GLOBAL CEMENT INDUSTRY KNOWLEDGE
ISSUE 41
NOVEMBER/DECEMBER
LEADERS Q&A
Norman Greig Secretary General of THE World Cement Association
Insight Analisys
Cement FOB prices continue to decline CW RESEARCH
Trade Price Report 3Q2017 Global cement prices remain volatile
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Analysis
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Market Coverage
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Interviews
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People
GLOBAL CEMENT TRADE PRICE REPORT The Global Cement Trade Price Report (GCTPR) provides a must-have, data-centric assessment of monthly and quarterly prices (USD per ton) for cementitious products - gray cement, white cement, clinker & granulated slag (GBFS): Ex-works and retail prices Trade pricing Together with insights on cement producers' pricing strategies and important price revisions, the GCTPR provides insights and data on domestic cement pricing for over 30 key markets, as well as international trade prices for 70+ cement markets.
Analysis and forecast of global cement trade.
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The report not only provides historical monthly and quarterly price information, but also offers a three-month forecast for each country. The unique report is built on CW Research’s long and proven expertise in the cement industry. The GCPR is intended as a tool for understanding the national, regional and international cement pricing environment and the competitive price scenario in key markets around the world. CEM ENT • B UILDING M ATERIALS • DRY BULK CARGO & SHIPPING • CHEMICALS • INDUST RIAL MINERALS • INDUST RIAL EQ UIPMENT • PAPER & PULP • PETCOKE research.cwgrp.com •
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STAFFBOX The consolidation of the cement sector The 41st issue of CemWeek Magazine is the last one in 2017. As the year draws to an end, CW Research’s team of experts keeps taking an attentive look at the global cement industry, by addressing relevant dynamics and anticipating crucial trends. Keeping up with the latest developments in the ever-evolving cement sector also entails listening to key personalities who are keen on giving it shape and cohesion. Thus, this issue features a central interview with Norman Greig, Secretary General of World Cement Association. CemWeek’s conversation with the Secretary General has resulted in an overview of the most relevant issues for the industry. Main economic challenges, new markets, as well as sustainability practices were some of the topics that guided this interview. Additionally, CW Research looks back on 3Q2017, tracing the evolution of global cement ex-works and trade prices, volumes and flows. Besides presenting relevant figures, the team of experts offers an outlook on the fourth quarter of the year, and reflects on the impact of current and future pricing trends. As usual, this issue also covers 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, as well as regional developments, equipment, and construction projects. In a sector that keeps evolving and consolidating, CemWeek will maintain its focus on the industry main developments, in order to untangle, year after year, the complexity of a market in permanent change.
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CEMWEEK PUBLISHER HEAD OF CW GROUP RESEARCH
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contents FEATURES 4 Leaders Q&A: Norman Greig In an exclusive interview with CemWeek Magazine, Norman Greig, the Secretary General of World Cement Association, discussed the main main economic challenges, strategies, alternative fuel usage and sustainability practices
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14 CW Research:World cement prices to struggle in 4Q2017 Despite the progressive stabilization of cement demand in 2017, world cement prices are expected to remain volatile until the end of the year 22 Insight Analysis: Cement and clinker prices struggle in November As 2017 draws to an end, cement and clinker FOB prices continue to display a declining trend
14 DEPARTMENTS 1 EdiTor's letter The consolidation of the cement sector 3 numbers in brief Major cement companies report mixed results for the first nine months of 2017
28 cw group meeting agenda CW Group’s upcoming events
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24 people People on the move 26 Equipment Equipment and notable projects
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29 BUZZ Top 20 CemWeek and BMWeek stories
numbers in brief
Major cement companies report mixed results for the FIRST NINE months of 2017 Yet higher cement pricing environment did not enable positive results for all of the major cement producers in the world When looking at the performance of some of the largest cement companies in the world during the first nine months of 2017, we are seeing different performances, mostly affected by the companies’ pricing strategies and geographical footprint. Heidelberg Cement registered a 22 percent increase in revenue in USD terms to USD 14.7 billion across its operations. Cement and clinker volumes for the group increased by 29.2 percent during the none months period, while pricing also improved in the main markets of the group. CHART: 2Q2017 v. 2Q2016 Revenue (mn USD) 9M2016
25,000
9M2017
20,000 15,000 10,000 5,000 LafargeHolcim
HeidelbergCement
Cemex
Votorantim
Source: CW Group, Cement companies’ quarterly reports and presentations
Though with a smaller operational footprint, Cementos Argos achieved an increase in revenue of 20 percent during the first nine months of the year 2017. Strong performance in the US market, as well as strict measures that limited operational costs in Colombia led to the result. LafargeCement’s revenue for the nine month period fell by four percent year-on-year. If in the first nine months of 2016 the company sold 177.2 million tons of cement, only 155.8 million tons were sold in the same period of 2017. Cemex’s revenue remained flat compared to the first nine months of 2016, as the company’s cost of slaes increased by 1.4 percent, reflecting higher energy costs. Moreover, the company’s good performance in the US and Mexico, markets where both sales and prices had increased in the period, were offset by decreases in Egypt, UK and Colombia. CHART: 2Q2017 v. 2Q2016 EBITDA margin (%) 9M2017
9M2016
Cementos Argos Cemex LafargeHolcim HeidelbergCement 5%
10%
15%
20%
25%
Source: CW Group, Cement companies’ quarterly reports and presentations
In terms of EBITDA performance, Cemex registered a six percent decline compared to the first nine months of 2016, due to lower contributions from Europe, Asia, and Latin America. www.cemweek.com
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Leaders Q&A
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Norman G r e i g World Cement Association S e c r e ta r y G e n e r a l World Cement Association has a strong focus on environmental responsibility. The Association creates platforms of cooperation, joint analysis and best practice sharing within the industry worldwide.
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Leaders Q&A Norman Greig, the Secretary General of World Cement Association, gave an exclusive interview to CemWeek Magazine to discuss topics such as the main economic challenges, strategies, alternative fuel usage and sustainability practices. Q: The World Cement Association (WCA) plays a significant role in the industry. How do you characterize the evolution of WCA to date? A: The global cement industry has faced major issues over the last decade, such as new emerging players, significant overcapacity, sustainability and climate concerns, improving the sector’s image around the world, digital disruption as well as positioning the industry as a global contributor to growth and social welfare. Since global problems require global solutions, we think that the need for an effective global organisation, providing leadership and guidance to the cement industry worldwide, is very clear.
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The World Cement Association was established to meet this need. It is the only independent association whose main mission is to represent the cement industry and its stakeholders on a global basis, with a single voice. To fulfil the role of global representation, we will create platforms of cooperation, joint analysis and best practice sharing within the industry worldwide.
WCA is structured to independently represent all levels of the cement industry These kinds of activities will give the WCA a strong voice in international forums, where it can speak clearly on behalf of the global cement industry and help position it as a responsible industry committed to fair practices in its dealings with all stakeholders.
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WCA is structured to independently represent all levels of the cement industry and promote the overall interests of individual cement companies. It currently has founding members located in 30+ countries, which shows the high level of interest shown by industry players in the fresh initiative. However, we expect that WCA will soon become recognised as the leading voice of the cement world, being the largest independent association of the cement industry in terms of number of countries represented. One of the important characteristics of the WCA is that the structure of the Association does not allow a few companies or countries to dominate discussions or decisions. Every corporate member has one vote in electing board members, which in turn will allow WCA to be a truly independent voice for the cement industry. Leaders of the cement industry in emerging markets, in China, India, and Africa all have a chance to express their views on a global scale and make a difference.
In this respect, the theme “Future Strategies for the Cement Industry” will be discussed at the WCA World Cement Conference to be held in December 2017 in London for the first time (in association with Intercem). We sincerely believe that this conference, as a first step towards creating an international platform where the common interests of the global cement industry are shared and discussed, will provide a unique and constructive experience for all industry participants. Q: For better and more effective action in the European cement market, what strategies has World Cement Association adopted? A: The WCA is concerned with global issues (and regional issues which have a global effect) and thus does not define a strategy for action specific to the European cement market. The
European
cement industry is well represented by Cembureau and WCA
shares some common topics such as public relations; energy; sustainability; resources and innovation. The World Cement Association’s aim is to co-operate with regional and national industry associations, and not knowingly compete with or duplicate the effort of any such organizations at a regional level. We welcome and encourage all regional and national cement industry associations to become part of WCA as Affiliate Members and help promote the global cement industry. Q: What are the current most pressing challenges for the cement industry? A: The global cement industry, employing 1.2 million people and having a production capacity of around 6.2bnt, suffers from substantial overcapacity, which is currently the biggest challenge for the industry. Since the turn of the century, driven in large part by China’s domestic boom, global cement capacity has exponentially increased, nearly tripling over the last two decades. Meanwhile, the number of producers has grown to more than 5000.
Although increased capacity was mostly absorbed during periods of high demand, a longer than expected global recession following the 2008 global financial crisis combined with major regional political and economic instability and sluggish demand, to leave significant global excess capacity in recent years, totaling approximately 2bnt.
Overcapacity (...) is currently the biggest challenge for the industry. Currently, China has the greatest excess capacity with 895Mt representing 45% of global overcapacity, of which only a fraction is earmarked for export due to higher inland logistics costs. Meanwhile, Europe has a capacity-toconsumption ratio of 200%, the highest in the world. In addition to low demand in the region,
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Leaders Q&A political pressure to reduce CO2 emissions has kept capacity utilization rates at low levels. Developing regions, such as India, South East Asia and Sub-Saharan Africa, have seen significant capacity growth over the last decade, more than twice the growth in consumption. Despite a capacity-toconsumption ratio of more than 150% in these regions, further capacity expansion is still anticipated in the following years. Political turmoil and low oil prices over the past three years have severely reduced domestic cement demand in the Eastern Mediterranean and Middle East countries, resulting in large excess capacity. In addition, the lack of export markets in neighbouring countries across the Eastern Mediterranean region has created a regional exportable surplus. Q: What can be done to make alternative fuel usage more attractive to cement companies? A: There are significant benefits for the environment, public and cement industry from using alternative fuels. The environment can be cleaned from garbage, the public can avoid landfills, the cement industry can reduce operating costs. Their smart use improves overall sustainability. It is a win-win situation. If alternative fuels (AF) are so beneficial, why does anyone still use conventional fuels? There are a number of constraints: 1. Availability and stability of supply chain. Some AFs are only available in low volume globally and vary regionally. For example, used vehicle tyres have similar calorific value as high quality coal. In many countries used tyres are predominantly discarded in unauthorized landfills or sometimes recycled in other ways. Workable collecting systems must be established.
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2. Fuel quality and consistency. AFs are derived from municipal-, industryor commercial waste. In order to be of acceptable quality, they must be processed to become a useable fuel for the cement industry to avoid production-, quality- and emission problems. Efficient waste processing plants need to be built, but they need money, time and a political will. 3. Unreliability of AF volume and quality delivery. Waste processing plants need to deliver constant AF quality and volume. They need to assure both is guaranteed in order to avoid problems in cement plants. 4. Direct and indirect costs. AF must be cost-competitive in order to be used since additional investment and operational costs in cement plants are considerable. 5. Unjustified social opposition based on fears of emissions and contamination. 6. Considerable regional variations in attitude and understanding of environmental authorities.
There are significant benefits (...) from using alternative fuels The use of AF varies significantly globally. The CSI GNR data collection of 2014 put the global AF replacement level at 16% whereas in some European countries the average replacement in an industry sector was up to 60% and up to 95% in individual cement plants. This shows there is potential if the infrastructure around waste is available. The majority of AF use starts in the cement kiln calciner where the quality requirements are less. Use of AF in the
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main burner requires higher quality. It means finer in particle size, in fluid form and of significant heat value. However, to gain the full benefit of AF, cement manufacturers need to use it in the main burning process as well. Numerous researches suggest that none of the alternative fuels alone could fulfil the entire thermal requirement of cement manufacturing because of either low calorific value, consistency or high contaminants. However, a smart blend of different AFs can in some cases achieve 100% replacement and considerably lower operating cost. For example; Cemex UK’s South Ferriby plant has 100% replacement by alternative fuel, which is a blend of industrial liquid waste (paint, solvent, etc.) and Climafuel, which is made from household residue and commercial waste. RDF (Refuse Derived Fuels) are the most plentiful AFs with about 1400 Mtpa available globally. Quality and production control of these materials need to be improved especially in respect of consistency, heating value, moisture content and foreign object removal. There will be many factors which make it difficult to predict future usage of alternative fuels. AFs are subject to supply and demand factors just like any other material. Different types of waste are more likely to be incorporated into other processes and consequently become more costly. According to CSI/ECRA-Technology Papers 2017, it is assumed that alternative fuel prices will rise up to about 30% of conventional fuel costs in 2030 and 70% in 2050. The key drivers are less likely to be technologic but more social, economic and regulatory such as banning of landfill. What can be done? • Expand waste collecting and processing systems to make AF available
•
• •
Develop and disseminate RDF/AF quality control systems across all of the collecting, supply and end delivery chain. Assure competitive pricing for RDF/ AF Improve burning and emission control by following and evolving BAT (Best Available Technology).
The cement industry has to continue to communicate with communities and manage public perceptions. This includes transparent Corporate Social Responsibility reporting on usage and emissions. It is part of WCA’s aims to promote the use of sustainable materials, and alternative fuels are very high on the list.
There will be many factors which make it difficult to predict future usage of alternative fuels Q: The use of other constituents in cement and the reduction of the clinker-to-cement ratio means lower emissions and lower energy use. What is being done by companies to achieve this goal? A: Data collected by CSI GNR for 2014 indicated a worldwide average clinker to cement ratio (CCR) of 75% or about 1000Mt alternative material in 4000Mt cement. The CCR varies significantly from region to region, but is typically 65% to 95% in 80% of the data collected. It has been reported that average CCR for China is 58%.
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Leaders Q&A There are two broad classes of clinker replacement materials: • Latent hydraulic and/or Pozzolanic such as granulated blast furnace slag (GBFS), pozzolans, fly ash from coal powered plants (FA); • Inert fillers such as limestone.
especially in developed countries, will affect the availability of GBFS and Fly Ash in the future. A major threat to the cement and concrete industry.
Clinker replacement materials have different effects on cement and concrete performance and so intended use is an important consideration. However, the first issue is availability and consistency of the supply chain. This varies greatly regionally and changes with time. The most important and most often used clinker replacement material, granulated blast furnace slag, is available where steel plants are. Pozzolans are only available in relatively few countries where there has been volcanic activity. Fly Ash is subject to power plants following most profitable times to go on the grid. A further reduction of steel making and coal fired power plants,
The cement industry can reduce operating costs
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Inert fillers such as very finely ground limestone is plentifully available and a suitable clinker replacement if added in a very controlled way. But the potential is considerably smaller compared to GBFS or FA, since it has no hydraulic properties whatsoever. It serves as void fillers.
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Price is always a major consideration of those clinker replacement materials. Therefore, fluctuating prices influence the use of those materials considerably and other materials might become more lucrative to use. Another critical issue is market acceptance and conformity with regional standards. It needs a sustained effort by cement makers, users, specifiers and regulators to get new cementitious products included in national standards and accepted in the market place. Intensive research to reduce the amount of clinker in cement, thus improving the clinker to cement ratio and reduce the CO2 footprint is ongoing in academic circles and company laboratories. The results are promising. One example is the Ecobinder project set up by EU with research being carried out in industry and universities on reducing
CO2 emission by 30% in the production of Belite-Ye’Elimite-Ferrit (BYF) class of binders. In recent years, another potentially significant development has happened in LC3 or Limestone Calcined Clay Cement. This blends calcined metakaolin with limestone using the same materials and most existing cement plant processes. It is claimed that the synergy between the metakaolin and limestone allows clinker content to be halved with resultant saving in cost and carbon emission. Unlike the other replacement materials both limestone and clay are abundantly available. Q: WCA is committed to the sustainability of the cement industry. What is the World Cement Association Sustainability Effort? A: The WCA seeks to co-operate with the WBCSD, Cement Sustainability Initiative
and regional Associations.
and
national
Cement
robust KPIs are an essential part of the sustainability matrix.
WCA’s key focus issues include: • Positioning concrete as the material of choice for sustainable construction • CO2 and climate issues • Responsible use of fuels and raw materials, circular economy • Local impacts on land and communities (environmental and social impacts)
The main value that WCA wants to bring is the wider dissemination of best practice relating to sustainability. WCA is a worldwide organisation that represents a range of stakeholders and will encourage the deployment of sustainable practices across the globe with an inclusive, international forum.
WCA recognizes the value and importance of these issues and associated tasks. However, WCA does not envisage setting up parallel task forces but rather to focus on specific issues of members and stakeholders, and to work collaboratively with other bodies.
There are many old plants in the world which are not environmentally advanced or where practices do not have the same focus on sustainability as may be the case elsewhere. Such cases will not be brought to CSI Charter level in one step but will first need education, change of priorities and then gradual improvement. The financial benefits of some environmental improvements should always be highlighted. WCA will request case studies
WCA supports the Global Reporting Initiative and GRI Sustainability Reporting. The availability and use of appropriate and
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Leaders Q&A of such improvements to be published on the website. WCA will promote closing of obsolete unsustainable cement production units and replacement of old technologies throughout the world. WCA members who are representatives of emerging markets will have different priorities and capabilities compared to mature market players and WCA will aim to help them in initiating many small but concrete steps towards building better societies around the world.
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Q: What will happen with the highly oversupplied markets? A: In the long term, current excess capacity in developing regions is expected to shrink to some extent as demand for urbanisation increases over time. However, mature markets like Europe and Mediterranean Basin will continue to struggle with this surplus for a longer time, even though capacity growth will be extremely limited in these regions. However, eventually it is predicted for mature markets that in landlocked areas only eco-friendly, hightech and optimised plants will remain, while coastal areas will meet their needs through grinding mills and clinker imports.
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Q: What are the expectations for the cement industry until 2020? A: First, if the global industry does not take any immediate and drastic measures, the overcapacity problem will continue to exist in the industry in 2020 and beyond. On the other hand, in terms of industry leadership much has changed in the last 10 years and there are new, emerging leaders of the global cement industry today. The Chinese domestic boom taking place since the 1980s has seen Chinese company CNBM/Sinoma, capture the world’s number one spot, replacing LafargeHolcim as the largest cement producer. With a capacity of more than 400Mt, it single-handedly exceeds several countries’ total production. Compared to
2005, when Conch was the only Chinese producer in the top ten globally, five more Chinese cement players, including CNBM, Jidong and Shanshui, have made the list in 2016. It is clear that we are approaching a turning point for the global cement industry and there is no doubt that Chinese and other independent cement companies in particular hold the keys to the future. Furthermore, the industry still appears to be slow in following the rising trends of the era: building sustainability and digitalization. Therefore, these areas still offer big opportunities and are likely to be central to achieving a better public image of the industry, greater cost efficiency and promoting concrete more generally.
Q: The Chinese cement market faces the big challenge of huge capacity surplus. What do you think about it? Can you point solutions that can help the market address this problem? A: Following the shift in China’s economic policy, from export-driven to domestic consumption-led growth, and a relative slowdown in GDP growth, normalisation in the Chinese cement industry has become a more crucial issue. As previously mentioned, China currently has the greatest excess capacity with 895Mt representing 45% of global overcapacity and, despite recent positive signs in the industry, it is clear there is a still long way for the country to go.
In addition to current market dynamics in the country that encourage/force players to think about domestic or outbound M&As and reduction of idle capacity for efficient resource allocation, we think the central government’s overall policy, pervasive planning and incentives, the governmentlinked investment funds together with the guidance of the national cement association will be the main drivers of the normalisation process through M&As and capacity reduction. The focus on reducing obsolete, inefficient surplus production capacity and optimizing capacity utilization, along with strict environmental concerns, will allow China to provide a cost-competitive product and a cleaner environment for the people of China.
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FEATURE
CW RESEARCH:
World cement
prices to struggle
in 4Q2017 Despite the progressive stabilization of cement demand in 2017, world cement prices are expected to remain volatile until the end of the year
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FEATURE
C
ement demand is gradually picking up, after a challenging first half of 2017. Likewise, trade prices have recorded a stable trend, while ex-works rates have displayed improvements in key markets such as North and Central America, and Europe. Meanwhile, the rising cement consumption in China has helped boost prices, whereas Brazil continues to drag South American rates down, according to CW Research’s October update of its Global Cement Trade Price Report (GCTPR 3Q2017). GLOBAL CEMENT DEMAND
Last year, global cement demand increased by more than two percent, while global exChina cement demand rose by less than two percent. For 2017, global demand is expected to stay stable and grow by two percent as well. Brazil emerged as one of the markets that recorded a declining trend in cement
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consumption so far in 2017, with demand declining around 8.2 percent in August when compared to the same period the previous year. The 0.6 percent increase in the cost of construction per square meter may explain the contraction in cement demand, as well as a 0.2 percent drop in the construction sector output. Following a recent downward revision of the country’s GDP growth, from 0.3 to 0.2 percent, Brazil remains the worst performing economy in South America in 2017.
"Brazil remains the worst performing economy in South America in 2017" Between January and June 2017, Turkish cement demand suffered a 4.4 percent cutback when compared to 2016. Harsh weather conditions at the beginning of
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the year impacted the country and had a major effect on cement production and demand. Furthermore, the continuous influx of refugees from Syria keeps pressuring the Turkish economy. From the beginning of the year through July, cement demand in the United States increased 2.4 percent relatively to the corresponding period a year ago, backed up by a year-on-year increase of 2.1 percent in housing starts. Moreover, privately-owned housing units authorized by building permits rose 5.1 percent above June 2016 figures. Until the end of 2017, demand for construction permits is expected to rise above the 4.0 percent figure, in line with the upturn in construction activity. Meanwhile, in the first seven months of the year, Indian cement demand declined 6.5 percent when compared to the same period of 2016. The country’s infrastructure sector recorded a 19-month low in June, resulting in a reduced cement output. The real estate sector has been facing a decrease in demand, while housing prices have increased in thirtythree large cities.
CEMENT DEMAND 2017, YEAR-ON-YEAR
2Q2017 YoY -30%-23% to -15% -15% to -8% -8% to 0% 0% to 8% 8% to 15% 15% to 23% 23% to 30% 30%+
Source: CW Research
MEDIAN FOB PRICES EVOLUTION Median FOB prices have recorded a stable trend in the last months. A marginal recovery was observed in December 2016, but then rates registered a decrease, and stabilized around below
60 USD per ton. From the beginning of 2017, median export prices for gray cement reached their highest peak in May, when they went up marginally by around 1 USD per ton.
In September 2017, CW Research estimates preliminary FOB prices to have reached around 59 USD per ton. However, estimated price points are about to change more materially in the next GCTPR update.
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FEATURE Moreover, top prices for more expensive exporters have decreased. The highest rates have declined from around 150 USD per ton to around 140 USD per ton. Bottom prices, however, have been increasing in the past couple of months. The lowest price recorded this year happened in January, when it stood at USD 31 per ton. Markets selling the cheapest cement included Turkey, Iran, and Asian markets such as Korea, Vietnam and Japan.
GLOBAL TRENDS IN GRAY CEMENT FOB PRICES
a low base comparison since volumes were significantly lower. In the previous quarter, some prominent exporting markets, like Spain, were moving smaller volumes during the Easter, which significantly impacts global trade. Also, CW Research noticed some countries display patterns that repeat every year. For instance, in the beginning of the year imports are much lower or non-existent in the United States.
Global gray cement FOB prices have been stable throughout 2017. From March onwards, rates began to improve marginally, mostly because of the start of the construction season in many markets, which in turn caused demand to rise. Meanwhile, analyzed global traded volumes for the commodity increased from the previous quarter by almost 13 percent, a behavior that can be explained by seasonality. The first quarter represents
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Chinese producers also exported much fewer cement volumes in the first quarter, which
also impacted global volumes heavily. However, in the second quarter of 2017, China replaced Turkey and became the leading exporter of gray cement for the period, accounting for 15 percent of total traded volume. The Turkish market was the second leading exporter, making up 12 percent of total traded gray cement. Both exporters recorded volume decreases on a year-on-year basis, yet recovered on a quarterly basis. Thai cement exports dropped around 24 percent compared to the same period last year. The exporting scenario in the country is changing slightly since the main importing destinations, such as Myanmar and Laos, are increasing capacity and progressively becoming self-sufficient. Greece stood as the fourth largest exporter of gray cement during the quarter, with a trade share of seven percent. For the third quarter of the year, Chinese cement exports continued increasing, while in Greece cement exporters are currently facing high pressure from other Mediterranean Basin players. Gray cement exporters
recently started losing their share in large importing destinations, such as the US and the United Kingdom.
FOB PRICES OUTLOOK Most regional markets are expected to record price decreases in the fourth quarter of 2017, with the largest ones to be felt in the Western Europe, Scandinavia and Baltics regions. The only regions that are projected to witness some pricing improvements are Asia-Pacific-Japan, North America and the Caribbean.
"Median FOB prices have recorded a stable trend in the last months" North American prices are going to be mostly driven by construction activity in the US. In North America and the Caribbean, FOB rates for gray cement are expected to hover around 92 USD per ton. By December 2017, global export prices in the Asia-Pacific-Japan region are expected to improve by two percent compared to
June 2017. CW Research projects regional rates to average 47 USD per ton in that period. Currently experiencing a strong pricing trend, the Indian market is moving the regional average upwards, as the effects from demonetization wane off. A marginal decline is expected in the Middle East, as rates are projected to go down by one percent in December 2017, compared to June. However, regional prices have been slightly recovering on a year-on-year basis. In the Med Basin region, cement prices in the third quarter stood at around 53 USD per ton and are expected to contract further by one percent in December when compared to September. Regional exporters keep struggling with decreasing prices, as importing markets are oversupplied and, therefore, displaying slow demand. For instance, in addition to slowing down due to a low oil price environment, which impacted government spending, the North African market became self-sufficient. In Western Europe, cement trade prices are expected to fall by around 1.9 USD per ton in December 2017 compared to September, representing a decrease of more than around two percent.
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FEATURE EX-WORKS PRICING TRENDS In the second quarter of 2017, cement exworks prices displayed positive trends in North and Central America, as the region prospers amidst a positive construction outlook and growing demand. Similarly, Europe observed a modest positive development in pricing in the second quarter when compared to the previous quarter. Nonetheless, cement prices were still below last year’s rates, in markets such as Germany or the UK. In Eastern Europe, this trend was more evident, with companies applying price increases in Russia, Ukraine and Poland.
In the Middle East, low oil prices are still hindering the regional demand for cement, leading to additional price declines in Saudi Arabia. Amidst a low demand trend, the country continues to struggle with overcapacity. In Egypt, the impact of the currency devaluation, following the free flow of the Egyptian pound, continued to strongly impact cement rates. While domestic retail prices are on the rise, driven by strong inflationary trends, in USD terms, Egyptian prices continued to drop.
On the other hand, in Southeast Asia, rates have remained pressured, as many markets such as Vietnam and Indonesia continued to suffer from overcapacity, resorting to exporting unsold stocks. These practices weighed down prices in importing markets such as the Philippines, pushing domestic players’ profit margins downwards.
"In 2Q, ex-works prices displayed positive trends in North and Central America"
YTD Cement demand growth (%) Aug'17
Source: CW Research
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In South America, demand remains subdued in major economies, such as Brazil, driving factory prices downwards. Concurrently, in Argentina, prices have ramped up, backed up by strong public infrastructure projects, initiating a recovery for the cement industry in the region. China’s growing demand for cement is reflecting on higher prices in the domestic market. In the second quarter of the year, cement rates in the country reached over 38 US dollars. Similarly, in France, a growing construction activity translated into a more positive scenario for domestic producers, with prices growing modestly. The Indian market was the standout performer in terms of ex-works prices in the second quarter of the year, as rates recovered from the rupee demonetization. Domestic producers have reported positive trends in demand throughout the country, and retail price indices are reflecting a surge in domestic pricing in local currency.
In Mexico, the rising trend in prices observed in the first quarter of the year remained in the second quarter, despite local construction companies’ threats to import cement in response to its rising costs.
"Most regional markets are expected to record price decreases in 4Q" In Russia, cement prices are on the rise, following the country’s economic rebound after the crisis. Construction activity has strengthened, driving demand and rates upwards. In the US, a growing demand and a positive pricing environment, characterized by low competitiveness, are allowing for a rise in prices.
EX-WORKS PRICES OUTLOOK An overall recovery is expected in terms of retail price indices, following positive pricing and construction trends in major cement markets, such as the US and China. In India, prices are expected to continue rising, although at a slower
pace, as the domestic economy overcame the currency devaluation challenges. Similarly, in France, CW Research expects an increase in ex-works prices, as cement demand has been rising in the second half of 2017. Within the Mediterranean Basin, cement rates are expected to remain pressured in Tunisia, as the country struggles with overcapacity. Meanwhile, in Egypt, prices in USD are projected to gradually recover, as the currency stabilizes and gradually appreciates against the US Dollar. Lastly, in South America, Brazil is expected to record a modest quarter-on-quarter recovery, although ex-works prices will remain below previous years’ levels. Low demand and overcapacity are still affecting the country, thus hindering prices in the long term. It is possible that other governments in the region will follow Argentina’s module, and increase their investment in infrastructure, in order to break out of the negative construction cycles in the industry. Nevertheless, this possibility remains to be seen.
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 150+ page report, published on a quarterly basis, serves as the industry go to source for monthly price data for about 60 individual markets worldwide, including multiple cornerstone data series: import, export, ex-works and market prices. Additionally, the GCTPR includes extensive discussion of key players’ price strategies as well as trade price forecast and select trade volumes for each country. The report also provides regional price indices as well as a quick review of trading dynamics and drivers in the different regions.
More information about the report can be found here: http://www.cwgrp. com/research/research-products/ product/1-global-cement-trade-pricereport
For more information and placing an order, please contact Liviu Dinu, Market Services & Marketing Consultant, CW Group (Europe), by phone at +40-74467-44-11, or e-mail at ld@cwgrp.com.
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November/december August / September 2017 2016
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insight analysis
Cement and clinker prices struggle in November As 2017 draws to an end, cement and clinker FOB prices continue to display a declining trend in the Persian Gulf and Arabian Sea, and the Mediterranean Basin regions.
In November, FOB prices for bulk ordinary Portland cement recorded a contraction compared to the previous month, in the Persian Gulf and Arabian Sea region. Meanwhile, prices for prompt deliveries of bulk ordinary grade clinker decreased by a single digit in the same period.
Trade-wise, overall cement sales in Pakistan registered a double-digit expansion compared to the same year-ago period.
According to CW Research’s Cement and Clinker Persian Gulf–Arabian Sea and East Africa Price Assessment, East African CFR prices for bagged cement dropped by a marginal percentage when compared to the previous month.
Cement and clinker prices dropped monthly in the Med Basin region, reflecting the tightening competition in the region
According to Ana Almeida, Analyst with CW Group’s European team: “Persian Gulf traders are struggling with overcapacity and a seasonal decrease in demand at the end of the year, but remain hopeful that domestic market demand will pick up, as international markets subdue.”
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In the Mediterranean Basin region, FOB prices for prompt deliveries of bulk ordinary Portland cement fell when compared to the previous month. Similarly, export prices for prompt deliveries of bulk ordinary grade clinker contracted marginally, according to CW Research’s November update of Mediterranean Basin cement and clinker prompt delivery cargo price assessment.
“Cement and clinker prices dropped monthly in the Med Basin region, reflecting the tightening competition in the region. As main producers ramp up production aiming to increase exports, prices could be further affected,” observed Ana Almeida. When it comes to cement trade flows, in Turkey cement exports are expected to maintain stable this year. Meanwhile, the Algerian domestic market is approaching overcapacity and thus preparing to start exporting.
About the report CW Research’s Cement and Clinker Price Assessments are monthly price markers, offering end-user centric FOB / CIF / CFR pricing information for prompt deliveries of cement and clinker. Based on a continuous dialog with market participants and using a formal methodology, the “Cement and Clinker Price Assessment” product series offers prompt cargo (next 3060 day deliveries) pricing insights, covering four distinct cement and clinker price markers. The new offerings include monthly updates for prices, cement market news and an overview of key developments that are crucial for those involved in the cement and clinker trade to understand. CW Research’s leading role in the global cement and clinker sector forms the underpinning for the monthly price assessment.
More information about the report can be found here: http://www.cwgrp. com/research/research-products/ price-assessments/category/26cement-clinker
For more information and placing an order, please contact Liviu Dinu, Market Services & Marketing Consultant, CW Group (Europe), by phone at +40-74467-44-11, or e-mail at ld@cwgrp.com.
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November/december August / September 2017 2016
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DEPARTMENTS
PEOPLE PCA Appoints new CEO and President
Michael Ireland has been appointed president and CEO of PCA, replacing James Toscas, who also held the two posts. “I am pleased to be working with Mike as the association navigates challenges, opportunities and changes facing our industry in the years ahead”, said PCA’s chairman Allen Hamblen. “It is my honor to serve America’s cement manufacturers during such an exciting time for the industry,” said Mike Ireland. “Cement and concrete will continue to play an important role in building infrastructure, enhancing the resilience and sustainability of buildings, and supporting the overall quality of life for Americans”. At the same time, the PCA’s board of directors has also integrated several new members, effective today. They include Greg Hale from Capitol Aggregates; Steve Regis, Bruce Shafer, and Mark Wagy from CalPortland Company; Enrique Rozas from Drake Cement, and Michael Ireland himself.
Crown Cement has a new Chief Executive Masud Khan is the new chief executive of Crown Cement Group. Khan has been appointed by Crown Cement Group as its new chief executive, with the nomination having become effective on November 1. Before joining Crown Cement, Khan was CEO adviser at LafargeHolcim Bangladesh. He will continue to serve as independent director on several other
CEO OF Dangote Cement to resign by the end of 2017 Onne van der Weijde will abandon his position as CEO of Dangote Cement. Dangote Cement’s Board of Directors announced that Onne van der Weijde is stepping down from his role a CEO of the company after three years in the position, in order to return to his home country, the Netherlands. Van de Weijde will remain associated to Dangote
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companies such as GlaxoSmithKline Bangladesh, Marico Bangladesh, Berger Paints Bangladesh, and Viyellatex Group. Born in Chittagong, Khan graduated at St Xavier’s College in Kolkata, India. He counts 38 years of professional experience, holding key positions in multinational companies including British American Tobacco Bangladesh, Monrovia Tobacco Corporation, Liberia and PricewaterhouseCoopers in Kolkata. Cement in a non-executive position, starting on January 1, 2018. The Board of Directors thanked van den Weijde for his guidance during an important growth phase for Dangote Cement. For now, J. O. Makoju will act as Managing Director and CEO of Dangote Cement until a successor to van den Weijde is appointed. Makoju is the honorary adviser to the chairman of Dangote, and also the former managing director of WAPCO/Lafarge.
PEOPLE Hakan Gürdal appointed CEO of Ciments Du Maroc On September 19 2017, the Board of Directors of the Moroccan cement company Ciments du Maroc (subsidiary of HiedelbergCement) finalized the decision to appoint Hakan Gürdal as thenew general manager. With this decision, Hakan replaces Nabil Francis, who had assumed this function since July 2016. Hakan Gürdal is a member of the Board of Directors of the German group and is in charge of the AfricaMediterranean Basin region since April 2016. He was also entrusted with managing HeidelbergCemetn’s acquisitions in January 2016.
Géraldine Picaud appointed group CFO at LafargeHolcim LafargeHolcim announced the appointment of Géraldine Picaud as Chief Financial Officer of LafargeHolcim and member of the Executive Committee with effect from 1 February 2018. Ron Wirahadiraksa, the current CFO, has decided to pursue opportunities outside the group. He will remain in his role and provide a smooth handover to Géraldine in due course. Géraldine Picaud, a French national, joins the Group from Essilor International, the world’s leading ophthalmic optics company listed on the French CAC 40, where she has been Group Chief Financial Officer and member of the Executive Committee since 2011. Trained as an auditor,
Géraldine Picaud brings to the group 20 years of experience leading and transforming Finance teams in complex, multinational companies. Prior to joining Essilor, she spent four years working for the ED&F Man group in Winterthur, Switzerland, a key player in the international commodity market, following 13 years as CFO at international specialty chemicals group, Safic Alcan. Jan Jenisch, CEO of LafargeHolcim, said: "I am excited to welcome Géraldine to LafargeHolcim. She is an agile and successful CFO who has worked in the UK, US, France and Switzerland. With a track record in delivering business results and restructuring within complex global business environments, she is the ideal person to join our executive team and drive the next phase of growth in the company."
The company also recently announced its half-yearly results, reporting a turnover of 2.02 billion dirhams at the end of June 2017, up 1.1 percent compared to end of June 2016. The firm ended the first half of the year with a sharp increase in its net profit, which reached 603 million dirhams of 19.8 percent.
Crown Cement has a new Chief Executive Ohlsson has been part of HeidelbergCement since 2014, occupying the post of marketing manager and vice president of Cement in the last years. As the new managing director, Ohlsson succeeds to Jan Gånge, who will become the new finance director and deputy general manager of HidelbergCement Northern Europe. Speaking of his new role, Ohlsson said that “Cementa will continue focused on zero carbon emissions during the lifetime of its products”. He also believes that the company should develop new and better products that meet market needs in today's modern society.
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November/december August / September 2017 2016
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DEPARTMENTS
EQUIPMENT FLSmidth presents new pollution control FLSmidth has presented its new pollution control technology in Turkey. During the 14th edition of TÇMB’s International Technical Seminar & Exhibition, hosted by Antalya between October 10 and October 13, Flsmidth Airtech introduced its update to its fabric filter and ESP technologies. According to FLSmidth, the “new generation of FLSmidthSmartPulse Controller® continuously optimizes and controls the operating conditions of a cement plant’s fabric filters.” Through internet-of-things technology, the new generation monitors and analyses filter conditions remotely. Additionally, the fabric filters DuoClean™ DC2 and DC8 have also received an update, with an innovative octagonal shape that FLSMidth claims reduces emissions in a less expensive way. Finally, FLSmidth presented the CataMax™ and CataFlex® that promise to remove NOx, NH3, VOCs, particular matter and dioxins/furans at the same time.
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Gebr Pfeiffer makes its first shipment to Nepal Kepilvastu Cement Dhyog acquired a cement mill from Gebr. Pfeiffer. The equipment maker will supply a MVR vertical mill to Kapilvastu Cement Dhyog, part of the Ghorahi Cement. The mill will be installed in a new grinding plant in Sonparwa, Barkalpure. Set to be used for the production of ordinary Portland cement, the MVR 3070 C-4 has the capacity to process 70 tons per
Claudius Peters to deliver two cooler conversions in Pakistan The Chinese design institute NCDRI awarded a contract to Claudius Peters for the delivery of two cooler conversions. Askari Cement seeks to convert two grate coolers to modern ETA cooler technology. The 856 S ETA coolers will each be equipped with eight rows of HE-modules and a roller crusher RB 305-3 EM. This installation is expected to position Askari Cement as one of the leading cement manufacturers in Pakistan.
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hour and is equipped with a sifter type SLS 2650 BC and a system of gas-fired heat generation – which also allows the use of other, secondary fuels – to dry the mixture. Gebr Pfeiffer will also be responsible for supplying a 1,250-kilowatts gearbox. The gearbox will be the only equipment coming from the company’s European operation, with the rest being supplied by Gebr Pfeiffer India. The cooler conversion will be carried out at the company’s Nazimpur plant, which has two production lines in operation. Both lines have a total capacity of 8925 t/d producing high cement used for dams, bridges and highways.
EQUIPMENT Loesche involved in new construction project in Egypt The end customer is the Egyptian Cement for Cement Projects Management S.A.E. The planned new plant is located nearly 500 km south of Cairo in Sohag.
India: Odisha Cement receives approval for new clinker manufacturing plant At a public meeting held at Rajgangpur in Sundargarh district (India), the Odisha Cement Limited, an associate of Dalmia Cement Bhart Limited, was granted approval for its proposal to set up a 2.25 million tons per year of cement and 3.0 million tons per year clinker manufacturing plant.
OCL is the largest and one of the fastestgrowing cement brands in Eastern India, having a strong presence in West Bengal and significant inroads in Jharkhand and Bihar. With the setting up of the new plant the company's total capacity in Rajgangpur will propel to 6.25 million tons per year of cement and 5.9 million tons per year of clinker.
Cherat Cement LTD to add power supply output
The Loesche scope of delivery includes a raw material mill with a capacity of 540 t/h of cement raw meal, a cement mill with an output of 350 t/h of clinker as well as a coal mill with an output of 45 t/h. The cement mill for this order is equipped with the COPE drive (COmpact Planetary Electric Drive). The COPE drive concept was developed especially for powerful vertical roller mills with over 6 MW of power by Loesche together with the Renkcompany. Six or eight watercooled cage rotor induction engines drive the grinding table of the mill through a planetary gear. The motor pinion can be engaged or disengaged. The motors are also individually replaceable, which makes the COPE drive very maintenance-friendly. Moreover, the mills can be further operated in case of a breakdown of one or several motors until the operation of a replacement is permissible. This results in a higher plant availability.
Cherat Cement Ltd has contracted Wärtsilä to supply three Wärtsilä 34DF dual-fuel engines capable of operating on both natural gas and heavy fuel oil (HFO). The electrical power generating equipment will be aimed at expanding output generation (total electrical output will be approximately 29 MW) of the cement plant located in Khyber Pakhtunkhwa province in the north-west of Pakistan. The existing plant is also powered by Wärtsilä equipment, consisting of four Wärtsilä 32 engines.
To meet the growing demand for cement in Pakistan, Cherat Cement is further expanding its production facilities, with a new line of 2.11 million tons, which depicts a need for additional power supply.
FLSmidth to supply equipment for Indian cement factory
Cements Limited is one of the largest of its kind in southern India.
FLSmidth (Danish engineering company) was awarded a contract with India Cements Limited to supply equipment for a cement plant in the Indian province of Tamil Nadu. India
The contract value remains undisclosed. The contract is for a plant that can produce 200 tons of cement per hour. The assignment is expected to be completed by the end of 2018. www.cemweek.com
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Flashback NEWS FLOW IN CEMWEEK.COM LAST TWO MONTHS
Russia
10 articles
Pakistan 21 articles
United States 17 articles
China
45 articles
Egypt
38 articles
Indonesia 25 articles
Argentina 16 articles
Higher news volume Lower news volume
cw group agenda / reports The CW Group will be hosting and participating in a number of webinars and conferences. We invite you to join us on-line or in person at the events to discuss our views of the industry. To learn more, please visit http://research.cwgrp.com/meetings
CW group meeting agenda include: December 5, 2017
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World Cement Equipment Market and Forecast
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Global Cement Volume Forecast Report
Global Cement Trade Price Report
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BUZZ
CRH faces competitor on acquisition of Ash Grove Cement
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FLSmidth to present new pollution control
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Cementir sells Italian assets to Heidelbergcement
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Ultratech faces opposition against new cement plant
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Holcim US to set captive solar power unit
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TOP BMWEEK STORIES activity 1. Azerbajian to produce new-generation conIRAN struction materials 2.
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US: Phillips 66’s refining profits surge in third quarter
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Indian Government mulling petcoke plant reopening
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World Cement Equipment Market and Forecast Report
The World Cement Equipment Market and Forecast report addresses important market dynamics and the outlook for equipment used in the production of clinker and cement, in integrated as well as grinding units. Key trends in the main production equipment segments are discussed, sized and forecasted (in USD value and capacity, where applicable), broken down into geographic segments (principal countries, regions and global by equipment type). The study offers a rigorous analysis of past and future cement plant capacity expansions (greenfield and brownfield expansions) with all the production stages covered.
Comprehensive analysis of the cement equipment market.
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This comprehensive and rigorous outlook provides: Detailed regional breakdown of cement plant equipment by unit (required in crushing, power, pyro processing and dispatch) and market size value Information derived from extensive primary interviews and industry expertise A five-year forecast of future equipment needs by type of equipment built through an end-user-informed bottom-up approach Market shares of suppliers within each main segment (i.e., mills, kilns and coolers)
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