GLOBAL CEMENT INDUSTRY. KNOWLEDGE.
May/june 2017
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Leaders Q&A
André Leitão Votorantim Cimentos Global Corporate Development Director
CW Research
Cement and Clinker Market Evolution Feature
Petcoke Market Trends and Outlook Through 2021 Highlight on
Reducing CO2 emissions in cement industry
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Analysis
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Market Coverage
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Interviews
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People Moves
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Global Cement Trade Price Report We know that the everyday challenge for cement traders, independent traders, shippers as well as buyers in cement sector is the pricing strategy. The Global Cement Trade Price Report is CW Research’s benchmark price assessment for monthly gray cement, white cement, clinker and granulated blast furnace slag market prices, imports, exports and ex-works.
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STAFFBOX Green Cement Industry
ROBERT MADEIRA
In a context shaped by environmental pressures and competitiveness, green and sustainability practices become key pillars of the cement sector.
Luísa Azevedo
CEMWEEK PUBLISHER HEAD OF CW GROUP RESEARCH
As cement manufacturers face extraordinary pressures to decrease their carbon footprint, product optimization and innovative solutions throughout all phases of production become vital to survive in a highly competitive business. Strong and determined actions are required for the cement industry to become sustainable in the near future. We have discussed sustainability and environmental issues, along with other concerns in the Brazilian cement sector, with André Leitão, Director of Votorantim Cimentos. Read the exclusive interview in this issue. CemWeek Magazinealso takes a look at how cement plants with modern, more efficient technology can improve their energy use and therefore reduce CO2 emissions. Additionally, this issue highlights the international petcoke market. The research presented by CW Group focuses on the factors that will influence petcoke consumption in the future. Elsewhere in this issue, we look at CW Research’s Global Cement Trade Report for the 1Q2017. The report update stresses that cement companies continue to be able to export cement and clinker, as expected, although there is a duty on cement exports, which is rendering cement producers uncompetitive in the international market. As usual, CemWeek Magazine provides all the relevant news about the main indicators of the industry, including the latest facts and figures about cement volumes, energy prices, and relevant people in the business, regional developments, equipment, and construction projects.
ROBERT MADEIRA
CEMWEEK PUBLISHER HEAD OF CW GROUP RESEARCH
Luísa Azevedo
Editorial Coordinator
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contents FEATURES 4 Leaders Q&A: André Leitão André Leitão, Votorantim Cimentos Global Corporate Development Director, gave an exclusive interview to CemWeek Magazine to discuss important topics in the cement industry
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10 CW Research: TPR Cement and Clinker Market Evolution 16 Petcoke Market Trends and Outlook Through 2021 CW Research presented its estimates on petcoke supply and demand during 2016 24 Reducing carbon footprint in cement industry The cement sector has a great responsibility when it comes to reducing CO2 emissions
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DEPARTMENTS 1 EdiTor's letter Green Cement Industry 3 numbers in brief Large cement companiesreported positive growth in revenue and EBITDA margins 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
Large cement companies implement pricing discipline to achieve better EBITDA margins Cemex, Dangote Cement, Lafarge Holcim reported positive growth in revenue and EBITDA margins on both a QoQ and YoY basis due to volume improvement and pricing discipline. For the quarter ended March 31, 2017, Dangote’s revenues increased by 74% YoY to US$663.6, driven mostly by improving sales in the company’s Pan-African operations (where sales in volume terms increased by 21%). LafargeHolcim reported a 5.3% increase in revenues YoY as a consequence of improving volume momentum in Nigeria, Middle East and the United States, and in spite of challending market conditions in Indonesia and Malaysia. Q1 2017 Revenue (mn US$) 6,000 5,000 4,000 3,000 2,000 1,000 -
Cemex
Dangote Cement
LafargeHolcim
Ultratech
Source: Company reports, CW Research
Cemex’s revenue for the quarter also benefited from bettering volume dynamics in Europe, Central America and Caribbean. In EBITDA terms, Dangote, Cemex, and LafargeHolcim managed to support an increase in margins in YoY terms due to pricing discipline and increases. LafargeHolcim increased cement pricing by 1.2% in Q1 2016 Y-o-Y, and also managed to improve EBITDA margins by 14.5 % YoY through cost reductions derived from synergies. Q1 2017 EBITDA margin (%) 60% 50% 40% 30% 20% 10% Cemex
Dangote Cement
LafargeHolcim
Ultratech
Source: Company reports, CW Research
Cemex too implemented low to mid-single price increases across regions, in line with the company’s “value-before-volume strategy”. On the other hand, Ultratech’s EBITDA margins were negatively impacted by a 13% increase in power costs, and a 9% growth of fuel expenses.
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Leaders Q&A
Votorantim Cimentos, Global Corporate Development Director:
André Leitão
We are focused on strengthening our leadership in Brazil
André Leitão, Votorantim Cimentos Global Corporate Development Director, gave an exclusive interview to CemWeek Magazine to discuss topics such as the main economic challenges, new markets, new plants and also to explain the sustainability practices that the company develops.
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Leaders Q&A
otorantim Cimentos is one of the 10 largest companies in the world in the cement sector and is strategically positioned in the most important cement consuming markets. With a presence in more than 14 countries, this 100% Brazilian company has a global capacity of 57 million tons per year.
Q: Votorantim Cimentos has been active in the cement market for more than 80 years. How do you describe the main role and focus of the Company today? A: Votorantim Cimentos was founded in 1933 and it is part of the Votorantim Group, one of the largest business conglomerates in Brazil. Today, as a result 6
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of the internationalization process that we started in 1996, we are present in 14 countries - Brazil, Argentina, Bolivia, Canada, Chile, China, Spain, United States, India, Morocco, Peru, Tunisia, Turkey and Uruguay – with a global installed capacity of 57.6 million tons/year of cement.
We are focused on strengthening our leadership in Brazil We are focused on strengthening our leadership in Brazil, our main market,
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which has suffered a strong demand reduction, through initiatives to increase Votorantim Cimentos competitiveness and mainly customer satisfaction. Furthermore, we remain focused on increasing our geographical diversification, with organic growth in different countries, like Bolivia, Turkey and US. Last year, we have also strengthened our commitment to build a legacy for society, not only through the products and services we offer, but also by the way we operate, i.e., the relationships we build with our suppliers, employees, investors and the communities. We want to build long-lasting relationships. And our way of doing business is one of our differentials, including our commitments related to sustainability.
material is as versatile as cement, when it comes to the construction of buildings, roads, or other major infrastructure works.
Q: On a global scale, what are the main economic challenges impacting Votorantim Cimentos? What are the mitigating factors you foresee in the current crisis scenario in Brazil?
A: Votorantim Cimentos has gone through several macroeconomic crises along its 83 years of history. Following our culture of planning and acting in advance, we prepared ourselves to the current scenario in Brazil, to preserve our financial health and strengthen our competitiveness and value proposition to the market.
Q: The Company is one of the world’s top ten cement producers and the market leader in Brazil. In your opinion, what are the main differences between the Brazilian cement market and other markets in which the Company operates?
Moreover, we continued to invest in the long-term strategy of expanding our global presence through investments in high-potential markets. Overall, our internationalization strategy has shown positive results, contributing to the mitigation of the current economic recession in Brazil. Our operations overseas benefited
from the growth of different markets and robust operational performance, leading to strong cash generation.
We continued to invest in the long-term strategy of expanding our global presence It is worth saying, though, that Brazil is still our main market, and despite the current recession, we believe in the gradual recovery of the economy and the longterm fundamentals of the industry.
Q: Votorantim is present in several countries around the world. The Company has been operating in Turkey since 2012, where it operates in the cement market for mortars and aggregates. In 2015, you opened a plant in that country. Why has the Company decided to invest in such a different market?
A: Turkey is one of the main geographies for Votorantim. We have a brownfield expansion project in Sivas, with an investment of EUR 140 million, which
A: In Brazil, as in most developing countries, there is a significant housing and infrastructure deficit, which still gives us great possibilities for growth. On the other hand, developed and mature markets show a more stable cement consumption, in addition to the use of different construction technology, which is more tech-intensive. In any case, whatever the market is, cement is a crucial element to foster urban development and economic growth. No other www.cemweek.com
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Leaders Q&A
will triple the current production capacity. That will allow Votorantim Cimentos to capture as much as possible the market growth in the region where we operate, which presents good perspectives, mainly in the infrastructure segment.
Q: In February, Votorantim opened the Itacamba plant in Yacuses, in the department of Santa Cruz. How did the operations in Bolivia begin and how are they strategically positioned in the Company? A: Itacamba Cemento was established in 1997 through a partnership between Votorantim Cimentos and Companhia de Cemento Camba (Coceca). In 2014, the Spanish company Cementos Molins also joined the partnership. 8
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The opening of the Yacuces plant strengthens our geographic diversification in markets with high-potential growth, as it is the case of the Bolivian market.
The opening of the Yacuces plant strengthens our geographic diversification in markets with high-potential growth
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The new plant received an investment of US$220 million and it was the first Greenfield project of Votorantim Cimentos in Latin America. It counts on a production capacity of 950 thousand tons of cement and the project will be responsible for increasing Itacamba's total production capacity to 1.2 million tons in the country, considering the grinding plant of Puerto Quijaro, which has been operating since 1991.
Q: Why Bolivia and what are the expectations for that market? A: Bolivia represents a strategic market in Latin America, with high-growth potential, and product and service differentiation opportunities. A significant part of the cement demand in the country was supplied by imports until
communities where it operates. Currently, the Company is using tires as a fuel, as part of the Environmental Policy and the "Green Law", which establish a framework for proper solid waste management. What other projects are in progress to continue promoting the development of these communities? A: Sustainability and Social Responsibility is part of Votorantim Cimentos' business strategy and purpose.
the opening of Yacuses plant. With the new operation, Bolivia becomes self-sufficient in the supply of cement and no longer relies on imports to serve the domestic market. Thanks to its geographical location, Yacuses will guarantee the supply of cement to the Santa Cruz region, the largest national market, responsible for a third of the country’s total demand.
commitments we have undertaken is the reduction of our carbon emissions by 25% by 2020. Regarding our social investments, in 2016 alone, we invested approximately USD 4 million in 85 social initiatives, covering 31 locations in Brazil, with the purpose of building a positive legacy.
Sustainability and Social Responsibility is part of Votorantim Cimentos' business strategy
We have a clear responsibility to minimize the impacts of our production represented by a Strategic Sustainability Plan - with several commitments to be achieved by 2020, in all countries where we operate.
Among the social initiatives, it is worth mentioning the Community Councils, which bring together community leaders and the municipality to co-identify local needs and resources to devise and implement a local development plan, based on a participatory approach.
Today, the cement industry is responsible for 5% of CO2 emissions worldwide and 2.6% in Brazil, according to the Cement Sustainability Initiative (CSI). Among the
Another key-project supported by us focuses on the promotion of inclusive businesses as an alternative for income generation and local development in low-
Nowadays, after the successful commissioning of the new clinker and cement plants, Yacuses covers all the steps of the manufacturing process, from raw materials processing to clinker and cement production.
Q: Votorantim has a history of actions to promote the social and environmental development of the www.cemweek.com
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Leaders Q&A
income communities. Along the past years, nineteen inclusive business projects, from bio-jewelry, nuts production, fish raising and family farming, were supported in all regions of Brazil.
Q: Nowadays, no company survives if it does not invest significantly in technology and innovation. How does Votorantim Cimentos invest in new technologies? What are the solutions to modernize a company with more than 80 years of history? A: Four pillars support our business strategy, including customer focus and operational excellence, which has led us to redefine our drivers to offer differentiated solutions, products and services, and develop new businesses. 10
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Recently we developed a “pozzolanic cement”, which emits 50% less CO2 In 2014, we restructured R&D to boost the productivity of our Operations, in addition to increasing our eco-efficiency and, more importantly, developing products and services that increase the value to our customers through differentiation. We
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work to be at the forefront of technology and knowledge, and seek technological leaps that result in the improvement of our competitiveness and customer satisfaction. As a practical example, recently we developed a “pozzolanic cement”, which emits 50% less CO2 and consumes less energy, due to the use of calcined clay instead of clinker, the main component of cement. Another example from St Marys Cement, a Votorantim Cement Company in North America, is a pioneering initiative with algae technology. This project is led in partnership with the Algal Carbon Conversion (ACC) program of the National Research Council (NRC) of Canada and Pond Technologies, and aims at producing biomass, by using CO2 from the production process.
Q: What are Votorantim's main expectations regarding the cement industry, both worldwide and in Brazil? A: We believe 2017 will still be a difficult year for the cement industry and building materials sector in Brazil. However, we are confident that the Brazilian economy is gradually retaking the growth path and we believe in the recovery of the construction market in the medium term. After several years of recession, the cement industry has adapted to the current low capacity utilization and further structural changes may occur. Worldwide, we expect strong growth in the US, stable to low growth in European countries, and a mixed scenario in the developing markets, with retraction in countries like Brazil to strong growth in
The new plant received an investment of US$220 million and it was the first Greenfield project of Votorantim Cimentos in Latin America some Asian markets. China deceleration is also a fact. Overall, the global cement demand should grow 2 to 3%, excluding China. On the supply side, the major M&A deals will be in consolidation phase and further strategic transactions may happen, since some large companies have recovered the financial strength to do so and others are facing important strategic dilemmas.
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cw research
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cw research:
Global Cement Ex-Works and
Trade Prices
Q1 2017 in review CW Research Trade Price report focuses on cement and clinker monthly prices and monitors market fluctuations in key countries worldwide.
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cw research
he CW Research team compiled data concerning cement, gray cement and clinker prices, and their stance on the trade market. Featured on their analysis were the global and regional trade dynamics, the monthly price evolution of gray and white cement, as well as clinker, the April update for cement and clinker prices in the Mediterranean Basin and Persian Gulf-Arabian Sea and East Africa, and cement import and export price spreads and developments.
Cement and Clinker Monthly Price Assessments
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Petcoke prices, however, are twice-monthly prices of imported petcoke delivered on a cost and freight basis (CFR). The pricing is
FOB Ordinary Portland cement bulk: Med/Basin (USD/ton) 100
1,6 %
Jan '17
The price assessments were conducted by a primary research aimed at cement traders, cement producers, cement users and buyers, and bulk cargo shippers/charterers, while engaging in interactions with traders in the three covered regions. The obtained price points were then aggregated and price markers were established for the three regions. 14
Cement and clinker prices analyzed here were based on the ordinary Portland cement and ordinary grade clinker, and
Feb '17
Mar '17
Apr '17
Source: CW Research
the delivery is ruled under a free-onboard basis (FOB) for prompt cargos, to then be compared to the numbers from the Mediterranean Basin (FOB), the Persian Gulf-Arabian Sea (FOB), and East Africa (CFR).
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compared on an mmBtu basis to coal, and analyzed on the East India Coast (CFR) and West India Coast (CFR) spectrum. On the Mediterranean Basin, FOB ordinary Portland cement bulk dropped
Regional Gray Cement Export Prices (USD/ton)
90
Asia Pacific Japan North America & Caribbean
Eastern Europe Scandinavia & Baltics
Mediterranean Basin Western Europe
Global Cement Trade Market Fluctuations
60
30
whereas ordinary gray clinker dropped a stunning 25.6 percent. In the Persian GulfArabian Sea, ordinary Portland cement bulk FOB prices slumped at minus 19 percent YoY, and ordinary Portland clinker bulk FOB prices also dropped 1.5 percent.
In 2016, there was a general recovery in key markets, but some major ones continued to decline. Mar ‘16
Apr ‘16
May ‘16
Jun ‘16
Jul ‘16
Aug ‘16
Sept ‘16
Oct ‘16
Nov ‘16
Dec ‘16
Jan ‘17
Feb ‘17
Mar ‘17
Source: CW Research
1.6 percent between January and April this year. At the same time, FOB ordinary grade clinker bulk also fell 1.0 percent in the same reporting period. However, according to CW Group Research, the general feeling of Q1 2017 seems to be more optimistic towards trade markets in the region, when compared to the previous year. This is one of the main factors that reflect the better performance of the prices of the market. On the Persian-Gulf Arabian Sea, the tension from the geopolitics conflict has started to pressure the market. Construction sectors are being challenged by the governments’ uncertainty on whether or not they’ll support and/or finance them, which has resulted in some postponements and delays in projects on the pipeline. As a result, some countries are starting to turn to the Asian market to export their products.
in the Mediterranean Basin and PersianGulf Arabian Sea zone are waiting for the Syrian conflict to calm down in order to restart supplying to that market, as well as to take over their previous trade routes in the region. However, according to some cement traders, that reality isn’t yet within grasp.
In Russia, the overall cement market started declining by the end of 2016 On a year-on-year (YoY) perspective, ordinary Portland cement bulk FOB prices rose 2.6 percent in the Mediterranean Basin,
In Russia, the overall cement market started declining by the end of 2016, with demand falling 13 percent. However, by the end of 2017, the construction market is expected to start coming back up, and hopefully the demand will follow that trend. The Saudi Arabian market suffered from low coal prices that impacted government spending. Cement demand subdued in the beginning of the year, and investments in infrastructure were below expectations, which further pressures cement demand numbers. China, as one of the biggest cement markets, showed resilience in 2016. Cement demand recovered, bouncing back from the fall in Q4 2015. Last year, demand recovered around 3 percent YoY, due to fiscal incentives from the government, as well as due to large-scale infrastructure installments. Moreover, on the topic of the faster-than-expected growth of the Chinese GDP in Q1 2017 and the ever-expanding housing market, cement
Despite all this, cement companies continue to be able to export cement and clinker, as expected, although there is a duty on cement exports, which is rendering cement producers uncompetitive in the international market. Also, cement producers are planning to cut on production in 5-10 percent, following the decreasing demand. All in all, CW Group Research concludes that some cement and clinker producers www.cemweek.com
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cw research Ex-works prices declined in most major cement markets
3Q2016 YoY 12.0% to 23.0% 1.3% to 12.0% -4.0% to 1.3% -9.3% to -4.0% -14.7% to -9.3% -20.0% to -14.7% -25.3% to -20.0% -30.7% to -25.3% -36.0% to -30.7%
Source: CW Research
demand is expected to keep growing until the end of the year. In Turkey, cement demand also showed a positive trend by the end of 2016, having posted a 5 percent increase YoY, when compared to the previous year. Demand grew on the account of the booming property market and large infrastructure projects. Considering export prices and how they have trended, it’s possible to notice that the longterm trend remains negative. Some marginal recovery has been seen in December 2016. Prices recorded in the beginning of 2016 were below USD 16 per ton; meanwhile, they have evolved, and marginally increased to USD 62 per ton in December. Moreover, stock prices for more expensive exporters have also decreased. The highest price has declined from USD 140 per ton to USD 130 per ton. Meanwhile, bottom prices decreased but at a much slower pace; the lowest price recorded rounded the USD 32 per ton. 16
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As previously mentioned, gray cement global FOB prices continue to decline, but at a slower pace than before. Thailand and Turkey were the main exporters during Q4 2016, accounting for more than 12 and 10 percent of global traded volumes, respectively. Despite that, both exporters recorded volume decreases on a YoY basis. Thailand exported around 19 percent less on the same reported period, and Turkey’s share in global volume decreased 2 percent YoY.
share in global traded volume of gray cement increased by 4 percent YoY.
China, as one of the biggest cement markets, showed resilience in 2016
In Eastern Europe, much bigger declines are foreseen, as prices are expected to go down by around USD 1.2 per ton by June 2017, when compared to March. In the Mediterranean Basin region, in Q4 2016, prices were seen below USD 52 per ton, and they’re expected to decline even further by around USD 0.9 by June 2017 as well, also compared to March.
China stood as the third largest exporter of gray cement during the quarter, with a trade share of 10 percent, while Greece’s exports improved significantly, and their
The North American Caribbean region is expected to see its gray cement prices stabilize, hovering around USD 80 per ton. In Western Europe, prices are expected to
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Gray cement trade prices are still pressured but to a lesser extent than in previous years. By June 2017, global export prices in AsiaPacific and Japan region are expected to decline by USD 0.2 per ton, when compared to March 2017 numbers. Prices in the region are expected to be seen around USD 41 per ton by the end of Q2 2017.
fall in June 2017, compared to March, by USD 1.2 per ton, or a 1 percent margin.
Export prices’ trend in 2016 Some of the markets have been experiencing recoveries on a year-onyear term, for instance, in China, there was almost a 9-percent recovery YoY registered in Q4 2016, as well as in Brazil, where a quarterly recovery was registered on export prices in almost 50 percent YoY. In India, a modest 1-percent increase YoY was registered, while other markets such as Indonesia showed a decrease in export prices by 14 percent YoY, between Q4 2015 and Q4 2016. The Saudi Arabian market recorded a decrease as well, by around 10 percent YoY, but this time on a quarterly basis, therefore void of any recovering signs. In the Argentinian market, prices have started to recover in Q2 2016, maintaining that trend until Q3 in the same year. However, in the last quarter, export pricing decreased to slightly more than USD 110 per ton. In Brazil, export pricing followed the increasing trend from the previous quarter, with reported prices marginally increasing to USD 68 per ton. China showed quite the increase in export pricing, both YoY and QoQ, with prices rebounding due to improvements in the country’s economy. Therefore, an improvement in cement demand was also recorded. In China, prices in Q4 2016 ranged between USD 35 and USD 37 per ton.
In India, demonetization affected export pricing environment, and therefore prices in Q4 showed a 5-percent quarter-onquarter decrease.
Gray cement trade prices are still pressured but to a lesser extent than in previous years. In Indonesia, the entrance of new players in the market affected export pricing as well. The country recorded prices below USD 70 per ton, which is about 7 percent lower than in the previous quarter. In the US, prices showed a general increase, according to cement manufacturers. Major cement producers are facing the improving conditions in the local market, supported by growing cement demand. Export prices for Q4 2016 were ranging between USD 106 and USD 107 per ton. In conclusion, global average FOB prices for gray cement were down 5 percent (by USD 3.1 per ton) year-on-year in Q4 2016. Quarterly volumes dropped around 18 percent YoY for the set of reporting countries with complete data for the quarter, while accounting for 80 percent plus of global volume. Prices
are expected to decline even further, particularly in Eastern Europe and the Mediterranean Basin. Clinker FOB rates were at minus 14 percent YoY in Q4 2016, with volumes down around 17 percent YoY for the set of reporting countries with complete data for the time period, while accounting for around 85 percent of global volume. Lastly, global slag export prices were up 7 percent YoY in Q4 2016.
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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FEATURE
cw research:
Petcoke Exports
Increase Faster Than Production
In this two-part webinar, CW Research presented its estimates on petcoke supply and demand during 2016, broken down by region and end-user, and gave its forecast on the factors that will influence petcoke consumption in the future.
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FEATURE etcoke is used as fuel in several industries, including cement, aluminum, and steel production, and in power generation as well. Demand has been concentrating around India, with the United States as supply leader. Going forward, the share of the cement sector in petcoke consumption is expected to remain stable. Several doubts on the policies followed by the Indian and Chinese governments, as well as regarding the role of Venezuela and Canada in the supply side, prevent higher certainty on the forecasts.
Petcoke in 2016 For 2016, CW Research estimates that a total of 110 million tons of petcoke were produced across the globe. Between 2010 and 2016, the percentage of petcoke production destined to exportation rose from 38.6 to 46.5 percent, finishing the last year at 47 million tons. In fact, petcoke exports have been rising much faster than production. Between 2010 and 2016, petcoke exports increased by a CAGR of 6.1 percent, while production rose by a CAGR of just 3.6 percent. In 2015 alone, exports jumped by more than 35 percent while production grew by just 2.7 percent, compared to the year before.
CW Research estimates that a total of 110 million tons of petcoke were produced across the globe
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US Taiwan
Venezuela Germany
Spain Indonesia
China Netherlands
Canada Other
India
50
30
10
2010
2011
2012
2013
2014
2015
2016E
Source: CW Research
The United States leads the international market of petcoke, being responsible for 81 percent of the market in 2016. Most of those exports follow two main routes connecting the United States to 20
top ten percent exportes and total share (mt 2010-2016e)
Asia-Pacific and to the Mediterranean Basin. Last year, 9.7 million tons of US petcoke arrived at Asia-Pacific, some 30 percent of the international market, up from 4.6 million tons in 2010. Also in 2016, 7.6 million tons of petcoke were
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shipped from the United States to the Mediterranean Basin, accounting for 23 percent of the total. Most of the petcoke exported by the United States leaves through the Gulf
indicate that Spain has expanded its petcoke exports by a CAGR of 40.1 percent between 2010 and 2016 and was able to surpass Venezuela during 2016 to become the second-largest petcoke exporter, with 2.4 million tons shipped and accounting for five percent of the international market.
India has consolidated itself as the largest recipient of petcoke in 2016 In the import side, India has consolidated itself as the largest recipient of petcoke. In 2016, CW Research estimates, the country received a total of 15 million tons of petcoke, nearly 31 percent of the total global exports. Turkey was the secondlargest importer last year, with volumes reaching five million tons, or 11 percent of the global share. top ten importers (2010-2016e) India Spain
China Canada
Japan Italy
Turkey Morocco
Brazil Others
Mexico
50
30
10
2010
2011
2012
2013
2014
2015
2016E
Source: CW Research
Coast, the majority heading to western India, Turkey, Brazil, and Spain. Petcoke is also shipped through the West Coast, from where it reaches Japan and China, and from other ports in the East Coast and the Great Lakes.
Venezuela has been, for many years, the second-largest petcoke exporter in the world. However, a succession of problems, including political tension and logistic constraints, led to a strong drop in its exports. In fact, CW Research’s figures
India’s appetite for petcoke has rose sharply last year. Comparing the 2016 estimate to the figures from 2015, imports rose by an impressive 92.3 percent, from 7.8 million tons. The strong increase can be attributed mostly to the discount price of petcoke when compared to coal, which grew larger in the last months of 2016. The United States are the main supplier of petcoke for India, accounting for 60 percent of the total, while Saudi Arabia established itself in the second place during 2015, with a total volume of two million tons. Petcoke reaches India mainly through the ports of Kandla and Mangalore, in the western coast, but also through Paradip and Kristinapatanam, in the eastern coast.
The cement sector use of petcoke Green petcoke is extensively used in cement production for clinker calcification. Globally, the cement sector absorbs 26
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21
FEATURE percent of all petcoke consumed, with 35 percent being channeled into the production of aluminum and other metals, 18 percent being used by power utilities, 15 percent going for other industries, and six percent staying in storage. CW Research believes that cement share on global petcoke consumption will remain largely unchanged in the next five years. During that time, a new segment, gasification, will assume up to six percent of the market. The use of petcoke in cement production varies widely across major individual markets. In Brazil, petcoke accounts for more than eighty percent of the fuel used in cement manufacturing. Petcoke is also a very significant fuel for clinker calcification in India, Portugal, Spain, Morocco, and Mexico, where it accounts for some 60 to 80 percent of the fuel used. Meanwhile, in Chile, Japan, Bolivia, and Canada, petcoke represents less than 20 percent of all fuels utilized in the sector.
Green petcoke is extensively used in cement production for clinker calcification
targets for further increases in the future. In North Lincolnshire, United Kingdom, Cemex has actually demonstrated that it’s possible to reconvert a 1970s plant to run
The use of petcoke in the cement sector may also end up declining due to the lower rate of clinker content in cement production. Companies are
alternative fuels usages in large cement companies (%)
2010
2015
Target 2020/ 2025
40%
In the cement sector, petcoke faces strong competition not only from coal but also from alternative fuels. Many companies are opting for the use of alternative fuels for their moderately low impact on the environment. The use of alternative fuels brings many advantages to producers, including a higher position in sustainability rankings, state-provided rewards, lower fuel costs, and an increase in shareholder attractiveness. Major companies have been trying to increase their intake of alternative fuels and most of them have set ambitious 22
August / September May/june 2017 2016
20%
Heidelberg Cement
Cemex
LafargeHolcim
CRH
Votorantim
Ultratech
Global
Source: CW Research
exclusively on alternative fuels derived from paint, thinners, and inks.
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trying to reduce their intake of clinker by using other materials, thus making
million tons in 2016 and 120.5 million tons in 2010.
Demand in the region is expected to reach 41.6 million tons in 2021
production cheaper and cleaner. Less clinker use translates into lower need for calcification, and, consequently, a lower requirement of petcoke.
million tons in 2021. Also in that year, global consumption of petcoke will reach 155.4 million tons, up from 139
In India, gasification will be a major driver for petcoke demand in the future. Back in 2012, Reliance announced an investment of USD 4 billion to build a complex with 10 gasifiers. The project suffered several delays and is now expected to start operating in July 2017. Depending on the method of generation chosen by reliance – either by using solely petcoke or a mixture of 65 percent petcoke and 35 percent coal – the project can take up between seven million and 11 million tons of petcoke per annum.
Petcoke demand and supply outlook Going into the future, CW Research forecasts that the Asia-Pacific will continue to be the largest consumer of petcoke. Demand in the region is expected to reach 41.6 million tons in 2021, up from 29 million tons in 2016, an increase of 43.45 percent. In China, petcoke demand will grow by 48.18 percent, from 22 million tons in 2010 to 32.6 million tons in 2021. By 2021, South America will be the thirdlargest consumer with 23.4 million tons; followed by North and Central America with 21.3 million tons. In Europe (excluding CIS), petcoke consumption will follow a negative trend, with consumption expected to go from 14 million tons in 2010 to 11 www.cemweek.com
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FEATURE However, there are also some factors that may bring down petcoke use in India. The Union Government made clear that it believes petcoke to be an unfair competitor to coal and has already hinted at an environmental tax on the fuel. Moreover, the Indian Supreme Court is studying a ban on petcoke use in the Delhi National Capital Region, and some within the Environment Pollution Prevention and Control Authority advocate for a nationwide ban.
Coal prices are also an important factor to determine petcoke competitiveness Coal prices are also an important factor to determine petcoke competitiveness. Coal prices in the e-auctions held by Coal India have come down by 39 percent
may consider a return to coal if the latter remains cheaper. Petcoke is always a riskier
Coal and petcoke pricing on USD/mmBTU basis* (USD/mmBTU) Richards Bay coal 5,500kcal/kg
Petcoke >5% petcoke
Petcoke <5% petcoke
$2.5
$2.0
$1.5
$1.0
$0.5
Dec ‘15
Jan ‘16
Feb ‘16
Mar ‘16
Apr ‘16
May ‘16
Jun ‘16
Jul ‘16
Aug ‘16
Sept ‘16
Oct ‘16
Nov ‘16
Dec ‘16
Source: CW Research
between June 2015 and September 2016. They had recovered 17 percent of their value by December 2016, but some users 24
August / September May/june 2017 2016
source of fuel, given the inexistence of a futures market, which prevents hedging, and the high volatility of the spot market.
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Similar to the case of India, demand in China is also dependent on the course of its environmental policies. Beijing is pursuing a strict environmental stance and rumors have emerged about a ban on “unqualified petcoke”, potentially defined by its SO2 content. In the supply side, Venezuela remains the biggest question mark. The country retains a largely untapped potential and, for many years, has been able to keep its place as the second-largest exporter of petcoke with only one coker, operated by state-owned Petróleos de Venezuela. New cokers have been announced by the government and the country still owns a very large inventory of the fuel. In Canada, large reserves of oil sands, or heavy tar, are also unexplored. Heavy tar is difficult to transport, since it has to be liquefied before being used as petcoke, but there have been discussions about a pipeline that could give access to a reserve of up to
region, while following a downwards trend in Europe (excluding CIS). Strong doubts remain on whether or not the Chinese and Indian governments will pursue more strict regulations, or even straight-out bans, on petcoke use.
In Canada, large reserves of oil sands, or heavy tar, are also unexplored On the supply side, Venezuelaâ&#x20AC;&#x2122;s vast potential and its large petcoke stockpile also add uncertainty to the international market. If demand for petcoke continues to grow, Canadaâ&#x20AC;&#x2122;s heavy tar may also become an option to global traders. 70 million tons in the north of the country. If global demand increases enough, those reserves may become commercially viable. Petcoke is a truly globalized commodity, with exports representing most of the production. Output is polarized in the United States, with Venezuela and Spain as distant contenders, while demand is more scattered. Even so, India alone still represented almost a third of all petcoke imports during 2016. On end-users, gasification may become an important segment of petcoke consumption, although that is still dependent on the concretization of a sole project from Reliance. On the other hand, cement is expected to maintain its share on the global consumption of petcoke, whilst facing strong competition from both coal and alternative fuels. Demand for petcoke is expected to consolidate around the Asia-Pacific www.cemweek.com
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25
FEATURE cw research:
2017 Kuwait Cement Market Report
upported by a solid amount of government-sponsored projects, Kuwait’s cement consumption has increased continuously. Notwithstanding domestic production limitations and external threats, public infrastructure programs and homeownership affordability point to a conservatively promising future.
Cement consumption between 2010 and 2016 The Kuwait Cement Market Report indicates the Kuwaiti cement industry has experienced sustained growth over the past few years. CW Research reports a robust growth of 18% CAGR between 2010 and 2016, an increase supported by a combination of both domestic and international factors.
Cement demand is highly correlated to governmentsponsored infrastructure programs
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Apparent consumption
10
Cement production
5
2010
2011
2012
2013
2014
2015
2016E 2017E 2018E 2019E 2020E 2021E
Source: CW Research
Such a promising increment in cement consumption is mostly attributable 26
APPARENT CEMENT DEMAND AND PRODUCTION 2010-2021E (mm/tons)
to a strong pipeline of governmental infrastructure projects, founded through capital sourced from oil revenue. In fact, the oil sector accounts for a significant portion of the government’s revenue. Also, cement demand is highly correlated to government-sponsored infrastructure programs, which is why oil price fluctuations end up affecting the cement market.
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Representative of such connection is the oil price decline registered in 2014, which took a toll on Kuwaiti government’s public investments. That, in turn, led to a 1.2% decrease in cement consumption in 2016. Even though consumption almost tripled from 2010 to 2016, domestic suppliers were not able to keep up with the growth. The domestic supply-demand
dynamics is, thus, imbalanced, making Kuwait reliant on imports. After all, national cement production is limited to only two domestic manufacturers, Kuwait Cement Company and ACICO, with a significant share of cement in the market being imported in bags, either directly or as clinker for grinding through dedicated cement import terminals. A limited domestic supply, combined with the lack of natural resources and a rapidly growing demand, has created a market reliant on cement importers.
2021 Outlook Despite the solid growth registered in cement consumption in Kuwait between 2010 and 2016, the conservative optimism currently surrounding the
The infrastructure sector outlook is moderately positive over the next few years future international crude oil prices in OPEC countries prevents overly enthusiastic outlooks. Between 2017 and 2021, CW Research forecasts a cement demand increase of 2%. The infrastructure sector outlook is moderately positive over the next few years, driven by Kuwaiti government’s
numerous planned projects and increasing homeownership affordability. Nonetheless, threats subsist, as Kuwait’s undiversified GDP structure poses challenges to the capital necessary to invest in infrastructure expansion. Overall, the future remains cautiously promising, as the slim forecast consumption growth is encouraging enough for cement manufacturers to add new capacity on the market. As a result, CW Research projects Kuwait will become less dependent on foreign-sourced cement.
About the report The CW Group Research’s Cement Industry Country Report series meet the country-level cement market research needs of small and large businesses, analysts and governments. The reports cover cement volume trends in detail, analyzing trade flows, cement demand and production (historical and outlook), per capita consumption, and the competitive landscape, including company profiles, cement production facility details, including past and announced brownfield production increases and greenfield projects. Cement Industry Country Reports also cover demand drivers, including macro-economic and construction sector dynamics, for the specific country. Industry reports are presented in an objective, easy to understand format, providing hard-to-find answers to top market research questions. The comprehensive CW Research’s Kuwait Cement Market Report provides an in-depth and data-oriented analysis of the cement market in Kuwait. This cement industry report provides a detailed review of the cement market in Kuwait, with regional perspectives, discussion of demand drivers, as well as cement tonnage volume and price trends in the country, which provides a national five-year demand forecast.
For more information and placing an order, please contact Liviu Dinu, Market Services & Marketing Consultant, CW Group (Europe), by phone at +40-744-67-44-11, or e-mail at ld@cwgrp.com.
More information about the report can be found at http://www. cwgrp.com/research/research-products/country-reports/product/205kuwait-cement-country-report
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27
FEATURE
Green solutions to reduce co2 emissions
ement manufacturing is an energy-intensive industry, using an average of 3.69 gigajoules per ton of finished product. According to EUâ&#x20AC;&#x2122;s Emission Database for Global Atmospheric Research, the cement sector accounted for around eight percent of the global CO2 emissions. Half of that percentage comes from carbonate oxidation in the cement clinker production process, whereas the other half derives from fuel burning associated with the cement sector. For companies committed on reducing those figures, several technological options allow for lower emissions across the several production stages.
Energy Efficiency Upgrading cement plants with modern, more efficient technology is one of the most significant ways to improve their energy use and therefore reducing CO2 emissions. Most of the energy consumed by cement plants is used to heat the clinker kilns. Using the dry method instead of the wet method is the state-of-the-art technique to enhance efficiency, but that is not always possible, due to the moisture content of the raw materials. Some variants of the dry method can be more efficient too, like those including preheating and precalciner. The energy spent in heating the kiln can also be reduced by improving preheating, insulation, bed distribution and the burners. Heat loss through the surface of the kiln can represent around 15 percent of the input energy, a waste that can be reduced by installing a second shell to improve insulation. Other, more general 28
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EU ETS annual caps between 2013-2020 EU ETS annual caps
2,500
2005 Emissions
2,000 1,500 1,000 500 2013
2014
2015
2016
2017
2018
2019
2020
Source: CW Research
measures include modernization of control and management systems of the heating process. Around 60 to 70 percent of all electricity used in a cement plant goes to grinding of raw materials, clinker, and coal. Manufacturers can improve the efficiency of their grinders by installing high
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chromium steel balls and liners that minimize wear and power consumption. Waste-heat technology has also been in use in the cement sector. Both the clinker cooler and the kiln preheater systems release high-temperature exhaust gas that, when not used to dry raw materials, ends up being released. That heat can be
recycled either to provide heating to the facility or to generate electricity like a regular thermal plant.
Fuel use Another possibility available to cement companies that wish to reduce their CO2 emissions is reconverting their plants to use fuels with a lower carbon content. For some, that means using natural gas instead of coal or petcoke, and for others it means scrapping fossil fuels altogether and feeding the plant alternative fuels. Alternative fuels are normally made up of waste that cannot be recycled by other sectors. Those can be in the form of gas, like landfill gas; liquid, like paint, oil, ink, or solvents; or solid, like tires, plastics, and textiles. Pure biomass fuels, which include animal meal, waste wood, sawdust, or dried sewage sludge, are also in use, as well as many other waste materials that are sourced depending on local availability. Moreover, the use of alternative fuels brings a double advantage: not only does it reduce CO2 emissions in the cement sector, it also avoids waste dumping in landfills.
equally strong cement, as the Pantheon in Rome, built in 135 AD exclusively using pozzolan cement, proves by continuing to withstand the passage of time. The average clinker share on cement produced worldwide has, in fact, decreased in the last years. According to a study from the Cement Sustainability Initiative, that share has fallen to between 60 and 80 percent, resulting in a 20-percent decrease in CO2 emissions per ton since the 1980s. In China alone, the average clinker content dropped from 76 percent in 2000, to 63 percent in 2010, and 60 percent in 2015, producing 250 million tons less CO2 per annum,
compared to the 95-percent reference content of regular Portland cement. As one of the largest emitters, the cement sector has a great responsibility when it comes to reducing CO2 emissions. However, manufacturers have a range of opportunities to save on energy during the several stages of production. As noted above, those opportunities are mainly related to the kind of fuel used in cement plants, the potential of adding clinker substitutes to the cement blend, and the technology available to save on electricity and fuel. Many of those are already extensively used by the industry, but there is still room for much improvement.
Consumption of fossil and alternative fuels in 2016
2016E Fossil fuels
82%
According to estimates from Cembureau, the EU cement sector has the technical potential to replace up to 60 percent of its fuel with waste, a figure that may rise to 95 percent in the future. In 2014, conventional fossil fuels accounted for 59 percent of the European cement industryâ&#x20AC;&#x2122;s fuel mix, whilst alternative fuels from waste made up 41 percent.
Coal
Altern. Fuels
18%
Coprocessing
Innovative mixtures Regular Portland cement normally carries a 95-percent clinker content. However, cement manufacturers are able to substitute clinker with other materials that also possess hydraulic binding qualities. Usually, those include a series of byproducts from other industries, like fly ash, from coal burning, or blast furnace slag, from iron-making, as well as natural pozzolanas, with volcanic or sedimentary origins. Pozzolan materials do not require pyroprocessing, and they produce
Petcoke Biomass Natural Gas Oil Source: CW Research
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CEMENT MARKETS
CW Research
CEMENT VOLUMES South American cement manufacturers are benefitting from higher consumption in the region. Argentina and Colombia showed an increase in terms of consumption and production in March 2017. In Argentina, lower cement prices are increasing sales in March. In the first quarter, consumption also increased due to the higher activity in the private construction sector. Argentina sales increased by 29.0 percent month-on-month and by 15.6 percent year-on-year.
In March 2017, the Asian region showed mixed feelings in terms of cement performance on year-on-year perspective.
Colombia’s cement consumption increased as the country is registering lower cement prices. Cement manufacturers are optimistic about the rest of the year, as projects for infrastructure and social housing are expected to bring higher cement demand. Colombia’s cement consumption touched a total of 1.1 million tons, a 7.5 percent increase on a monthly and yearly view. The same scenario seems to be happening in Brazil. Brazilian cement consumption reached a total of 4.7 million tons in March, a 21.6 percent improvement when compared to the previous month. In March 2017, the Asian region showed mixed feelings in terms of cement performance on yearon-year perspective. The overall situation in the region, seems to be recovering from the depressed days seen after the Chinese economy slowdown. Thailand, India and Japan showed a slower production pace when compared to the levels seen last year. However, these last two countries Cement demand March 2017 – YoY change (%)
seem to be recovering on a two digit percent pace on a month-on-month perspective. In March, India produced 25.2 million tons of cement (17.5 percent more than February and 6.0 percent less than March 2016), while Japan’s cement output reached 5.3 million tons (11.1 percent above February’s levels and 0.4 percent lower than March 2016). Both cement consumption and production in Thailand decreased by 10.6 percent and 4.6 percent, respectively. At the same time, China, Vietnam and Korea showed a better performance in March 2017, both on a monthly and yearly perspective. Chinese economy has showed in the first quarter unexpected signs of improvement. The country’s economic output as well as the industrial sector have been improving based on the growth in Chinese credit and strong turn in commodities that has begun last year. In Europe, cement producers are finally seeing a better scenario in the sector, based on stronger construction sector. Both Italy and Spain cement sectors are showing a better performance in the third month of 2017. The Spanish domestic consumption has been improving, as the numbers confirm. Spanish domestic sales reached 1.1 million tons, a 21.9 percent improvement when compared to the previous month or a 17.5 percent expansion from the same month in the previous year. Additionally, Spanish cement production reached 1.3 million tons in March, a 12.7 percent increase on a month-on-month perspective, and a 14.6 percent growth on a yearly perspective. Cement production March 2017 – YoY change (%) 20%
30%
15% 10%
10%
5% -5%
-10%
Source: CW Research * values based on CW Research estimation for January 2017
August / September May/june 2017 2016
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Argentina
Spain
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 30
Korea
Italy
Vietnam
Peru
Colombia
China
Japan
India
-20%
Thailand
-15% Saudi Arabia
Spain
Pakistan
Argentina
Korea
Colombia
Japan
Indonesia
Morocco
Brazil
Thailand
Peru
Saudi Arabia
-30%
-10%
CW Research
CEMENT PRODUCTION (million tons) Country
LM
MoM (%)
CEMENT CONSUMPTION (million tons) YoY (%)
YTD
YTD (%)
LM
MoM (%)
YoY (%)
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 (%)
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 IMPORTS (million tons)
TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION. LM
YTD (%)
CEMENT CONSUMPTION MOM (%)
CEMENT EXPORTS (million tons) Country
Country
MoM (%)
YoY (%)
YTD
WWW.CEMWEEK.COM/SUBSCRIBE
YTD (%)
Country
LM MoM (%) YoY (%) YTD TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.
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
YTD (%)
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
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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 March 2017 closed at $75.70 per ton, increasing 47.2 percent YoY as compared to March 2016’s price of $51.44 per ton. It decreased by 5.1 percent when compared to February 2017’s price of $79.80 per ton. Steam Coal FOB Average Prices (us$/ton) US exported
Colombia exported
Australia Newcastle
Indonesian HBA
South Africa Richards Bay
120 110 100 90 80
Global trading volumes for the five major coal countries totaled 40.84 million tons in March 2017, declining by 34.1 percent in comparison with the 61.97 million tons recorded in February.
70 60 50 40
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 Mar ’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 ’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 five major coal countries totaled 40.84 million tons in March 2017, declining by 43.0 percent in comparison with the 71.63 million tons recorded in February. With the exception of South Africa, all countries recorded an output expansion when compared to the previous month. PETCOKE: US petcoke exports rose by 23.3 percent to 3.6 million tons in March 2017 when compared to the previous month, and expanded 25.6 percent when compared to March 2016. The US export price for petcoke for March 2017 averaged at $72.22 per ton, decreasing 2.3 percent as compared to February’s price of $73.91 per ton, and up 84.6 percent when compared to March 2016’s price of $39.12 per ton. US Petcoke Export Price (us$/ton) 80
Rolling 12-month average
70 60 50 40 30 20
F ‘17
M ‘17
J ‘17
D ‘16
O ‘16
N ‘16
S ‘16
J ‘16
A ‘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
10
Source: Customs data
NATURAL GAS: The US Henry Hub spot price traded at $2.88 per MMBTU in March 2017, a 1.1 percent increase when compared to February 2017, and growing 66.5 percent as compared to March 2016’s price of $1.73 per MMBTU. Prices in Europe decreased 14.5 percent MoM, reaching $5.36 per MMBTU in March 2017. To learn more, please contact the CW Research team at sales@cwgrp.com or +1-702-866-9474 32
August / September May/june 2017 2016
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Volume variation analysis for selected countries that are major importers and exporters of coal and petcoke. This is a selection of notable markets. Additional detail is available from CW Research. COAL - EXPORTS (million tons) - Feb 2017 Country
LM
MoM (%)
PETCOKE - EXPORTS (million tons) - Feb 2017 YoY (%)
YTD
YTD %
LM
MoM (%)
YoY (%)
TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.
TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.
WWW.CEMWEEK.COM/SUBSCRIBE
WWW.CEMWEEK.COM/SUBSCRIBE
TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.
TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.
WWW.CEMWEEK.COM/SUBSCRIBE
WWW.CEMWEEK.COM/SUBSCRIBE
YTD %
YTD
YTD %
YTD
YTD %
PETCOKE - GLOBAL EXPORT PRICES (USD/ton) - Feb 2017
TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION. COAL - GLOBAL EXPORT PRICES (USD/ton) - Feb 2017 LM
YTD
US PETCOKE EXPORTS PRICES MoM (%)
COAL EXPORTS MoM (%)
Country
Country
MoM (%)
YoY (%)
WWW.CEMWEEK.COM/SUBSCRIBE
YTD
Country
LM
MoM (%)
YoY (%)
TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.
YTD %
WWW.CEMWEEK.COM/SUBSCRIBE
TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION. WWW.CEMWEEK.COM/SUBSCRIBE COAL EXPORT PRICES MoM (%)
NATURAL GAS PRICES (US$/mmBtu) - Feb 2017 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
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CEMENT ENERGY MARKETS
CW Research
DEPARTMENTS
PEOPLE Bamburi cement appoints three new directors Kenya-based Bamburi Cement appointed three new female directors, breaking its all-men board. The new directors include Alice Owuor, Rita Kavashe, and Hellen Gichohi. Female directors now represent 30 percent of the board. Kenya’s Capital Markets Authority encourages listed companies to diversify their boards in terms of gender. Rita Kavashe was the chief executive of General Motors East Africa. Alice Owuor is the former Commissioner for Domestic Taxes at the Kenya Revenue Authority. Finally, Hellen Gichohi was, until now, managing director from Equity Group Foundation. Bruno Pescheux remains as managing director and John Simba as chairman of the company. Last year, two female directors, Sheila M’Mbijjewe and Catherine Langreney, resigned from the board.
Afrisam considers CEO replacement Rumors point out that AfriSam will soon be appointing a new CEO that will conduct the merger with PPC. Stephan Olivier is expected to step down from office as soon as possible, according to sources that refused to be identified. Olivier will be substituted by a shortterm contract with Rob Wessels, the chief investment officer at Phembani
Adepeju Adebajo is no longer executive director of Lafarge Africa Before ascending to executive director, Adebajo held several posts within Lafarge Africa, including managing director at the Geo-Cycle and Project Management Office. Adebajo abandoned the company to become Honorable Commissioner for Agriculture in Ogun State, Nigeria. The board and management of Lafarge
34
August / September May/june 2017 2016
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Group, a black empowerment partner of AfriSam. The move will leave Darryll Castle, the current CEO of PPC, as the prominent candidate for assuming the leadership of the new company resulting from the merger. For now, Olvier commented on the merger saying: “Finer details such as executive changes and possible asset sales have not yet been defined.” Africa thanked Adebajo for its work in the company and congratulated her for the new appointment.
PEOPLE Mordovcement appoints a new leader
LafargeHolcim to change board of directors
Sergey Marchenkov, VP of EuroCement, will serve as leader of Mordovcement. Sergey Marchenkov will accumulate hisposition as vice-president of production and technical development at EuroCement Group with leadership of Mordovcement. Marchenkov has integrated the EuroCement structure for 18 years. He graduated as a PhD in Technical Sciences by the Belgorod State Technological Academy of Building Materials. During the first quarter of 2017, Mordovcement produced a total of
559,000 tons of cement, an increase of 53 percent year-on-year. EuroCement wants to modernize the company and has already invested RUB 1 billion during the last five quarters in Mordovcement.
Vostokcement has a new general director The Tepoozersky cement plant has a new manager. EvgenySysoev was appointed manager of the company. He has been working in the cement sector since 2000, overseeing operations in several stages of production, including clinker burning, cement grinding, and the raw materials shop. Sysoev will replace Viktor Ivanov, who was promoted to general director of Vostokcement, the company behind the
Tepoozersky plant. Ivanov began working for Vostokcement in 1986 as an apprentice at the Spassky cement factory. He climbed from cement milling machinist to shift mater, shop manageranddeputy production director. In 2017, he was appointed manager of the Teploozersky plant. He is also member of the legislative assembly of the Tepoozersky electoral district.
ATECAP has a new president ATECAP, the Italian association of prefabricated concrete producers, has a new president. Andrea Bolondi is the new president of ATECAP. With 30 years of experience in the sector, Bolondi was, until now, operation manager at Unical, a subsidiary of BuzziUnicem. He is also the current vice-president of Federbeton, the Italian federation of stakeholders for the concrete and cement sectors. Bolondi said that ATECAP will be a reference in the sector, promoting honest competition and fighting
The Board of Directors of LafargeHolcim nominated Patrick Kron for election as a new Board member at the Group’s Annual General Meeting. At the same time, Philippe Dauman and Alexander Gut have taken the decision not to stand for re-election. As communicated earlier, Bruno Lafont, currently CoChairman of the Board of Directors, has also decided that he will not stand for re-election. “We are pleased to nominate Patrick Kron. He is an experienced leader with an extensive track record in transforming industrial companies. His skills will be highly complementary to the existing knowledge pool in our Board”, says Beat Hess, Chairman of the Board of Directors of LafargeHolcim. “On behalf of the Board, I would like to thank Bruno Lafont, Philippe Dauman and Alexander Gut for their many years of service and significant contributions to the success of LafargeHolcim.” All other current members of the Board of Directors will be proposed for re-election at the Annual General Meeting: Beat Hess, Chairman; Bertrand Collomb; Paul Desmarais, Jr.; Oscar Fanjul; Gérard Lamarche; Adrian Loader; JürgOleas; NassefSawiris; Thomas Schmidheiny; Hanne B. Sørensen; Dieter Spälti.
illegal operations that may appear in a context of stiff competition and sluggish demand.
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EUROPE, MIDDLE EAST AND AFRICA Turkey becomes the largest cement producer in Europe TufanÜnal, the chairperson of the Cement Industry Employers’ Union (CIEU),reveals that, in the last 10 years, cement production in Turkey rose by 50 percent, leading the country to become the top producer in Europe. Right now, the sector employs 17,000 people. Ünal is the chairperson for CIEU, representative of 98 percent of the Turkish cement sector, with 32 members and 63 facilities associated. He says that cement companies in the country want to ramp up exports, taking benefit from new production technologies and a qualified workforce. The United States, Africa, and Georgia have the potential to become the next destinations for cement produced in Turkey, says Ünal. In 2016, the Turkish cement sector produced 77 million tons of cement. Ünal stresses the importance of the sector by giving examples of some of the infrastructure projects being supplied by domestic producers, including the Eurasia Tunnel, and Cannakkale 1951 Bridge.
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Algeria still restricting cement imports The Algerian government renewed its restrictions on cement imports. In April, the government released a list of products that are subject to import limitations, which include a licensing process and annual volume limit, similarly to what it did in 2016. Cement has made the list again, together with a variety of other products, including cheese, lemon, vehicles, ceramics, wire
Angola maintaining cement import ban in 2017 The Angolan government decided to keep its ban on cement imports during 2017. However, exceptions will be made to cover any shortage created by planned projects. The provinces of Cabinda, Cunene, and CuandoCubango will be able to access cement imports only after a reasoned request. Each province can import a maximum of 150,000 tons.
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rods, polyphosphates, meat barley, garlic wood, and many others. With those limitations, the Algerian government wishes to boost domestic production by protecting the national industry from external competition. Algeria is on the road to becoming selfsufficient on cement production, and is already considering exporting part of its production in the next year. According to the government, local production of cement and clinker largely surpasses demand and therefore imports are not necessary. Any exception will be analyzed by the Commission for the Cement Sector. Installed capacity in the country is currently at eight million tons, while demand stayed at 5.0 million tons in 2014. In 2015, Angola comfortably exported part of its production, without any consequence for domestic demand.
regional report Dangote expanding in Ghana Nigeria-based Dangote Cement entered Ghana six years ago, and it intends to keep and expand its market share in the country.
New cement unit to be set up Iran The Iranian province of Bushehr will have a new cement unit. According to Seyed Hossein Hosseini Mohammadi, head of Industry, Mine, and Trade for the Province of Bushehr, the new cement unit, with a production capacity for 3,000 tons per day, will soon open in the region.
There are two cement plants already operating in Bushehr, with a capacity of 3,000 and 6,000 tons per day. Mohammadi stressed the importance of promoting cement exports, as production capacity continues to rise. He said that, in March alone, 39,500 tons of clinker and 39,000 tons of cement were exported through the province.
The company is already preparing its expansion, with an investment of USD 100 million to build a new grinding plant in Takoradi. The new unit is scheduled to be commissioned in early May. EtornamBuani, media relations manager for the company, expressed Dangote’s desire of maintaining its quality service and the distribution of cement to all corners of Ghana. He takes credit for, not only employing a large number of Ghanaian citizens, but also for stabilizing cement prices in the country.
LafargeHolcim setting up new facility in Morocco LafargeHolcim will open a new cement grinding station in Laâyoune, Morocco. The new unit will supply cement to the southern region of Morocco, where demand is expected to grow in the near future thanks to major infrastructure and housing projects. Currently, LafargeHolcim Maroc has the installed capacity of 11.8 million tons.
under the name Moroccan Cimenteries of the South, has a designed capacity for 500,000 tons of cement per year. EUROPE, MIDDLE EAST & AFRICA EUROP COMPANY/LOCATION COMP PANY/L PA Y OCATIO Y/L ATION ATIO TION
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Ciments du Maroc, a subsidiary of Italcementi, already operates a cement grinding and cementing center near the town. The Moroccan company Anouar Invest had also announced plans to set a cement plant in Laâyoune, back in 2014. The project, www.cemweek.com
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SOUTH EAST ASIA Vietnamese producers wary of Thai competitor The Vietnam Cement Association has concerns regarding Siam City Cementâ&#x20AC;&#x2122;s penetration in the Vietnamese cement market. The Thai firm Siam City Cement recently acquired several factories of cement in Vietnam, including Holcim Vietnamâ&#x20AC;&#x2122;s former assets and operations. Nguyen QuangCung, chairman of the Vietnam cement Association, is afraid of the growing share of Siam City. Cung believes that, if the company continues to strengthen its position in the domestic market, Vietnamese producers will struggle to maintain their market share. Competition by Siam City is especially problematic for some Vietnamese producers, Cung says, given the current state of overcapacity in the country. Cung warns that the full impact of that competition will not be felt immediately, but rather in the long term.
Cherat Cement developing new unit Tianjin Cement Industry Design & Research Institute will be responsible for installing the third cement line from Cherat Cement in Pakistan.
The contract includes a system to transport the raw materials and to package the final product. The project is expected to take 24 months to complete.
For the line, the Chinese engineering firm will use a Pfeiffer MVR 6300 C-6 roller mill, with the capacity to grind 365 tons of ordinary Portland cement per hour to a fineness of 3,200 cubic centimeters per gram.
The collaboration of Cherat Cement and Tianjian Cement is not new, since the Chinese firm was responsible for installing the second production line of the Pakistani manufacturer.
Pakistan looking at other export markets Cement makers from Pakistan are exploring potential new target markets for exports due to drops in shipments to their traditional export markets. Cement exports to India and Afghanistan have been falling down steadily since 2008-09, from six million tons recorded at the time. In the meantime, exports to Afghanistan dropped from five to two million tons. Pakistan faces strong competition from neighbors Iran and India,
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and has lost an important market, South Africa, after the country decided to impose a duty on imports. Additionally, it has lost market share in Kenya, Tanzania, and Mozambique. In that light, manufacturers have been looking to alternative markets such as the Philippines. Total cement exports fell to 3.6 million tons, fetching USD 191.5 million (or USD 52.5 per ton) in the July-March 2016-17 period, compared to 4.6 million tons earning USD 248 million ($54.4 per ton) in the comparable period in the previous year, according to the Pakistan Bureau of Statistics.
regional report Adani Cementation building new grinding facilities Adani Cementation wants to set new cement and clinker grinding facilities in the states of Gujarat and Karnataka. The company, a subsidiary of Adani Enterprises, is prepared to invest INR 3,000 crore in several project across the two states.
Bestway Cement no longer acquiring Dewan Cement Pakistani manufacturer Bestway Cement signed a non-binding memorandum of understanding to acquire Dewan Cement last February, a deal which is now pulling out of. “As a result of delay and uncertainty resulting from recent legal proceedings initiated in the Sindh High Court, Bestway Cement Limited has decided not to proceed with the acquisition of the north plant of Dewan Cement Limited located at Kamilpur, near Haripur, Khyber Pakhtunkhwa,” said
Bestway Cement, in a notification to the Pakistan Stock Exchange. The decision to abandon the deal leaves either to one of the major domestic companies to increase their capacity, or to a possible Chinese penetration in the Pakistani market. Dewan Cement has an annual capacity of 2.0 million tons, equivalent to 6.1 percent of the 45.6 million tons of installed capacity of cement in Pakistan. Lucky Cement, Fecto Cement, and an unidentified Chinese firm have already expressed their interest in the company.
Two new cement grinding units will be set in Mundra, Gujarat and Udupi, Karnataka, each with the capacity to process one million tons per year. Additionally, a clinker grinding unit with the annual capacity to process five million tons per year is planned for Lakhpat, Gujarat. Completion of the three projects is expected to happen within 24 months from March. Adani has plans to install 35 to 40 million tons of cement production capacity over the next few years.
CRH defending investment in the Philippines CRH remains committed to the Philippine market in spite of lower sales, and after investing over USD 300 million in the country. CRH entered the Philippines in 2015, and since then, sales have shown disappointing results due to cheaper imports, rough market conditions, and poor weather.
during the first quarter, while in the United States, sales grew by two percent compared to a particularly strong first quarter of 2016. SOUTH EAST ASIA COMPANY/LOCATION COMPA P NY/L PA Y O Y/L OCATIO ATION ATIO TIO
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Albert Manifold, chief executive of CRH, defends the company’s investment in the Philippines, explaining that the negative results are a consequence of the “volatility of emerging market.” Other markets are presenting stronger results for CRH. In Europe, sales increased by six percent year-on-year www.cemweek.com
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ASIA PACIFIC Shanshui Cement still struggling China Shanshui Cement Group continues to face problems. In 2016, the company posted a net loss of CNY 738 million, though still far away from the CNY 6.4 billion loss registered in 2015. However, disputes over its control and the way to solve its liquidity and debt problem continue to hamper the company from making any further advancements. China Shanshui may actually end up missing the favorable wave sweeping the Chinese cement sector. Profits in the sector are expected to reach CNY 60-70 billion this year, up from CNY 52 billion in 2016, and CNY 33 billion in 2015. Prices for cement products remain steady at three-year highs, after jumping 40 percent in the first quarter of 2017.
Mitsubishi Materials leaving the Chinese cement sector Japan-based Mitsubishi Materials is pulling out of the Chinese cement sector. The company sold its Yantai Mitsubishi Sludge factory, located in the Shandong Province, to an affiliated Chinese firm. The plant was operated by Mitsubishi since May 1995 and has an installed capacity for 1.2 million tons of clinker per year. Since April 2012, it has a waste heat plant that generates 4,350 kilowatts. Another mixed cement plant in Qingdao, Shandong Province, will be closed
Cement sector in China urged to make output reforms The China Cement Association (CCA) urged the sector to speed up the implementation of supply-side reforms. After a round of meetings, the association admitted that overcapacity, low concentration of production, and environmental and resource constraints remain important challenges to the Chinese cement sector. Considering this, the CCA spoke about the needs for further restructures in the sector.
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down, said Mitsubishi. The company is restructuring its overseas assets, focusing on the United States and moving away from the state of overcapacity in China. Mitsubishi believes that market conditions will become more severe in the future, while in the United States demand is expected to grow thanks to more investment in infrastructure. The company is also preparing for rising demand in the medium term in its home front, Japan, thanks to the 2020 Olympic Games. For 2017, cement companies are expected to achieve a collective profit target of CNY 80 billion. Following the governmental guidelines, companies will continue to scrap backward capacity and upgrading existing capacity to meet energy consumption, emission, quality, safety, and environmental protection standards. Moreover, the CCA discussed the implementation of special funds for structural adjustments on the industry. More consolidation, mirroring JinyuJidong Cementâ&#x20AC;&#x2122;s merger, are also in the plans laid out for the cement sector.
regional report BBMG to benefit from newly announced district
Huaxin Cement wants to integrate Lafarge China In October 2016, Huaxin Cement offered approximately CNY 13.8 billion for Lafarge China’s operations in Yunnan, Guizhou, and Chongqing. If the deal follows through, Huaxin Cement would 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, with 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 accounting for 6 percent. The merger of Huaxin Cement and Lafarge China would be another step towards capacity integration, promoted under Beijing’s supply-side reforms in the sector.
Cemex Philippines’s income lower in the first quarter Between January and March 2017, Cemex Philippines posted a net income of PHP 350 million, 24 percent less compared to the PHP 460 million achieved during the same quarter last year. Its revenue also fell year-on-year, by 15 percent, from PHP 6.32 billion to PHP 5.35 billion, while recovering by two percent compared to the last quarter.
in March, which was the highest in the last 17 months,” Cemex president and chief executive Pedro Jose Palomino said.
The Chinese government revealed plans for a new district in the Beijing-TianjinHebei region, named the Xiong’an New Area. Initially, the new district will have a 100-square-kilometer area, located some 100 kilometers southwest of Beijing. In the long-term, the district will be expanded to encompass 2,000 square kilometers. BBMG calls itself the largest cement producer and supplier in the BeijingTianjin-Hebei area, placing it in a right position to cash in with the new district. Speaking on the project, Chinese President Xi Jinping explained that it will be a “demonstration area for innovative development”. The new district will be larger than the Guian New District, which occupies 100 square kilometers and absorbed CNY 300 billion in investment. The new district is expected to increase cement demand by 30 million tons over a period of three years. In the meantime, cement prices remain strong, with several regions, including Hebei Shijiazhuang, Xingtai, Lingshou, Shenzhou, and Hengshui, announcing an increase of CNY 50 per ton; only to be quickly followed by Tangshan, Beijing, Tianjin, and other regions that witnessed a similar rise.
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Also during the quarter, the volume of Cemex’s sales came down by nine percent, while prices eased by seven percent. “The first-quarter sales performance has been challenging, but we are encouraged by improvements in cement volumes versus the prior quarter and a strong sales performance www.cemweek.com
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AMERICAS Cement producers in Turkey consider investing in the US Turkish companies are considering investments in the United States market, after the Trump administration said that it would focus on infrastructure, announcing an investment of USD 1 trillion for the next ten years. Following this announcement, Turkish manufacturers have expressed their willingness to penetrate the US market, as they expect that domestic capacity will not be enough to meet the arising demand. Both Akçansa and Çimsa are eyeing possible investments in Canada and the United States. Akçansa, Çimsa, Noah, Oyak Adana, and Medcem are the five Turkish manufacturers able to produce cement following quality standards from the United States. Sabanci Group, the owner of Akçansa, says that it is ready to invest in the construction of new plants or in buying idle factories. They believe that it would be possible to achieve a profit margin of USD 30-40 per ton. However, RahmiCuhacı, a board member of NuhÇimento is not so sure. He believes that US companies may block a Turkish bid through continuous anti-dumping cases.
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CEMEX’s stake at Cementos Chihuahua remains unchanged CEMEX failed to sell its stake at Grupo Cementos Chihuahua, which was a part of its divestment program. CEMEX expected to sell around 51.8 million shares from Chihuahua, equivalent to a 9.5 percent stake at the company, for roughly USD 240 million.
Colombia receives large quantities of cement imports Colombia is receiving large quantities of bulk cement, mostly coming from southern Europe, Turkey, China, Vietnam, or the Middle East. The imports are entering the Colombian market with poor control and specifications, and the Colombian environmental authorities have already expressed their preoccupation with the subject. Bulk cement imports with little inspection end up competing with domestic producers, which must follow strict quality and environment
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However, the offer was not well received, and no co-shareholder of CEMEX opted to exercise their option of buying 6.8 million shares within a period of 30 days. The offer was closed on February 9, 2017. For now, CEMEX will retain a stake in Grupo Cementos Chihuahua. standards. Up to 55 percent of new demand in the cement sector is being covered by those imports. Both Colombia’s Ministry of Commerce and Industry and the National Association of Foreign Commerce refused to comment on the subject.
regional report CEMEX’s Dominican Republic subsidiary to expand its capacity CemexDominicana, Cemex’s subsidiary in the Dominican Republic, will invest USD 8.4 million in one of its plants, to increase production capacity by 800,000 tons per year.
Cement companies expressing mixed interest in US-Mexico border wall project Several cement companies with assets in the United States have either denied interest or claimed that they could supply materials to US president’s Donald Trump controversial project to build a wall between American territory and neighboring Mexico. Former LafargeHolcim CEO Eric Olsen claimed that the company was prepared to supply materials “to all types of infrastructure projects in the United States.” The statement did not sit too well across the Atlantic, with French authorities requesting the company to change its stance. The Parisian
mayor even declined to work with the company on a regular project. Meanwhile, Ireland-based CRH says that it will not participate in the project, due to its lack of a significant presence close to the southern border of the US. As for HeidelbergCement, the company confirmed that it will not be making any bids for the controversial wall. Cemex, a Mexican cement company with significant assets in the southern US, also denied its interest in bidding for the US-Mexico border wall project.
In the end, the new unit will raise the total capacity of the plant to three million tons per year, making it the largest in the Caribe. The new unit was ceremoniously inaugurated with the presence of Danilo Medina, President of the Dominican Republic, and Carlos Gonzáles, president of CemexDominicana. According to González, the positive economic indicators of the country and the favorable environment for investment have been major factors in Cemex’s decision to expand its capacity.
The project is currently still in bidding, one of the initial steps where suppliers for cement and other key construction materials are procured and later selected.
Mexican cement prices rise Mexican cement manufacturers significantly increased prices in the beginning of 2017. Major cement producers in the country, including Cemex, Cementos Chihuahua, Cementos Moctezuma, and Fortaleza ramped up their prices by up to 20 percent this year.
volume of sales by 10 percent, while Cementos Chihuahua’s dispatches grew by 6.7 percent. Fortaleza has recently opened a new cement line, increasing its capacity. AMERICAS COMPANY/LOCATION COMPA COM P NY/L PA Y OCATIO Y/L A N ATIO
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Companies are trying to pass on the increase in fuel costs and other expenses to the final consumer. The hike has been easier to absorb thanks to a rise in activity within the Mexican construction sector. Producers are experiencing a surge in demand, with Cemex increasing its www.cemweek.com
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CONSTRUCTION & BUILDING MATERIALS BY BMWEEK.COM Imerys improves results in the first quarter Holcim Romania launches self-compacting concrete Agilia is an important product in Holcim’s portfolio of self-compacting concrete, as it is already used in over 50 countries. Holcim typically provides transport, consulting and technical expertise regarding this product. The product can be used in a wide range of applications, from simple to complex construction elements. It can be applied in a variety of highquality civil or industrial works, as well as in prefabricated structures, bridges, viaducts, and tunnels. Agilia retains its compacting properties for at least two hours after it’s mixed, including in higher temperatures, without adding additives to correct the consistency. Holcim Romania owns two cement plants in Campulung and Alesd, as well as a grinding station and cement terminals in Turda and Bucharest. It also owns 14 stations of mixed concrete, three aggregates plants, and two special binder units.
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Imerys’s revenue grew by 7.2 percent to EUR 1.1 billion when compared to the first quarter of 2016, when it recorded a revenue of EUR 1.0 billion. According to the company’s CEO, Gilles Michel, “In the first quarter, Imerys took advantage of healthier market trends that were already visible at the end of 2016. The increase in our results reflects the dynamism and positioning of our businesses in this environment, as well as the effectiveness of our management measures and operating excellence program. In the coming quarters, the Group will benefit from the contribution of recent acquisitions and will pursue its development strategy, in particular with the proposed acquisition of Kerneos.”
HeidelbergCement acquiring Cemex operations in the US The assets consist of aggregates, asphalt and ready-mix concrete operations in Oregon and Washington. The purchase price for the assets amounts to around USD 150 million and should be closed during the second quarter of 2017. “The operations are an ideal strategic fit in order to broaden our vertically integrated market position in the states of Washington and Oregon” explains Dr. Bernd Scheifele, Chairman of the Managing Board of HeidelbergCement.
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The company’s operating margin has also improved by 8.7 percent year-on-year in current operating income, to EUR 147.2 million. Compared to the first quarter of 2016, Current EBITDA also rose 6.3 percent, to EUR 201.7 million.
“This is a bolt-on acquisition with low risks and we are expecting significant synergies. It is part of our strategy of disciplined growth and increasing shareholder returns.” The Pacific Northwest Materials Business includes seven aggregate quarries, five ready-mix concrete plants, and two asphalt operations. They will soon be integrated into HeidelbergCement’s current network in the area, allowing it to broaden its position in that market.
BMWEEK.COM Saint-Gobain extends offers to acquire sika stake Saint-Gobain, the French-based construction materials group, extendedits contract to buy a controlling stake in the construction chemical maker Sika. The contract will now be valid until the end of 2017, and may be extended further until the end of 2018. The company wants to acquire the controlling stake in the Swiss company from its founding family, the Burkards. "This further extension of the sale agreement once again reflects the alignment between the Burkard family and Saint-Gobain and their unwavering determination," Saint-Gobain affirmed in a statement.
Rio Tinto supplying manufacture by-product for concrete production Rio Tinto has reached an agreement to supply 25,000 tons of alkaline anhydrite to concrete maker Lafarge Canada, a subsidiary of LafargeHolcim.
The family is at odds with Sika’s management due to an agreement by Saint-Gobain to pay CHF 2.75 billion for a 16 percent stake that corresponds to 53 percent of the voting rights. Management blocked the deal by restricting the family’s voting rights to 5 percent, prompting a still ongoing legal battle.
Alkaline anhydrite is a byproduct of the fluoride plant at Rio Tinto’s Jonquière complex. Lafarge plans to use anhydrite to develop a self-leveling product, mainly used as a concrete floor covering. "On the European side, self-leveling screeds are well known as a product that is spread in buildings in a liquid way and it automatically dries to the level," explains Stéphane Poirier, who is the head of the by-products valuation and marketing department at Rio Tinto. "This type of product is widely used in Europe, but the market remains to be developed in North America, which is both an opening for Lafarge and Rio Tinto," he adds. The fluoride plant produces nearly 100,000 tons of alkaline anhydrite per year, with the company mainly exportingits output to the European market. Rio Tinto and LafargeHolcim took the first steps in 2011, but the former had to first develop the necessary expertise to ensure a stable and quality supply.
Carmeuse lime and stone investing in a calcite plant The city council approved a motion on May 2 at a meeting, to schedule a public hearing on the issue for the next meeting, on June 6. “Carmeuse plans to invest in the Calcite plant,” City Manager Joe Hefele said. According to a manager’s report, the company wants to invest USD 39 million over a five-year period, with most of this investment focused on equipment, while the rest will go toward real estate property. “It’s my understanding with the (Michigan Economic Development Corporation) that he company will seek a tax abatement
associated with USD 1,471,100 of the proposed work,” Hefele said. The Michigan Strategic Fund Board has already processed and approved the request, and the MEDC staff who contacted Hefele said it’s up to the city to consider.
The Jonquière fluoride plant, unique in North America, will meet the need for LafargeHolcim’s Canadian subsidiary in the next three years. Rio Tinto is also in discussions with other companies to develop the use of anhydrite in the agricultural and cement sectors.
The first step before an abatement can be approved is to create an industrial development district within which an application for an abatement could be considered at the local level. However, that district cannot be created until a public hearing has been conducted. www.cemweek.com
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PETCOKEWEEK.COM
Petcoke Market update from PetcokeWeek.com Bharat petroleum commissioning petcoke equipment Bharat Petroleum’s (BPCL) Director of Finance, P Balasubramanian, said that the company will be commissioning the delayed coker unit at the Cochin refinery expansion by the end of the week. The company has technically commissioned all the plans from March 2017, but some units are still being commissioned and stabilized, onebyone. Such is the case of the Petro-FCC, and the coker unit. Some sulfur recovery units will also be commissioned later, as Bharat hopes to have all units stabilized by the first half of the year, and use the new full capacity of 15.5 million metric tons for the entire refinery by the second half. Previous capacity stood at 10.5 million metric tons. The crude distillation unit has already been stabilized, as it was commissioned in the previous quarter. The director also discussed the possibility that some pumps might close on Sunday, particularly in Maharashtra, stressing that profitability would not be hindered, but that it might affect supply and distribution.
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Cemex’s fuel usage may be restricted The Spanish Ministry of Environment is imposing new restrictions on Cemex’s request for renewing its operating permit for the Buñol plant, in Valencia, reports Valencia Plaza. The new restrictions would deprive the company of up to 30 percent of its current fuels, namely waste burning, which some might consider dangerous, and that Cemex uses in order to replace petcoke – a fuel that is not considered dangerous, but is more polluting. Cemex has a 30 percent rate of fuel substitution, in line with the overall cement industry in Europe, mostly working to replace petcoke with waste materials by a maximum of 115,000 tons. However, due to production cuts brought forward by the economic distress in 2008, Cemex is far from using this tonnage, usually inputting a maximum of 75,000 tons of waste, and 17,000 tons of flours. The regional secretary for the environment, Julià Álvaro, wants to significantly tighten this current scenario, and to prohibit Cemex
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from using any sort of waste that can be considered hazardous, moving from a maximum of 75,000 tons to zero. The new authorization proposal would prohibit Cemex from recovering waste with codes LER 140603 (other solvents and solvent mixture), 190205 (sludges from physicochemical treatments containing dangerous substances), and 190208 (liquid combustible wastes containing hazardous substances). The secretary wants the company to stop using all of this waste, without exception, representing a significant change of what was initially proposed to renew the permit of the concrete and clinker manufacturer. Local authorities and environmental groups rallied, leading Álvaro to harden the criteria. New criteria for the plant involve quadrupling the monitoring of emissions of the Buñol plant, and the creation of three additional air control points, adding to the existing one. A terminal that receives continuous data from the plant and sends the information to the environmental council and the town hall of Buñol will also be created.
PETCOKEWEEK.COM Pemex installs first coking equipment The Miguel Hidalgo refinery in Mexico was a stage to the installation of the first coking drum from PetróleosMexicanos (Pemex) and ICA Fluor. The equipment is part of the unit’s last reconfiguration phase.
Petronor’s net profit rises in 2016 Due to its expansion, Spanish-based Petronor, a subsidiary of Repson, generated EUR 222.4 million due to a rise in crude prices from its reserves, and amortized EUR 121 million worth of debt in 2016. Turnover also fell by 14 percent. The refinery, located in Biscay, posted a 12.5 percent increase in net profit when compared to 2015. In the previous two years, the company reported negative results, largely due to the equity effect derived from the upward trend in the price of oil, and its impact on Petronor’s crude oil reserves.
However, operating income (excluding the equity effect) contracted by almost 30 percent in 2016, to EUR 213 million. Turnover also dropped, standing at EUR 4.7 billion, but the greater margin for crude prices allowed for the improvement of results. Petronor has reduced its debt in recent years, after investing EUR 800 million in the coke plant. At the end of 2013, the refinery’s debt amounted to EUR 1.1 billion, having successfully halved it by 2016, at EUR 650 million.
"From now on we are looking for partnerships to complete things faster, compared to if we had to do it alone," said González Anaya, stressing the fact that the oil business is made from partnerships and alliances.
In 2017, it has reduced this amount by a further EUR 25 million.
He added that the placement of the six coking drums at the Hidalgo refinery is one of the ways in which Pemex intends to move forward with its modernization. "This is undoubtedly a great process and the placement of this drum is a key point", so that the state’s oil producer improves its work.
Port of Cabedelo receives new petcoke load The Port of Cabedelo received three ships on April 18, carrying around 50,000 tons of wheat, diesel and petcoke. "We are intensely moving loads, machines and port workers from today and for a few days. This reflects positively on the economy of Paraíba ", commemorates the president of Companhia Docas da Paraíba, Gilmara Temóteo. Dozens of workers are involved in unloading operations. The Pola Indian’s unloading operations involved 28,506 tons of petcoke. The ship sports the Malta flag and came from the
After witnessing the placement of the drum’s in the refinery located in the Tula municipality, in the Mexican state of Hidalgo, the Pemex’s general director, José Antonio González Anaya, commented that the feat means a modernization process for the refineries in Mexico.
United States. Promise I is carrying 16,500 tons of wheat for the pasta industries. It arrived from Argentina and carried the Hong Kong flag. Meanwhile, hoisting the Liberian flag, Atrotos docked from the port of Pernambuco, also in Brazil, with 3,760 tons of diesel.
The drums were imported from Spain by Pemex, totaling an investment of USD 52 million. The total cost of the coking plant should be around USD 2 billion, with USD 240 million having been used so far. The drums will allow refinery production to increase to 55,000 barrels per day of gasoline, and 60,000 barrels per day of diesel.
Until the end of the month, 12 more ships should dock at Cabedelo, carrying a variety of products totaling 110,000 tons of products, including malt, petcoke, wheat, and petroleum derivatives. The port will also ship granite and ilmenite to Europe. www.cemweek.com
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EQUIPMENT
EQUIPMENT Messebo cement plant buys new trucks The Messebo cement factory acquired a set of new trucks. The Ethiopian plant invested ETB 700 million to acquire 200 new MAN trucks to transport cement domestically and, thus, cut logistic costs and become more competitive in the local market. The trucks were supplied by German manufacturer MAN and assembled locally by Mesfin Industrial Engineer. The company operates a cement plant near Mekelle City, 780 kilometers away from Addis Ababa. Given its distance to the capital, the plant has been more or less excluded from the benefits of a construction boomthere. The Messebo cement plant has the capacity to produce 2.3 million tons of cement per annum. Last year, the company managed to produce and dispatch two million tons of cement. It has shipped a special cement grade for the construction of the Grand Ethiopian Renaissance Dam.
Taiheiyo cement sets new silo in Tokyo The Japanese company commissioned a new silo, with the capacity to store 20,000 tons of cement, in the Koto Ward. The silo is 25 meters in diameter and 42 meters in height. It is the fifth silo in the facility, improving its storage capacity to 105,000 tons.
Iskitimcement moves forward with automation Iskitimcement is pushing through its program to automate production at the plant. The company is installing new equipment, including sensors, controllers, and cable lines that will improve its automation. Moreover, it will equip the factory with a centralized video surveillance system. â&#x20AC;?As a result of automation we will be able to remotely perform the start and stop of main and auxiliary equipment, control its
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Taiheyo is reinforcing its logistic capacity, predicting a jump in demand for cement in the time leading to the 2020 Tokyo Olympics. The Koto Ward is a large facility inaugurated in May 2002, able to handle up to 1.2 million tons per year of cement arriving in cement bulk carriers. operation, control frequency convertersâ&#x20AC;&#x2122; aspiration fans, control parameters of the bag filter, which in turn will help ensure reliable operation and further reduce emissions into the atmosphereâ&#x20AC;?, the company said in a statement.
EQUIPMENT Loesche provides cope technology to DG Khan On September 4, 2015, DGKCC decided to implement more state-of-the-art technology and signed a contract with Loesche GmbH for the supply of three grinding plants for their new 9,000-tonsper-day clinker production line at Hub in Balochistan province.
Buemer group supplies LafargeHolcim Poland The group will deliver four highperformance belt buckets to the Kujawy cement plant, located in the Kuyavian-Pomeranian Voivodship. The installation of the new belt buckets will be completed by the end of 2017.
Each belt bucket has an axle spacing of 50 meters and the capacity for 350 tons per hour. They are made with highquality steel cable straps produced by Beumer Group itself. Czechia-based Beumer Group specializes in the fields of conveying, loading, palletizing, packing, sorting, and distributing.
GebrPffeifer supplies mill to new unit in Port Elizabeth Osho Cement and HeidelbergCementâ&#x20AC;&#x2122;s joint venture will install a new vertical mill in its cement plant in Port Elizabeth, South Africa, reports Gebr Pfeiffer.
cement per hour to a fineness of 3,500 square centimeters per gram. The new mill is equipped to operate with an input of 2,600 kilowatts.
The new mill was supplied by Gebr Pfeiffer and it is a MVR 3750 C-4 with the capacity to process 80 tons of slag
It will enter operation in 2018, becoming the first example of an MVR operating in South Africa.
Cementos Progreso installs new conveyor belt Guatemalan Cementos Progeso successfully installed a conveyor belt to transport limestone to its plant. The new RopeCon aerial conveyor system was installed by Doppelmayr to carry limestone from the nearby quarry into the plant. Four tower structures support a conveyor with a length of 1.6
kilometers, located 200 meters high. RopeCon will transport 2,100 tons of raw materials per hour. The transport system combines the features of a belt conveyor with those of a ropeway, thereby making use of the advantages of both technologies. Deoppelmayr is an Austrian company specialized in ropeway manufacturing.
Loesche vertical roller mills will be installed. Thus, the contract comprises one raw material mill for 654 t / h raw meal with a COPE drive, one cement mill for 445 t / h OPC with a COPE drive, as well as a coal mill for 66 t / h. The raw mill with 1,050 t / h nominal capacity will be the largest raw material mill in the world. With the new COPE drive, which DGKCC decided to be installed in both, the raw material and clinker mill, it will be possible to split the total drive capacity. In addition, Loesche will deliver both mills, the raw material and the cement mill, according to the unique Loesche unification concept introduced in the grinding technology many decades ago. This will provide a favorable solution with respect to DGKCC's supply inventory, as all key parts will be interchangeable between the cement and the raw mill. With this project, DG Khan Cement Company has become a trendsetter, being the first cement plant establishing a single solution for the grinding of raw material and cement with vertical roller mills equipped with the innovative COPE drive technology from Renk AG. This new cement plant at Hub, in Balochistan, will support and add to DGKCC's strategy, as it will become one of the most modern cement plants in the world with the latest, most innovative and effective grinding technology. It is expected that Pakistan's demand for cement will increase due to expected government spending on infrastructure projects. Revival activities may result in additional demand for construction materials.
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EQUIPMENT Eurocement's Voronezh branch installs new filters The Voronezh branch of the Eurocement Group improved its environmental performance due to new filtering equipment. During a scheduled maintenance routine, conducted between March and April this year, the company installed a new filtering system that will reduce its emissions. The pulse cleaning filter furnace was replaced by around 5,000 filter bags with a diameter of 20 centimeters and a length of eight meters, supplied by BWF Envirotec.
BBMG installs new system to monitor energy use in cement plant
The replacement is part of the “Veronezh Oblast Year of Ecology plan of action”, being carried out by the Voronezh’s Department of Natural Resources in close collaboration withEurocement Group.
The new system will be installed by Enersize, and will measure energy consumption and make efficiency analysis
According toAlekseyaEgorova, textile fiberglass sleeves with ePTFE membrane provide efficient filtration for two years. It is worth noting that in January 2017 the Voronezh branch of Eurocement Group was awarded a diploma by the Federal Service for Supervision of Natural Resources in the Voronezh region "for active participation in the implementation of measures to reduce air emissions and improve environmental security in the Voronezh region”.
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BBMG Liulihe Cement Plant will install a new system to monitor energy usage.
Russian company produces 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
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on the usage of the industrial compressed air system in the plant. Sami Mykkänen, CEO of Enersize, is satisfied with the new contract, commenting on the relevance of its client – “BBMG fits this profile perfectly with many plants all over China and we are happy that we now have secured a first project with them”. 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 scheduled for the second quarter of 2017.
EQUIPMENT Cement McInnis builds new terminal in Bronx The new terminal will spawn for 7,000 square meters and will have a storage capacity of 43,000 tons of cement. It will be able to serve up to 80 trucks per day. The terminal will receive cement situated in Port-Daniel–Gascons, in the region of Gaspésie-Îles-de-laMadeleine, Canada. With its new terminal, Ciment McInnis will tap into rising demand from the infrastructure and housing sector in the region. Over the next years, around USD 60 billion will be invested in infrastructure, while USD 7,7 billion will be spent in reparations in the aftermath of hurricane Sandy.
Loesche delivers cement mills to Algeria A new cement factory in Biskra, near Algiers, will receive two raw material mills until the end of the year. Loesche has already shipped three cement clinker mills to the factory, with delivery scheduled forautumn 2017. Chinese firm CBMI Construction was the responsible for the order.
The Algerian cement sector is undergoing a large expansion, with capacity expected to reach 24.5 million tons per annum, up from 19.5 million tons now. The country is trying to achieve selfsufficiency in the cement sector and is already considering exporting part of its production as soon as it achieves a surplus.
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analyst recommendations Cemex
HeidelbergCement The consensus forecast amongst 27 polled investment analysts for HeidelbergCement advises investors to hold their position in the company, as of May 5. This is the consensus forecast analyst recommend since the sentiment of investment analysts was deteriorated
on Nov 11, 2016, when the consensus forecast advised that HeidelbergCement would outperform the market.The 24 analysts offering 12 month price targets the company have a median target of 91.65, (a 2.52% increase from the last price of 89.4) with a high estimate of 117.00 and a low estimate of 78.00.
CRH As of May 5, the consensus forecast amongst 21 polled investment analysts covering CRH advises that the company will outperform the market. This has been the consensus forecast since the sentiment of investment analysts improved on Jan 27, 2016. The previous consensus forecast advised investors
Titan Cement Company As of May 0, 2017, the consensus forecast amongst 12 polled investment analysts covering Titan Cement Company advises that the company will outperform the market. This has been the consensus forecast since the sentiment of investment analysts improved on Apr 18, 2016. The previous consensus
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to hold their position in the company. The 17 analysts offering 12 month price targets for CRH have a median target of 35.00, with a high estimate of 39.00 and a low estimate of 30.50. The median estimate represents a 1.36% increase from the last price of 34.53, according to Financial Times. forecast advised investors to hold their position in Titan Cement Company. The 12 analysts offering 12 month price targets for Titan Cement Company have a median target of 23.95, with a high estimate of 27.00 and a low estimate of 21.00. The median estimate represents a -3.62% decrease from the last price of 24.85, according to Financial Times.
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The consensus forecast amongst 10 polled investment analysts covering Cemex advises that the company will outperform the market. This has been the consensus forecast since the sentiment of investment analysts improved on Nov 26, 2012. The previous consensus forecast advised investors to hold their position in the company. In terms of prices, the 8 analysts offering 12 month price targets for Cemex have a median target of 20.35 (a 21.47% increase from the last price of 16.75), with a high estimate of 21.92 and a low estimate of 10.58.
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BUZZ
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TOP BMWEEK STORIES activity 1. United States lime and minerals reports higher IRAN revenue 2. 3. 4. 5. 6. 7. 8. 9.
IHI inaugurates heavy concrete factory in Myanmar Holcim Romania launches self-compacting concrete Carmeuse lime and stone investing in a calcite plant Imerys improves results in the first quarter Martin Marietta materials reaches record consolidated net sales in 1Q2017 HeidelbergCement acquiring Cemex operations in the US Rio Tinto supplying manufacture by-product for concrete production Saint-Gobain extends offers to acquire Sika stake
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FLSmidth receives order for new cement plant in Egypt 2. Cemex opens new branch for venture capital 3. Cemex fails to sell stake at Cementos Chihuahua 4. Cimaf opens new plant in Côte d'Ivoire 5. Heidelberg raises Italcementi synergy target 6. HeidelbergCement builds new clinker unit in Germany 7. New cement project in Söke, Turkey 8. CRH to make large investment in new acquisitions 9. LafargeHolcim launches new plant in Cameroon 10. Siam City cement buys another cement company in Vietnam
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