
view. Ukrainian cement market showed resilience in 2016 and continued with positive performance in 2017. In Russia, cement manufacturers expect the market to stabilize as the macroeconomic performance recovers. However, a high budget deficit and still weak consumer confidence suggest a slow recovery.
Colombia’s cement sector showcased negative performance in January. Cement demand decreased both on a year-on-year basis (-2.8 percent) and from a month-on-month one (-9.3 percent), and reached a total of 0.9 million tons. Cement production in the country had similar behavior and contracted by 6.0 percent yearon-year and 17.1 percent on a monthly basis to 0.9 million tons for the full month. Cement companies in the country have been dealing with low sales, however, they are expected to recover in the second half of the of 2017 with the initial works of 4G program.
Russia cement production is estimated to have increased by 25.0 percent when compared to the same month in the previous year, while on a month-on-month comparison it contracted by 7.4 percent to 2.5 million tons of cement. Both consumption and production of cement in Russia are projected to slightly decrease in 2017 due to a continuingly sluggish construction sector.
Argentina’s cement output decreased by 0.5 percent on a yearly basis, while when compared to the previous month it showed a contraction of 10.7 percent. During January, demand in the cement sector reached a total of 0.9 million tons or a 1.2 percent recovery from the previous year. Cement consumption decreased by 7.2 percent month-on-month. We estimate that Brazilian cement consumption during the month of January 2017 decreased by 5.7 percent when compared to the figure of January 2016, or by 3.0 percent in comparison with the previous month, to 4.2 million tons per month. Brazilian cement consumption is not expected to recover in the coming months due to the persistent economic challenges. In the CIS region, countries showed positive figures concerning cement output on a yearly
Ukrainian cement production increased by 35.7 percent year-on-year and contracted by 26.6 percent month-on-month to 0.3 million tons in January 2017. In the Middle East, the overall cement industry continued to show negative results at the start of 2017. Even though markets such as UAE are expected to perform well, slow growth of the construction sector in Saudi Arabia is weighing down on cement demand in the country, and therefore affecting the whole region. Saudi Arabia’s cement consumption decreased from a year-on-year perspective by around 16 percent, while production contracted by around 17 percent. Cement producers in the country were looking forward to cut cement production at the beginning of the year to respond to the sluggish demand in the country. However, on a month-on-month view, in January 2017, both consumption and production of cement showed a recovery of 11.3 and 8.3 percent, respectively, to 4.8 million tons. Cement production January 2017 – YoY change (%)
Cement demand January 2017 – YoY change (%)
10%
40% 30%
0%
20% 10%
Source: CW Research * values based on CW Research estimation for January 2017
August / September March/April 2017 2016
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US*
Peru*
Source: CW Research * values based on CW Research estimation for January 2017
To learn more, please contact the CW Research team at sales@cwgrp.com or +1-702-866-9474 26
Japan
Spain*
Argentina
Thailand
Pakistan
Colombia
-20%
Brazil*
Ukraine
Russia*
Vietnam
Belarus
Japan
Argentina
Thailand
Colombia
India
Saudi Arabia
-20%
Saudi Arabia
-10%
0% -10%
CW Research
CEMENT PRODUCTION (million tons) Country
LM
MoM (%)
CEMENT CONSUMPTION (million tons) YoY (%)
YTD
YTD (%)
LM
MoM (%)
YoY (%)
YTD
YTD (%)
LM MoMIN (%)THE CEMWEEK YoY (%) YTD TABLE AVAILABLE MAGAZINE PRINT EDITION.
YTD (%)
TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.
TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.
WWW.CEMWEEK.COM/SUBSCRIBE
WWW.CEMWEEK.COM/SUBSCRIBE
CEMENT PRODUCTION MOM (%)
CEMENT CONSUMPTION MOM (%)
TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.
TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.
WWW.CEMWEEK.COM/SUBSCRIBE
WWW.CEMWEEK.COM/SUBSCRIBE
CEMENT EXPORTS (million tons) Country
Country
CEMENT IMPORTS (million tons)
TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION. LM
MoM (%)
YoY (%)
YTD
WWW.CEMWEEK.COM/SUBSCRIBE
YTD (%)
Country
WWW.CEMWEEK.COM/SUBSCRIBE
CEMENT EXPORTS MOM (%)
CEMENT IMPORTS MOM (%)
TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.
TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.
WWW.CEMWEEK.COM/SUBSCRIBE
WWW.CEMWEEK.COM/SUBSCRIBE
Source: CW Group analysis estimates
MoM: month vs previous month; YoY: month vs same month last year; YTD: year-to-date; YTD%: year-to-date vs previous year
To learn more, please contact the CW Research team at sales@cwgrp.com or +1-702-866-9474 www.cemweek.com
AugustMarch/April / September 2016 2017
27
CEMENT MARKETS
Volume variation analysis for selected countries that are major consumers, producer, importers and exporters of cement. This is a selection of notable markets. Additional detail is available from CW Research.
CEMENT ENERGY MARKETS
CW Research
Energy Prices Update COAL: The average coal price for January 2017 closed at $83.80 per ton, increasing 65.9 percent YoY as compared to January 2016’s price of $50.51 per ton. When compared to December 2016’s price of $89.80 per ton, it decreased by 6.7 percent. Steam Coal FOB Average Prices (us$/ton) US exported
Colombia exported
Australia Newcastle
Indonesian HBA
South Africa Richards Bay
120 110 100 90 80
Global trading volumes for the six major coal countries decreased to 86.30 million tons in December 2016, growing by 6.5 percent in comparison with the 81.02 million tons recorded in November 2016.
70 60 50 40
Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Jul Sep Nov Jan ’13 ’13 ’13 ’13 ’13 ’13 ’14 ’14 ’14 ’14 ’14 ’14 ’15 ’15 ’15 ’15 ’15 ’15 ’16 ’16 ’16 ’16 ’16 ’16 ’16 ’17
Sources: EIA, Colombia Ministry of Mines and Energy, IMF, Indonesia Ministry of Energy and Mineral Resouces
COAL TRADING VOLUMES: Global trading volumes for the six major coal countries decreased to 86.30 million tons in December 2016, growing by 6.5 percent in comparison with the 81.02 million tons recorded in November 2016. An increase in coal trading volumes occurred in Australia, Indonesia, Colombia and the United States, while Russia and South Africa all showed volume decreases in the month of December. PETCOKE: US petcoke exports dropped 3.2 percent to 2.61 million tons in January 2017 when compared to the previous month, and fell 7.7 percent as compared to January 2016. The US export price for petcoke for January 2017 closed at $71.90 per ton, increasing by 0.5 percent as compared to December 2016’s price of $71.53 per ton and up 68.3 percent when compared to January 2016’s price of $42.71 per ton. US Petcoke Export Price (us$/ton) 80 70
Rolling 12-month average
60 50 40 30 20
J ‘17
D ‘16
N ‘16
O ‘16
S ‘16
A ‘16
J ‘16
J ‘16
M ‘16
A ‘16
M ‘16
J ‘16
F ‘16
D ‘15
O ‘15
N ‘15
S ‘15
A ‘15
J ‘15
J ‘15
M ‘15
A ‘15
M ‘15
F ‘15
0
J ‘15
10
Source: Customs data
NATURAL GAS: The US Henry Hub spot price traded at $3.30 per MMBTU in January 2017, up by 44.7 percent as compared to January 2016 and declining 8.1 percent as compared to December 2016’s price of $3.59 per MMBTU. Price in Europe decreased 0.7 percent MoM, reaching $5.46 per MMBTU in January 2017. To learn more, please contact the CW Research team at sales@cwgrp.com or +1-702-866-9474 28
August / September March/April 2017 2016
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Volume variation analysis for selected countries that are major importers and exporters of coal and petcoke. This is a selection of notable markets. Additional detail is available from CW Research. COAL - EXPORTS (million tons) - Dec 2016 Country
LM
MoM (%)
PETCOKE - EXPORTS (million tons) - Dec 2016 YoY (%)
YTD
YTD %
LM
MoM (%)
YoY (%)
TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.
TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.
WWW.CEMWEEK.COM/SUBSCRIBE
WWW.CEMWEEK.COM/SUBSCRIBE
TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.
TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.
WWW.CEMWEEK.COM/SUBSCRIBE
WWW.CEMWEEK.COM/SUBSCRIBE
TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT -EDITION. COAL - GLOBAL EXPORT PRICES (USD/ton) Dec 2016 LM
YTD
YTD %
YTD
YTD %
YTD
YTD %
US PETCOKE EXPORTS PRICES MoM (%)
COAL EXPORTS MoM (%)
Country
Country
MoM (%)
YoY (%)
WWW.CEMWEEK.COM/SUBSCRIBE
YTD
PETCOKE - GLOBAL EXPORT PRICES (USD/ton) - Dec 2016 Country
LM
MoM (%)
YoY (%)
TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.
YTD %
WWW.CEMWEEK.COM/SUBSCRIBE
TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION. COAL EXPORT PRICESWWW.CEMWEEK.COM/SUBSCRIBE MoM (%)
NATURAL GAS PRICES (US$/mmBtu) - Dec 2016 Country
LM MoM (%) CEMWEEK YoY (%) TABLE AVAILABLE IN THE MAGAZINE PRINT EDITION.
WWW.CEMWEEK.COM/SUBSCRIBE
NATURAL GAS PRICES MoM (%)
TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.
TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.
WWW.CEMWEEK.COM/SUBSCRIBE
WWW.CEMWEEK.COM/SUBSCRIBE
Source: CW Group analysis estimates LM: latest month Jan 2016 except where specified; MoM: month vs previous month; YoY: month vs same month last year; YTD: year-to-date; YTD%: year-to-date vs previous year
To learn more, please contact the CW Research team at sales@cwgrp.com or +1-702-866-9474 www.cemweek.com
AugustMarch/April / September 2016 2017
29
CEMENT ENERGY MARKETS
CW Research
DEPARTMENTS
PEOPLE Taiwan Cement appoints President Nelso An-ping Chang, former member of the Taiwan Cement’s board of directors and brotherin-law of the late chairman and president of the company, Leslie Koo, will take over the company. Leslie Koo was responsible for Taiwan Cement’s investment in mainland China, which resulted in the rapid growth for the company. At the time of his death, Taiwan Cement was the seventh largest cement maker in China and the 12th largest in the world. The new president has already promised to carry on the work of Leslie Koo, starting with the idea of seeking growth opportunities in India. Chang has been active in the cement sector for four decades and has extensive experience in the business.
Portland Cement Association welcomes new EPA administrator The Portland Cement Association (PCA) confirmed Scott Pruitt as the Administrator of the U.S. Environmental Protection Agency. According to the president of PCA James Toscas, Pruitt “experience and background are strong indicators that we will see a common-sense approach to
Sabanci Holding appoints CEO Sabancı Holding, a Turkish conglomerate with interests in cement, appoints CEO. Mehmet Göçmen will take over the post after Zafer Kurtul’s resignation. Mehmet Göçmen has already been approved by the board of directors. Zafer Kurtul’s resignation will enter effect on March 30, 2017 with Göçmen immediately entering functions. Göçmen comes from the cement arm of Sabancı Holding. He was a
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regulations that protect public health and the environment”. PCA stresses that cement and concrete are very important in the development of the United States and says it is fully committed to safely and efficiently manufacture cement with the smallest possible environmental impact. general manager of Akçansa Cement Industry and Trade between 2003 and 2008, and was since July 2010 head of Sabancı Holding Cement Group. He currently serves as the chairman of the Board of Directors of the Cement Manufacturers’ Association.
PEOPLE Neeraj Akhoury appointed managing director of ACC
Cementir announces organizational changes
Neeraj Akhoury has been appointed managing director and chief executive officer of ACC with effect from February 2017.
Cementir presents organizational changes in the Nordic & Baltic Region and presents the resignation of a Member of the Board of Directors.
Akhoury has worked in the cement and steel industries for the last 24 years. Previously he was the CEO of Lafarge Surma Cement and the country representative for LafargeHolcim Bangladesh.
Cementir announced appointment of Piero Corpina as head of Nordic & Baltic, USA region. He is also appointed as Chief Executive Officer of the Danish companies Aalborg Portland and Unicon. The appointment was effective from 2 January 2017, with Corpina replacing Riccardo Nicolini, who held the position from January 2016. Nicolini will continue to work for the Group until his departure on 31 March 2017.
He began his career with Tata Steel in 1993 and joined the LafargeHolcim Group in India in 1999. He was a member of the Executive Committee of Lafarge India, heading Corporate
Affairs followed by Sales. In 2011, he moved to Nigeria as CEO and Managing Director of Lafarge AshakaCem. Subsequently, he was appointed Strategy and Business Development Director for Middle East and Africa at the Lafarge headquarters in Paris, France.
Siam City cement appoints CEO Thailand-based Siam City Cement has appointed PN Iyer as CEO of the company. PN Iyer has extensive knowledge of cement sector in Asian countries, including Bangladesh and India, and in Africa. He also has around 35 years of experience in sales and marketing genre and has served as the CEO of multinational
cement companies for over a decade. The company produces and is engaged in the distribution of cement under branded names with various types of cement for different applications. The company also produces and distributes ready-mix concrete and aggregates under branded names, as well as branded woodreplacement products.
In addition, Philippe César was appointed member of the Board of Directors of CCB, Compagnie des Ciments Belges, a company acquired and added to the Cementir Group's consolidation in October 2016. He will also be appointed Chairman of CCB's Board of Directors.
Saudi Cement seeks new Board of Directors members Saudi Cement Company is looking for new members for its Board of Directors. The company invites every shareholder with more than 1,000 shares to apply for a place in its Board of Directors. Applications will be accepted between March 2 and June 17. Candidates will be evaluated based on their biography, qualifications, and experience in the cement sector.
Huaxin Cement loses director Ron Wirahadiraksa resigned from his post as director at Huaxin Cement. The resignation letters were received by Huaxin’s board of directors. The board will continue operating normally, since it continues to have more directors
than the minimum statutory number. According to Wirahadiraksa’s letter, the resignation was motivated by a change in his professional priorities. In February 6, the board received the resignation letter of Hu Chao from the Supervisory Committee of the company.
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AugustMarch/April / September 2016 2017
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regional report
EUROPE, MIDDLE EAST AND AFRICA Portugal ceases exports to Algeria Portuguese cement exports were dented by import restrictions in Algeria. In 2016, the Algerian government decided to restrict cement imports by subjecting them to quotas and a licensing process. The impact of the measure was felt in the Port of Aveiro, in Portugal, with a strong decrease in cement throughput. In 2015, cement exports to Algeria passing the port grew to 400,000 tons, a figure that fell to virtually zero last year. Demand is also sluggish in the domestic market, with cement consumption dropping 3.6 percent. Portuguese companies are seeking nearby markets, with Secil acquiring several assets in Spain, previously owned by LafargeHolcim. The assets, according to Secil’s parent company Semapa, include a cement terminal, two quarries, and 13 readymixed cement plants located in the northern Spanish autonomous regions of Asturias, Galicia, and Castile and León. Last year, the cement department of Semapa registered an operating income of EUR 470.5 million, 1.3 percent less compared to 2015. Its EBITDA reached EUR 85.1 million. Semapa faces sluggish demand in its home market, Portugal. In 2016, cement consumption in the country dropped by 3.6 percent.
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August / September March/April 2017 2016
Palestine to set up its first cement plant Palestine’s first cement plant will be constructed by Sanad Construction Resources Company, a subsidiary of the Palestine Investment Fund operated by the Palestinian Authority. The project was launched in October 2016 and will take 18 months and USD 310 million to complete. The first phase of the cement plant represents an investment of USD 60 million and will produce one million tons
New cement plant installed in Sohag, Egypt The first steps are being taken to set up a new cement plant in Dar es Salaam, Egypt. According to the Governor of Sohag Ayman Abdel Moneim, the process to create a new cement plant east of the town has already started with the exploration of quarries in the area.
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of cement per year, while the completed project will produce 1.3 million tons per year. Production may then suffer further increases and reach up to five million tons. The Palestinian market has a current demand of up to three million tons of cement per year. Palestinian Constructions, a large company in the building materials’ sector, will consider if the new plant will become its major supplier. For now, the company imports cement from Jordan, Israel, Turkey, and Greece. Moneim explained that a delegation of geologists from the Egyptian Cement Company has been conducting surveys of the terrain in the governorate of Sohag, looking for suitable location for quarries. As soon as limestone reserves are mapped, a timetable for the implementation of the project will be created. Moneim assures coordination between the concerned bodies in the Sohag governorate.
regional report Morocco’s cement prices revised LafargeHolcim is likely to announce a price hike in January, which is expected to have a ripple effect in the Moroccan market.
Diamond Cement Invests in greenfield cement plant Côte d'Ivoire-based Diamond Cement will setup a greenfield cement plant in the Abidjan region. The cement plant will have a production capacity of around 1,800 to 2,000 tons per day, and will have a total production capacity of 500,000 tons of cement per year. The cement will be sold in the local and international markets.
Meanwhile, the company will be financed at about CFAF 16 billion, of which USD 6.2 billion will come from the company's own funds, USD 7.5 billion from the BOAD, along with a contribution of USD 2.5 billion from a local BOAD partner in the project (UBA). The cement plant is expected to begin operation in April 2017. The greenfield cement plant will help meet the growing demand for cement in the market.
The company’s price hike will force the other manufacturers to increase prices in the market. The revision of prices is expected to be between 1.5 to two percent per ton of cement. The price hike is expected to impact the real estate sector and cement market in Morocco. Prices for real estate should increase by 25 percent in the market if construction prices were to increase.
Cement consumption at historical low in Spain Spain closed 2016 with a 3.1 percent decrease in cement consumption, down to 11 million tons. It is the first time since the 1960s that the country records such a low volume of cement usage. 2016 breaks the pattern when compared to 2014 and 2015, which denoted an upward trend in cement consumption.
decreasing competitiveness in the sector, particularly on export-markets, which are needed to cushion the decline of the domestic market. EUROPE, MIDDLE EAST & AFRICA COMPANY/LOCATION
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Spanish cement makers attribute this decline to a “collapse” in public works and government spending, and classify 2017 as a “worrying year”. Government spending in infrastructure declined due to a need to meet the deficit quota in 2016. Some also noted that increasing electricity costs, which weigh heavily on cement manufacturing, are www.cemweek.com
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SOUTH EAST ASIA Indian companies planning to set up new cement plants India-based Shree Cement has received permission from the Indian authorities to set up an integrated cement plant in Kodla, Karnataka, while UltraTech Cement has greenlit the project for a new cement plant in Dhar, Madhya Pradesh. Ultratech’s Board of Directors approved the plans for the new cement plant on January 21, with a capacity for 3.5 million tons of cement per year. Shree Cement’s proposed cement plant will have a clinker production capacity of 2.8 million tons per year, and a cement production capacity of around 3 million tons per year. The capacity addition is expected to be commissioned by December 31, 2018, with the company likely to invest around INR 1,800 crore in the new unit. The company will fund the cement plant through internal accruals, and the new cement plant will help in expanding the company’s business. Headquartered in Kolkata, Shree Cement has a production capacity of approximately 25.6 million tons per year. The Company has operations in Rajasthan, Uttarakhand, Bihar, Haryana, Chhattisgarh and Uttar Pradesh.
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Siam Cement builds new cement plant in Vietnam Siam City Cement Company will open a new cement plant in Vietnam by 2019. The company will invest USD 522 million in a new cement plant in the country, which will produce around 4.5 million tons of cement per year, around eight percent of
Pakistani cement companies investing in new plants, expansions Pakistani conglomerate Arif Habib Group is preparing an investment of PKR 25 billion in an existing cement plant, while Frontier Works Organization (FWO) wants to build a large cement plant in Khyber Pakhtunkhwa. Arif Habib Group’s investment will vastly increase the capacity of the Power Cement plant, from the current 900,000 tons per year to 3.37 million tons per year. The project will be completed within the next two years. Power Cement Chairman Nasim Beg thinks that cement demand will continue to increase in Pakistan, backed by the China-Pakistan Economic Corridor.
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total demand in the country, helping to accommodate rising demand from Ho Chi Minh City. Construction of the plant will soon begin. The groundbreaking ceremony was held on February 2, with the presence of Prime-Minister Nguyễn Xuân Phúc. Beg also believes that the corridor will improve energy security in the country, benefiting cement manufacturers that have been affected by electricity shortages. FWO’s new cement plant also aims to rise demand brought by the China-Pakistan Economic Corridor and its projects in the region. FWO has already met with the provincial government and is now seeking state approval for its project. Khyber Pakhtunkhwa’s Minister of Labor and Mines Anisazaib Tahirkheli praised the project for its commitment to develop local resources. The new cement plant would be constructed in Haripur, close to a known reserve of limestone.
regional report Huaxin Cement makes an offer on Lafarge China Huaxin Cement wants to integrate Lafarge China and become a major producer in the southwest Chinese provinces. In October 2016, the company offered approximately CNY 13.8 billion for Lafarge China’s operations in Yunnan, Guizhou, and Chongqing. If the deal follows through, Huaxin Cement will become the second largest producer in the southwest region, with a market share of 12 percent, very close to the region’s leader, China Resources Cement, which has a market share of 13 percent. Huaxin’s production capacity currently rounds 72 million tons, making it the fifth largest producer in China. Central China is home to 65 percent of that capacity, with Southwest representing 23 percent, and overseas units making for 6 percent.
Several India cement companies merged in 2016 The Indian cement market recorded a major merger deal signed between Dalmia Bharat and OCL India in 2016, including several other smaller yet significant deals. The merger of Huaxin Cement and Lafarge China would be another step in the integration of capacity, promoted under Beijing’s supply-side reforms in the sector. Cement prices in the country are also still rising in what can be seen as a signal of economic recovery. In mid-January, the price of cement in China rounded CNY 272 per ton, equivalent to USD 39.61, compared to an average regional price of CNY 206 per ton in the first quarter of 2016. Demand for cement seems to be picking up, a good sign for the Chinese economy.
Chinese government imposing cement kiln co-disposal policy The Chinese Ministry of Environmental Protection issued a new cement kiln co-processing of solid waste pollution control technology policy.
encourage research and development, related to environmental protection planning, and others.
The new policy will be a part of the country’s environmental protection law, as it aims to improve the environmental technology management system to guide pollution prevention, health and ecological security. This policy will also guide the green cycle and low-carbon development of the cement industry. The co-disposal of solid waste by cement kilns policy refers to solid wastes that are to be met or pretreated in order to meet the requirements of kiln entry into the cement kiln and securely dispose them.
The companies valued the merger deal at around INR 10,000 crore, creating the fourth largest cement maker in the county with an installed capacity of 25 million tons per year. After the restructuring deal is complete, Dalmia Bharat will change the name of Odisha Cement, which will be absorbed into the company. Meanwhile, UltraTech Cement and Jaypee Group merged assets in Uttar Pradesh, Madhya Pradesh, Himachal Pradesh, Uttarakhand and Andhra Pradesh for around USD 2.4 billion. The merger will help UltraTech to acquire a four-million-ton-per-year cement grinding plant in Uttar Pradesh. The company will invest around INR 470 crore to complete the unit. The investment will also increase UltraTech’s capacity to 91.1 million tons per year over the next few months. Despite this, the cement sector is still likely to witness a decline in volume and flat realizations, after the demonetization. North cement companies should report weakness in volumes with sequential drop in realizations, while South-based companies are likely to report healthy volume growth coupled with sequential improvement in realizations.
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It includes the contents of source control, clean production, terminal treatment, secondary pollution prevention and new technologies to www.cemweek.com
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ASIA PACIFIC Australia and New Zealand discuss cement trade The New Zealand Prime-Minister Bill English met is homologous, Australian PM Malcolm Turnbull, in Queensland. The meeting was part of the annual Australia-New Zealand Leaders’ round of talks. The two countries are making advancements towards a single economic market. Cement trade was among the topics discussed, although the exact content of negotiations was not divulged. In New Zealand, Holcim is trying to sell several assets in Westport, after closing the nearby Cape Foulwind cement plant, after 57 years of operation. Holcim’s assets at the site include the cement work area, a quarry, a packing plant site, wharf silos, a water treatment plant, and 11 houses. In terms of area, it encompasses 500 hectares of land, including 200 hectares of farmland.
Cement consumption increases in the Philippines The Philippines increased its cement consumption during 2016, according to figures provided by the Cement Manufacturers Association. Last year, cement sales in the country reached 26.0 million tons, up by 6.6 percent when compared to 2015. In the first half of the year, dispatches climbed by a two-digit figure thanks to increased activity in the infrastructure sector, but slowed down in the second half due to unfavorable weather conditions. Cement sales increased by 12.8 percent in the first quarter when compared to the same quarter of the previous year, 8.8 percent in the second quarter, and 5.4 percent in the third quarter. In the fourth quarter of 2016 alone, consumption of cement was 5.8 million, up by 3.9 percent compared to the same period a year before. This was mainly due
HR Cement introduces a new cement type New Zealand’s HR Cement has introduced a new cement type, which will help reduce carbon footprint. “ECOCEM has the potential to reduce the carbon footprint of concrete utilized
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to a high-base effect, given the expansion of demand in 4Q2015 propelled by approaching elections in May 16, 2016. Thanks to this increase in demand, Siam Cement Group’s division in the Philippines posted an increase in its operating revenue during the last quarter of 2016, with a total operating revenue of PHP 1.8 billion between October and December 2016, a jump of nine percent compared to the same period a year before. In the last six months of the year combined, the company reached PHP 3.7 billion in sales. Also in the last quarter of 2016, the division’s net profit ascended to PHP 16.3 million, also up by nine percent year-on-year. Quarteron-quarter, however, its net profit fell by 11 percent. SCG Philippines ended 2016 with PHP 9.74 billion in assets, an increase of one percent compared to 2015. on construction sites by 15-30 percent and set a New Zealand benchmark for low carbon concretes in New Zealand,” said an official from the company. The company will also continue to manufacture Portland cement and other market variants. The new cement will help reduce the company’s carbon footprint.
regional report Semen opens new plant in Indonesia The new plant by Semen Indonesia will be inaugurated in April, with the presence of Indonesia’s President Joko Widodo. Construction of the factory has already been completed, but it still has to wait for its strategic environmental assessment.
Geca develops new cement certification process GECA developed a new set of standard to reward manufacturers that invest in minimizing the environmental, healthrelated, and social effects of cement production. Companies will be rewarded for alterations in cement production that result in lower CO2 emissions. Through the new certification, GECA ensures,
consumers will be able to recognize products that comply with “strict sustainability criteria”. The new certification process was already recognized by the Infrastructure Sustainability Council of Australia and is being reviewed by the Green Building Council of Australia’s Green Star ratings tools.
The Rembang plant has been contested by several groups, including local farmers that have buried their feet in concrete blocks for five days in front of the State Palace. However, the Minister of State-Owned Enterprises Rini Soemarno did not hesitate and fully endorsed the project, making a visit to the factory during last Friday, March 17. Semen Indonesia has also faced resistance from the courts. In October 2016, the Supreme Court ruled in favor of the farmers, and the company lost its license in January. However, a new environmental permit was issued in February 23.
Japanese cement sales increase in January Total sales by Japanese cement companies improved by 6.9 percent during January. Thanks to a surge in both domestic demand and exports, dispatches in the country rose by 6.9 percent year-on-year to 4.07 million tons. This was the third consecutive month of growth in that indicator. Domestic sales grew by 4.4 percent year-on-year
tons during 2017, a growth of 3.1 percent, with exports ascending to 12 million tons, up by 1.7 percent. ASIA PACIFIC COMPANY/LOCATION
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In December 2016, production increased by 6.8 percent compared to December 2015, while inventories rose by 4.5 percent. The Japanese Cement Association predicts demand in the country to reach 43 million
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AMERICAS Cimentos Molins investing in new cement plants in South and Central America Ciments Molins is part of two joint ventures in the cement sector in Bolivia and Honduras to create new cement plants. The new cement plant in Bolivia, under the name of Itacamba Cemento, is a joint venture between Votorantim Cimentos de Brasil, Companya de Ciment Camba, and Cimentos Molins. This is the first production unit that Cimentos Molins has in the country. The three companies combined invested EUR 190 million tons that will produce around 950,000 tons per year. In Honduras, the project for a new cement plant belongs to Ecocement, a joint venture between Cementos Molins and Grupo Corona. The full equipment to the plant, an investment of USD 60 million, will be delivered by FLSmidth. The cement plant will be set-up in Rio Claro, Colombia, and the order will be fully delivered by the first quarter of 2018. When finished, the new plant will have the capacity to produce 3,150 tons of cement per day.
Buzzi Unicem units in the US receive energy certification Four of Buzzi Unicem’s cement plants, including Chattanooga (Tennessee), Festus (Missouri), Maryneal (Texas), and San Antonio (Texas), have received a certificate for their environmental performance.
The Energy Star program, which awarded these certificates, focuses on strategic energy management and emphasizes the importance of demonstrating environmental leadership for future generations.
This marks the eighth consecutive year that the cement plants in Chattanooga, Festus, and Maryneal have received this certification.
Cement plants are required to score at least 75 on the Energy Performance Indicator in order to qualify for Energy Star recognition, and must have a threeyear history of environmental compliance.
Cementos Moctzuma opens new production line in Mexico In Mexico, Cementos Moctzuma inaugurated a new cement line at the Apazapan cement plant. Construction of the new line began in February 2015 and was concluded last month. Works to expand the factory employed 1,800 workers and cost USD 150 million. The production line was officially inaugurated on January 26 with a ribbon-cutting ceremony. The Apazapan plant is fully automated and fitted with modern, power-efficient technology.
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Apazapan now produces 2.75 million tons, similarly to the Cerritos works. Together with Tepetzingo plant, with the capacity of 2.5 million tons, Cementos Moctzuma now holds an annual capacity of eight million tons.
regional report Mexican cement companies do more business in the US Grupo Cementos Chihuahua plans to increase production capacity by 10 to 12 percent by the year in the US and Mexican markets.
Piauí governor intervenes on Itapissuma cement plant shutdown Piauí governor intervenes on Itapissuma cement plant shutdown. The local government wants to discuss the suspension of production at the cement plant. In the statement issued to workers arriving at the plant Monday morning, Itapissuma says that it has suffered an 80-percent decline on its sales due to
the economic crisis that it is currently hitting Brazil. The Governor of Piauí Wellington Dias announced that he will open a dialogue with the director of the factory to discuss the shutdown. Dias says that the state will collaborate with the company with the objective of returning it to operation. A possible solution would be an endorsement fund, normally attributed for companies trying to invest that have no access to credit lines.
Cementos Argos sets up new cement plant in French Guiana Cementos Argos is involved with the construction of space station in the French Guiana. The company has set up a cement plant near the upcoming space station. It is also supplying specific cement grades to the most famous infrastructure in the territory, the Spaceport, where the European Space Agency has the launch base for the Ariane rockets. The company won the contract in 2014, through a cement supply tender. To facilitate the supply of cement, Argos began to produce four types of cement with specific quality characteristics required for that kind of facility. The cement company is also supplying cement to several construction projects in the region, in a bid to expand its market share.
The new cement plant will fulfill demand in the south-central and eastern regions, including Valle, Choluteca, Francisco Morazán and El Paraíso. The new cement plant will also help its mother company, Argos, to increase its market share in the country. Cement production volumes have increased steadily in the regions of Choluteca and Valle in Honduras during 2016, when compared to the previous year.
The cement company has a positive outlook after acquiring cement plants in Odessa, Texas, each having a production capacity of three million tons of cement in USA. The company invested USD 306 million to acquire two distribution terminals in Amarrillo and Paso region in Texas. The current investment is part of the company’s investment of USD 1 trillion in the US market over the last three years. Meanwhile, Cemex sold one of its cement plant in the United States to Eagle Materials for a total of USD 400 million. The Greene County unit, which was sold, produces around one million tons of clinker per year. According to the president of Eagle Materials Dave Powers, the acquisition is part of the company’s strategy to increase its cement division. For Powers, buying the Greene County unit allows Eagle to increase its supply range without overlapping the market of the plants it already owns. Cemex will use the yield of the sale to general corporate uses and debt reduction.
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In Honduras, Argos is also setting up a new greenfield cement plant, in San Lorenzi Molienda. The new unit should increase the national cement production capacity from 1.8 to 2.1 million tons. www.cemweek.com
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BMWEEK.COM
CONSTRUCTION & BUILDING MATERIALS BY BMWEEK.COM Qatar Ministry and researchers develop new building block VegeBlock is a new innovative building block designed to help increase sustainability across the country’s construction segment and it was created by TRL and the Qatar’s Ministry of Municipalities and Environment. The product, also known as Smart Block, represents the latest stage in an ongoing program of collaborative work between the ministry and the global center for innovation in transport and mobility. It aims to improve the sustainability and adoption of green construction in Qatar and throughout the region. The VegeBlock was developed from small scale samples produced in laboratories to full-size building blacks using materials and techniques suited for the Gulf region. The VegeBlock is composed entirely of recycled aggregates (limestone) and used vegetable oil in a similar way to conventional concrete blocks, and has properties that nearly match lowstrength concrete. It’s suitable for use as non-load bearing blocks in buildings. According to a preliminary economic analysis, the production costs of the VegeBlock could be significantly lower than concrete blocks, at around two thirds of the price.
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Saint Gobain completes Tumelero acquisition The French group Saint Gobain has officially concluded the acquisition of Tumelero Construction Materials in Brazil. The company purchased a controlling stake of 100 percent through the company’s stocks, a process negotiated since 2016.
This represents another acquisition for Saint Gobain in Brazil’s construction sector, which joins those already existing Telhanorte, which operates in 41 locations throughout the states of São Paulo, Minas Gerais e Paraná, and several other companies, such as Brasilit, Carborundum, Isover, Norton, PAM, Placo, Sekurit and Weber.
Saint Gobain is maintaining the Tumelero brand, with 29 stores in the state of Rio Grande do Sul, and plans on expanding the network.
The company operates 56 factories in Brazil, 42 distribution centers, 10 mining companies, 70 stores, 23 commercial offices, and a research and development center.
Cemex and Quikrete complete sale of US reinforced concrete Cemex announced that one of its subsidiaries in the U.S. has closed the divestment of its U.S. Reinforced Concrete Pipe Manufacturing Business to Quikrete Holdings, for approximately USD 500 million. The transaction also includes a potential addition of USD 40 million
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to the purchase price contingent on future performance. The proceeds obtained from this transaction will be used by Cemex mainly for debt reduction and for general corporate purposes. Bank of America Merrill Lynch and Citigroup Global Markets Limited are acting as financial advisors to Cemex in this transaction.
BMWEEK.COM Headwaters reports results for Q1FY2017 after company's acquisition by Boral In the first quarter of 2017, the American company Headwaters entered a definitive merger agreement with Boral, representing an aggregate enterprise value of approximately USD 2.6 billion.
Wienerberger to increase core profit in 2017
adjustment, to increase 8.6 percent to EUR 415 million.
Austrian brickmaker Wienerberger is expecting a rise in its core profit in 2017, due to demand in the European and North American house builders, and public sector investments in Eastern Europe.
"The economic environment will still be characterized by a great deal of uncertainty throughout the year”, Chief Executive Heimo Scheuch said in a statement.
The company forecasts its 2017 EBITDA, adjusted for contributions from the sale of non-core assets and growth projects, exchange rate effects and structural
In 2016, the company reported an unexpected nine percent increase in its core profit, due to accelerating demand in residential construction in Europe and the United States.
US Concrete consolidated revenue increased in 2016 For the full year of 2016, consolidated revenue hiked 19.8 percent to USD 1.17 billion, as ready-mixed concrete average sales price improved 5.1 percent, and aggregate products average sales prices rose 13.6 percent year-on-year. The company’s losses also rose during the fourth quarter, with results showing a rise from USD 6.3 million in 2015 to USD 15.4 million in 2016. For the full year of 2016, the company recorded an income from continuing operations of USD 9.6 million, compared to a loss of USD 5.1 million in 2015. The company cemented its stake in major metropolitan markets, as strong demand arose from the areas of New York, San Francisco, Washington D.C and
Dallas/Fort Worth. US Concrete remains optimistic of growth in their existing markets in 2017. In the last quarter of 2016, US Concrete’s consolidated revenue rose 20.9 percent to USD 318.8 million in the fourth quarter of 2016 when compared to the equivalent quarter in 2015. Average sales price of ready-mixed concrete improved 5.5 percent to USD 132.25 per cubic yard, while the average sales price for aggregate products grew 14.8 percent, to USD 12.57 per ton. In the fourth quarter, the total adjusted EBIDTA increased 41.1 percent to USD 46.1 million year-on-year.
Headwaters shareholders voted in favor of the company's acquisition by Boral, with 98 percent of the vote in favor of the deal. This agreement will allow Boral to expand its fly ash business. In the first quarter of 2017, sales from net new fly ash sources should exceed 500,000 tons, and expansion to the fly ash storage capacity are ahead of schedule, which should contribute to a strong year for the construction materials segment. In the first quarter, consolidated revenue increased by 17 percent to USD 255.6 million when compared to USD 218.4 million in the first quarter of 2016. Revenue for the Building Products section increased 33 percent from USD 101.6 million in the first quarter of 2016 to USD 135.0 million in the first quarter of 2017. Gross profit was USD 38.5 million, compared to USD 32.0 million in 2016, while operating income was USD 11.4 Million compared to USD 11.7 million in 2016. Gross profit was USD 31.7 million in 2017, compared to USD 32.0 million in 2016. Operating income was USD 18.6 million in 2017, compared to USD 20.4 million in 2016.
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PETCOKEWEEK.COM
Petcoke Market update from PetcokeWeek.com Port of Recife to install petcoke terminal The Brazilian government is returning the autonomy of selecting the port concessions to Pernambuco, a measure that the port authority at Recife is welcoming. In 2013, the “Lei dos Portos” (Port Law) was upheld, and ports were unable to select their own concessions to private investors without an extensive bureaucratic process and government approval. The commercial director of the Port of Recife anchorage welcomed the news: "We can say that now we start 2017 on the right foot. We are going to unlock the bidding processes of all the ports that have been frozen for years.” The port will install a new terminal for petroleum coke, along with another for soda ash, a raw material for the glass industry. The projects were dammed for five years, along with a finished passenger terminal that remains unused, and could now enter a bidding process. As the decree is not out yet, the Port of Suape can’t yet say which of the halted projects will be prioritized. However, due to the inability to move forward with some projects, some of the terminals have become obsolete, and need to be newly adapted and updated.
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Petcoke consumption continues to increase in India India’s overall petroleum product consumption grew from April to December, remaining strong at 9 percent. Although diesel sales fell slightly during this period, demand for petcoke hiked the overall consumption growth, as cement companies switched from coal to the petroleum byproduct. Overall product consumption growth in India has remained strong in nine months of FY17 at 9 percent year-on-year, despite slower diesel growth due to strength in many other products, like petcoke, gasoline, liquefied petroleum gas (LPG),
aviation turbine fuel (ATF) and fuel oil" said the source. Despite this, the increase falls short of last year’s 10.9 percent, as diesel volume growth decelerating to 3.7 percent from 7.5 percent in the previous fiscal year. Petcoke consumption rose above gasoline in terms of tonnage, while kerosene declined and LPG consumption stood at a 12-year high. This is due the Indian government’s strategy to shift household consumption from the pricier kerosene to the more affordable LPG.
Petcoke production decreases in Brazil
a further 6.6 percent, in line with the previous years.
Brazil’s overall industry is performing 19 percent below the peak recorded in July 2013. Current production patterns near those of February 2009, when the international crisis hit the Brazilian economy. The Brazilian industry had shown signs of an uptick in the last two months of 2016, but fell
Petcoke production, along with petroleum derivatives and biofuels, had the greatest negative influence in the industry’s average, dropping by 14.1 percent year-on-year in December 2016. In this month, the overall industry fell 0.1 percent.
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PETCOKEWEEK.COM Petronor refinery halt petcoke unit This will be the plant’s first general stoppage in order to analysis the facilities and perform technological innovation improvements, at an assumed cost of EUR 49 million. Out of this sum, 23 million correspond to the specific maintenance contemplated in the general stop itself, while 26 million relate to technological innovation investments in the plant. Other than the petcoke unit, the Refinery 2 and the vacuum unit in the conversion
area will also be halted during this period, meaning that 75 percent of the total activity of the refining installations will be frozen. This will be the largest stop in the company’s history since its inception in 1968, and the first review of the coke plant, inaugurated in April 2013 after an investment of over EUR 1 million. The maintenance will focus on improving the energetic efficiency of the facilities, mainly by cooling the chimney smoke and energy saving costs.
China suspends coal imports from North Korea On February, China decided to suspend imports from North Korea as an effort to impose United Nations’ sanction against the country, following a new nuclearcapable missile test.
Last year, North-Korean imports of anthracite and high-quality coal used to make coke to China reached 22.48 million tons, up 14.5 percent compared to 2015.
Prices responded accordingly, with May coke futures raising by 1.3 percent to CNY 1,709.5 per ton while coking coal futures rose by a similar percentage to CNY 1,250 per ton.
Omsk refinery’s petcoke production rises in 2016 In 2016, Gazprom Neft refinery in Omsk, Russia, displayed a 4.6 percent increase in production of petcoke, when compared to the previous year. According to a press release from the refinery, total petcoke output throughout the year reached 169,000 tons. Volume of gas condensate processed at the
refinery also increased to 1.5 million tons during the year, while gasoline output rose 6.6 percent year-on-year to reach 4.7 million tons. Diesel fuels production increased by 3.2 percent to 6.5 million tons.
India considering nationwide petcoke ban The ban is currently only being considered in the Delhi National Capital Region (NCR). The Supreme Court had mandated a meeting of EPCA to ban petcoke and seek alternatives to the fuel in the NCR. According to a senior official in the Ministry of Environment, Forests and Climate Change claimed that a panIndia ban was under consideration, but no decision had been taken yet. Sunita Narain, Director-General of the Centre for Science and Environment and member of the EPCA, said, “We have recommended a ban on petcoke in Delhi-NCR, but one needs to look at banning it across India as it is a very highly polluting fuel”. Narain added that there was a need to restrict the import of petcoke, as countries such as the US and China were using India as a “dumping ground”. The EPCA is currently recommending the ban of the fuel for captive power generation, but allowing it for cement manufacturers. Rajiv Agarwal, Secretary at the Indian Captive Power Producers Association, said: “Petcoke is the currently available fuel for captive power producers as larger volumes of coal are diverted for independent power producer and public sector power generation projects. Generally, power producers use a mix of 20 to 30 per cent petcoke with coal to keep sulfur emissions under check and to sustain the life of the plant. The government will have to ensure free availability of cheap coal if they want to go ahead with the ban”.
Aromatic hydrocarbons production also rose by 5.6 percent to 430,000 tons, while bitumen products for road construction reached 430,000 tons, a rise of 9.9 percent when compared to 2015.
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EQUIPMENT
EQUIPMENT Russian Company produce ball mills Russian company Evraz Ntmk will start producing ball mills to substitute imports. The metallurgical company will produce ball mills with a diameter ranging from 60 to 120 millimeters which were not produced in the Russian Federation until now. The project represents an investment of RUB 1 billion. Among other potential clients are mining and processing plants and, of course, cement plants. The delivery of the first batch is schedule for the second quarter of 2017.
Tec Group supplies new calciners to Aalborg Danish cement producer, Aalborg Portland, part of the Cementir Group, has appointed A TEC to upgrade a cement kiln at the Aalborg cement plant, one of the largest in Europe with a capacity of around 3 million tons per year of both grew and white cement. The calciners will be installed during the annual kiln shutdown in FebruaryMarch.2017. With the new equipment, Aalborg expects to increase its grey clinker production with the lowest possible emissions. 44
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The new calciner system will be equipped with the A TEC Post Combustion Chamber for the optimized mixture of fuels and combustion air in the end section of the calciner. The design will be configured to use 100% solid alternative fuels for the lowest possible emissions. The upgrade will also reduce the number of kiln stoppages due to fall-through cyclone blockages. A TEC will carry out the basic and detailed engineering work, as well as equipment supply, erection and documentation.
EQUIPMENT New Egyptian public owned company orders six clinker production lines The German Aumund Fรถrdertechnik will supply six clinker production lines to the new government owned cement plant in Beni Suef, Egypt. AUMUND Fรถrdertechnik, in close cooperation with its Chinese subsidiary AUMUND Beijing, has now won the order to supply the clinker conveying equipment for the project.
Baotou Jidong cement installs dust removal equipment
a dust collection to its electrostatic precipitator. The clinker line in question produces around 5,000 tons per day.
In China, Baotou Jidong Cement successfully implemented an electric dust removal equipment on its clinker production line. The company retrofitted
According to Jidong, the transformation project was conducted successfully, with dust emission values of under 10 milligrams per cubic meter.
Ssangyong Cement order conveyor belt from Voith German company Voith supplied SsangYong Cement in Singapore with a belt conveyor drive and controller system. The company installed the TurboBelt DriveControl system in the Donghae cement plant. Thanks to this retrofit project, SsangYong will be able to complete the increase of production
in its limestone quarry. The conveying route connecting the plant to the quarry is covered by two belt conveyors, with the longest running for 12.8 kilometers. The speed of the conveyor system was doubled from three to six meters per second, by installing a new SB500 drive train in the longest belt.
The clinker production units will have a production capacity of 6,000 tons per day. The identical lines are equipped with four belt buckets with a capacity of up to 650 tons per hour and three chain beaters (max. 550 tons per hour) per line. The machine package also includes four BWGL belt buckets (170 t / h), a BWZL chain trolley (80 tons per hour) and six short belt tapes (maximum 375 tons per hour). Meanwhile, the new project in Beni Suef is to be completed within the next three years. The pilot phase in the operation of the new production lines is expected to begin in December 2017.
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EQUIPMENT Gebr. Pfeiffer sells modular grinding system to LafargeHolcim Colombia LafargeHolcim Colombia has awarded Gebr. Pfeiffer a contract for a ready2grind plant. The new plant, to be installed in the Cali area of Columbia, will comprise a modular ready2grind cement grinding system with the very latest MVR mill technology. The MVR 2500 C-4 mill will be installed together with the feeding unit, filer, blower, and other components. This is the fourth ready2grind system with MVR Mill Technology supplied by Gebr. Pfeiffer to LafargeHolcim Colombia. The MVR roller mill grinds cement raw material, cement clinker and additives with an installed power of up to 12,000 kW/. Thanks to its modular design and smaller footprint it is easier to transport and install and offers many cost reductions in terms of running costs and maintenance, and offers higher productivity. The finished installation will include a storage facility mounted by Gebr. Pfeiffer and a packing plant from Claudius Peters.
Acico construction orders third road-mobile cement unloader from siwertell Siwertell, part of Cargotec, has signed a contract with Kuwait-based Company Acico Construction for its third roadmobile cement unloader. Similar to its last delivery in 2015, the next-generation, road-mobile unloader will be a trailer-based, diesel-powered Siwertell 10 000 S unit. It will be fitted with dust filters and a double bellows system for uninterrupted operations and, like its predecessor, will have a rated capacity of 300t/h. "Acico initially enjoyed positive experiences operating Siwertell equipment belonging to third parties. This was an important factor in helping the company decide that it would like to own and operate its own unit. This positive experience has continued, making it quite an easy decision for Acico to once again choose a system from Siwertell to meet the needs of its expanding operation", says Jรถrgen Ojeda, Director, Mobile Unloaders.
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The new unit will be built at Siwertell's premises in Bjuv, Sweden, and delivered by the end of the first quarter of 2017. It will operate in Kuwait's second largest port, Shuaiba, located south of Kuwait City. The Siwertell road-mobile unloaders were originally developed for handling cement, making them ideal for this commodity, although they can comfortably handle a wide variety of dry bulk materials. Acico benefits from a Siwertell Care maintenance support contract, signed in 2015. With one more year to run, it covers Acico's first two road-mobile units. The agreement includes an ongoing training element for Acico maintenance staff, covering mechanical and electrical systems and instrumentation. Siwertell ship unloaders and loaders are based on a unique screw conveyor technology, in combination with belt conveyors and aeroslides, and can handle virtually any dry bulk cargo, such as alumina, biomass, cement, coal, fertilizers, grain and sulphur.
EQUIPMENT FLSmidth to supply equipment to Pakistani Maple Leaf Cement FLSmidth has obtained an order from Maple Leaf Cement Factory Limited for engineering, procurement and supply of equipment for a complete cement production line with a capacity of 7,300 tons per day. The order includes a complete range of equipment from crushing to packing and cement loading. The scope also includes equipment from product companies of FLSmidth, such as planetary gear units from FLSmidth MAAG Gear, electrostatic precipitators and fabric filters from FLSmidth Airtech, a packing plant from FLSmidth Ventomatic, a control system and plant automation from FLSmidth
Automation, and weighing and metering systems from FLSmidth Pfister. The deal is valued at around SEK 557.7 million and is expected to have a positive impact on the company operations. The plant will be located in Iskanderabad in Mianwali District, Pakistan and the order will be fully executed by the end of 2018. This is the latest project to underline FLSmidth's strength as the leading supplier of the most productive and energy-efficient equipment and technology - and our position as the preferred supplier of complete production lines to the Pakistani cement industry”, said Group Executive Vice President, Cement Division, Per Mejnert Kristensen.
Plycem installs new kiln in Costa Rica Plycem, part of the Building Systems Division of Mexican consortium Elementia, announced it will install a new high-tech kiln at its manufacturing facility in Santa Lucía de Paraíso, Costa Rica. The new kiln is part of the project that the company began in 2015 of modernization of its plants in Costa Rica and El Salvador, having already spent USD 12 million in the mechanization of the plants. The new kiln substitutes an older one that had been in operation for 20 years and allows for significant savings in electricity and fuel, for a tighter control of quality. In addition, fuel economy is significant, favoring the reduction of CO2 emissions, which is in line with Plycem's strategy of becoming a more sustainable company. The kiln will lead to an increase in production of about 30 percent. “Robotization forces us to improve the performance of other parts of the production chain to continue seeking the optimization of the processes of our plant”, said Ronald Thamez, Plycem Marketing Corporate Manager.
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analyst recommendations Cemex As of Mar 4, 2017, the forecast amongst 10 investment analysts covering Cemex advises that the company will outperform the market, after the sentiment of investment analysts improved on Nov 26, 2012, says Financial Times.
LafargeHolcim As of Mar 4, the forecast from 27 investment analysts for LafargeHolcim recommend investors to hold their position in the company after the sentiment of investment analysts weakened on Mar 03, 2017, says Financial Times. The previous consensus
forecast advised that LafargeHolcim would outperform the market. The 19 analysts offering 12 month price targets for LafargeHolcim have a median target of 60.00, with a high estimate of 78.00 and a low estimate of 47.70. The median estimate represents a 3.90% increase from the last price of 57.75.
The previous consensus forecast advised investors to hold their position in Cemex. The 7 analysts offering 12 month price targets for Cemex have a median target of 20.00 (a 16.41% increase from the last price of 17.18), with a high estimate of 22.80 and a low estimate of 11.00.
HeidelbergCement The forecast amongst 27 polled investment analysts covering HeidelbergCement advises investors to hold their position in the company, as of March 4, says Financial Times. This has been the forecast since the sentiment of investment analysts deteriorated on Nov 11, 2016. The previous forecast
CRH The analysts believe CRH company will outperform the market, hence the forecast since the sentiment of investment analysts improved on Jan 27, 2016. The previous consensus forecast advised investors to hold their position in CRH PLC.
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advised that HeidelbergCement would outperform the market. In terms of price target, the 23 analysts offering 12 month price targets for HeidelbergCement have a median target of 91.00 (a 1.82 percent increase from the last price of 89.37, with a high estimate of 117.00 and a low estimate of 75.00. The 16 analysts offering 12 month price targets for CRH PLC have a median target of 34.70, with a high estimate of 39.00 and a low estimate of 30.50. The median estimate represents a 4.96% increase from the last price of 33.06, says Financial Times.
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Taiwan Cement Corporation The consensus forecast amongst 19 polled investment analysts covering Taiwan Cement Corp advises that the company will outperform the market as of Mar 6, 2017, says Financial Times. This has been the consensus forecast since the sentiment of investment analysts improved on Jul 27, 2016. The previous consensus forecast advised investors to hold their position in the company. The 9 analysts offering 12 month price targets for Taiwan Cement Corp have a median target of 40.00, with a high estimate of 46.00 and a low estimate of 27.40. The median estimate represents a 8.11% increase from the last price of 37.00.
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Global Energy and Cement markets | February 2017
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Yamama cement receives funds for Greenfield cement plant 2. LafargeHolcim announces executive changes 3. New cement plant to be built in Dar Es Salaam, Sohag 4. Vietnam: Siam cement to begin construction of new cement plant 5. Chinese government imposes new cement kiln co-disposal policy 6. FLSmidth to supply equipment to maple leaf cement 7. Colombia will have a new cement plant in Rio Claro 8. Cementos Argos ventures into French Guiana market 9. Cemex sells cement plant in the United States 10. Diamond cement invests in a Greenfield cement plant
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