CemWeek Magazine: July/August 2018

GLOBAL CEMENT INDUSTRY. KNOWLEDGE.

ISSUE 45

JULY / AUGUST

Carbon Capture & Storage 

Q&A with Phil Hodgson

Managing Director of Calix



Norway’s plan to create a global CCS value chain

White Cement

the rise of emerging markets

Global Economy Is the cement industry ready for a trade war?

News

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Analysis

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Market Coverage

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Interviews

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People Moves

GLOBAL WHITE CEMENT

MARKET & TRADE REPORT The Global White Cement Market & Trade Report provides an in-depth, data-oriented market assessment of the worldwide white cement industry, focusing on industry trends, global movement of product as well as major suppliers and consumer markets. White cement consumption and production figures are discussed, along with import and export data, pricing trends and white cement capacity developments. The research team highlights global leading white cement producers to provide insight into the production capacity, distribution and marketing initiatives.

Comprehensive analysis of the global white cement market.

LET US GUIDE YOU.

This comprehensive and rigorous outlook provides: •

5-year projection of global white cement consumption and production (in tons) through 2023 by country and region

•

White cement plant production facility mapping with manufacturing details and capacity market shares

•

Extensive quantitative information on consumption, usage segments, production, local prices, regional benchmark trade prices, trading facilities and trade-flows, by region and major country

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EDITOR’S NOTE Letter from the editor

The CemWeek Magazine is published by the CW Group LLC PO Box 5263 Greenwich, CT 06831, USA www.cwgrp.com www.cemweek.com

STAFFBOX ROBERT MADEIRA

Keeping grounded

CEMWEEK PUBLISHER HEAD OF CW GROUP RESEARCH

“Those who initiate change will have a better opportunity to manage the change that is inevitable.” When English clergyman William Pollard uttered these words in the 19th century, he was far from referring to carbon capture and storage technologies. Yet, it couldn’t ring truer. When you get to pave a way, you pave it your way and set the rules for those who come after.

Margarida Cunha Editorial Coordinator

LIVIU DINU Mihnea Manea ADVERTISING

Norway is quite aware of that, which is why it is taking time to assess the feasibility of its groundbreaking CCS project. By capturing carbon dioxide emissions from several industrial sources, Norway could lay the foundation for the establishment of the Norwegian continental shelf as a large-scale centralized storage facility for European CO2. Not to mention it could render HeidelbergCement’s Norcem the world’s first cement plant with full-scale carbon capture. In this issue of CemWeek, we crunch the numbers, and analyze the evolution of the project and the business opportunities it can bring. Phil Hodgson, whom we interviewed, also helps us understand the benefits and hurdles of CCS technology. Managing Director at the multi-award-winning Australian technology company Calix, Hodgson and his team secured 3.4 million euros to build a CO2 capture facility in Belgium. His perspective on CCS is grounded and objective, and his words deserve a careful read.

Paulo Cruz Raluca Cercel Sara Ruas Simão Alvarez Tea Vukicevic

Meanwhile, the world struggles with more immediate problems. As China and the US continue to impose tariffs on each other’s commodities, including cement, we look into the possible implications of an eventual trade war – how could it affect the global gray cement market?

©2018 CemWeek LLC. All rights reserved. The contents of this publication may not be reproduced by any means, in whole or in part, without the prior written consent of the publisher.

Much smaller and exclusive, the white cement market – whose consumption trends are closely linked to economic development and purchasing power – is making way for emerging economies. Already mature markets display shorter growth margins. Thus, it is likely that, in the mid to long term, emerging economies will play an increasingly important role in the white cement global trade. Make sure you don’t miss CW Research’s main figures and insights on capacity, production, consumption and end-user trends.

As Norway is showing, the future may well lie below rather than ahead. Because sometimes, rather than be progressive, it’s important to keep grounded.

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CW Analytics

contents FEATURES 4 Leaders Q&A: Phil Hodgson As environment-friendly technology has become an inescapable subject of discussion in the cement industry, CemWeek presents an exclusive interview with Phil Hodgson, Managing Director at Calix, about carbon capture and storage (CCS) and how it can help the cement sector step up its ecologic game

24 Country Snapshot: Infrastructure projects and exports to boost Dominican cement demand to 6 million tons CW Research offers a glimpse into the compact and saturated Dominican cement market, in a country where the construction sector accounts for almost 10 percent of the GDP

10 Insight Analysis: On Solid Ground – Norway’s plan to create an international CCS value chain As Norway looks into the feasibility of an innovative CCS project, HeidelbergCement’s Norcem could become the world’s first cement plant with full-scale carbon capture

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14 CW Research: White cement consumption to accelerate on increasing purchasing power A premium building material traditionally favored by developed markets, white cement is carving its place among emerging economies. CW Research assesses the world white cement market, including global and regional trends on capacity, production, and end-use sectors, and presents a forecast on consumption trends through 2023 20 Insight Analysis: How can a trade war affect the global cement industry?

CemWeek draws a timeline of the latest developments in the US-China trade dispute and ponders on how a possible trade war could affect global cement market dynamics and trade flows

DEPARTMENTS 1 EdiTor's letter Keeping grounded

36 cw group meeting agenda CW Group’s upcoming events

3 numbers in brief After a troubled 1Q2018, demand is back on track

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28 Research Cement Volumes 30 Departments People Equipment

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37 BUZZ Top 10 CemWeek, BMWeek and PetcokeWeek stories

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numbers in brief

Consumption picks up speed in 2Q2018 After a troubled 1Q2018, demand is back on track Some of the largest cement manufacturers in the world registered encouraging results in the first half of the year. In spite of a lackluster performance in 1Q2018, when demand was troubled by the unseasonal cold in Europe and North America, consumption picked up speed considerably in the second quarter of the year, both quarter-on-quarter and year-on-year.

CHART: 1H2017 and 1H2018 revenue (USD mn)

Source: Company reports, CW Research

The pricing strategy companies such as Cemex and LafargeHolcim implemented were also helpful and translated into the growth of margins. HeidelbergCement registered volume growth across business lines, and also plans further price increases to compensate the higher-than-expected cost of inflation. For Cementir, positive results in the European and Asian markets countered the lackluster performance in Egypt.

CHART: 1H2017 and 1H2018 EBITDA margin (%)

Source: Company reports, CW Research

EBITDA results were also sufficient to offset a soft first quarter, but not sufficient to surpass the levels registered a year before. Operating expenses continue to increase during the quarter, as input costs are recovering to the detriment of cement manufacturers.

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Leaders Q&A

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P hil Hodgson Managing Director, Calix As environment-friendly technology has become an inescapable subject of discussion in the cement industry, CemWeek presents an exclusive interview with Phil Hodgson, Managing Director at Calix, about carbon capture and storage (CCS) and how it can help the cement sector step up its ecologic game

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Leaders Q&A Calix is leading the LEILAC (Low Emissions Intensity Lime And Cement) project, which includes a consortium of the world’s largest cement (HeidelbergCement, Cemex, CRH/Tarmac), and lime (Lhoist) companies, as well as leading research and environmental institutions (Imperial College, ECN, Quantis, The Carbon Trust). How did this project come to be?

Calix’s technology was originally developed to look at processing carbonates such as limestone and directly separate and thus efficiently capture CO2. After Calix proved the technology on a commercial scale for another carbonate mineral, magnesite, in its Bacchus Marsh plant, it reignited interest in looking at applying the technology to the cement and lime industry, which use huge amounts of limestone.

Calix started talking to big cement and lime

companies and, with those that took an interest, formed a consortium to apply for funding from the European Horizon 2020 scheme, which is specifically for research and development relating to climate change strategies. The consortium, with Calix in the lead, was successful in winning funding and the project commenced in 2016. The project team included a selection of major

Because CO2 is kept in a contained space in the reactor tube, (…) [it] comes off as a pure stream, which allows us to capture it directly for no energy penalty cement and lime companies plus some research institutes and specialist engineering and technology companies.

Calix has secured €3.4 million in working capital from EFIC, the Australian G o v e r n m e n t ’s export credit agency, to build a CO2 capture facility for the LEILAC project, in Belgium. What are your expectations for this initiative?

Typically with grant funding of projects such as LEILAC, there

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is a grant drawdown schedule that pays back eligible costs once they are incurred.

That means that costs are incurred and carried by the grant recipients until their work is checked and verified by the grant administrators.

As a small Australian company building a plant in Europe, the upfront costs were significant. While the grant would repay these costs, Calix had to come up with the money upfront to purchase equipment and employ contractors to build the plant.

Reimbursement would come months or even a year or two later, which could create a large gap in the business’s cash flow.

To help Calix secure its commitments under the Horizon 2020 grant, EFIC provided the working capital. The expectation is that, once construction is complete, Calix will achieve the grant drawdown, which will let it repay the EFIC loan. The consortium can then start up the plant, and hopefully prove the technology works!

One of the cornerstones of LEILAC’s CO2 capture facility is Direct Separation technology. How does it work, and what are the benefits for cement manufacturers?

In a regular cement or lime kiln, there is a need to generate a very high heat, so these kilns use furnaces that burn fuel. Very hot gases are brought into contact with the feedstock, which is basically limestone.

That limestone converts into lime, which is the core product in cement. In doing so, the limestone gives off a lot of CO2 – about half the weight of limestone! This, added to the furnace gases, produces a significant amount of CO2.

The Calix technology uses an externallyheated reactor tube that is heated to around 1,000 degrees. The limestone is ground

down to a small size, like the consistency of flour, and it floats down that tube and turns into lime while giving off CO2. Because the CO2 is kept in a contained space in the reactor tube, and not mixed with furnace gases, the CO2 comes off as a pure stream, which allows us to capture it directly for no energy penalty.

When it comes to the fuel being burned, there are other technologies being worked on to capture the CO2 associated with burning that fuel. But it’s very important to capture the CO2 from the limestone, as roughly two-thirds of emissions from a cement plant is CO2 from the limestone.

The aim of the LEILAC project is thus to demonstrate how Calix’s technology can lead to the direct separation of those CO2 emissions without additional capital or operating costs, compared to a current cement or lime plant.

Despite an increasingly environmentally aware cement industry, carbon-capture technology remains far from mainstream adoption, with some opponents deeming it unavailable, immature and/or expensive. How can CCS (Carbon Capture and Storage) overcome its reputation problem?

CCS is often talked about in relation to fossil fuels such as a coal-fired power stations. It’s important to understand fossil-fuel CCS solutions in the light of the cost of alternative energy sources such as solar and wind. And, it’s important to further separate fossilfuel CCS from the CCS associated with industrial sources of CO2. One of the largest industrial sources of CO2 is the cement industry. The CO2 in that industry comes mostly from the raw limestone,

which means it’s an unavoidable emission, as opposed to the emissions that come from burning fossil fuels in preference to solar or wind power.

CCS and discuss each on their merits.

With respect to unavoidable industrial CO2 emissions CCS has a very important role to play.

The aim of the LEILAC project is to demonstrate how Calix’s technology can lead to the direct separation of CO2 emissions without additional capital or operating costs

According to CW Research’s 2017 World Cement Equipment Market and Forecast Report, environmental and automation are the cement equipment sub-markets most likely to increase in the next five years.

Does this trend signal a new cement production approach? How?

Part of the dialogue that needs to take place is to separate fossil-fuel CCS and industrial

European cement companies and, to a lesser extent, companies in other parts of the world, have started to use interesting fuel substitutions in cement production. They’re moving from coal- or gas-fired kilns to biomass and recycled waste materials. This is increasingly helping to reduce the carbon footprint of the cement industry.

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Leaders Q&A Perhaps within a time period of five years, with enough willpower and incentives, significant fuel substitution already achieved in Europe could be achieved in the rest of the world. This will go some way to helping the carbon footprint of the industry.

The Calix technology will require a longer horizon than five years for the cement industry. While the technology will be tested in Europe in the next few years, it will need to be scaled up and proven at scale, which is likely to take more than five years.

However, the industry is certainly moving with respect to dealing with emissions, and multiple technologies, including Calix’s technology, are being advanced by the industry in the hope of dealing with CO2 emissions in the future.

In February 2018, the US president Donald Trump signed the 45Q, a bill focused on expanding tax incentives for carbon-capture initiatives. Can this step somehow validate the economic viability of CCS? When talking about the economic viability of CCS, it’s important to understand when and to what extent there will be a price on carbon emissions. While there are some active carbon markets around the world, generally speaking, the cost

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of carbon emissions is currently fairly low. In terms of the economic viability of CCS today, it’s unlikely that there would be many economically viable CCS projects. As CO2 gains a price or penalty, more CCS projects will probably become economically viable.

Perhaps within a time period of five years, with enough willpower and incentives, significant fuel substitution already achieved in Europe could be achieved in the rest of the world Considering it in the context of tax and other incentives, it’s important to be aware that early stage technology is typically expensive to develop and first stage implementation is this very costly. Over time, the cost of the application of those technologies will typically decrease. However, before this can happen, those upfront incentives are necessary to help drive the innovation required in the first place.

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In summary, as long as the incentives are designed to drive innovation in the short to medium term, rather than be a longerterm crutch for non-economically viable outcomes, they have a crucial role to play.

According to the 2017 update of the Global Status of the CCS report by the Global CCS Institute, in order to achieve Paris Agreement targets, more than 2,000 CCS facilities will be needed by 2040, and 14 percent of cumulative emissions reductions must be derived from CCS. Currently, there are 17 large-scale CCS facilities operating globally, with four more coming onstream in 2018. How can the cement sector play a role in pushing the numbers up?

Cement is one of the highest industrial sources of CO2, however it is dwarfed by the power and transportation sectors.

Despite this, the cement industry seems to generally acknowledge it has a role to play in reducing CO2 emissions.

There is enormous money going into infrastructure as the world urbanizes, and there is massive demand for new production capability. One Chinese cement company is building 100 new cement plants in three years across 50 countries. The cement industry

Calix is a multi-award-winning Australian technology company that is developing new processes and materials to solve global challenges.

The core technology is a worldfirst, patented "kiln" built in Bacchus Marsh, Victoria that produces "mineral honeycomb" – very highly active minerals.

Australia

Calix

By using these minerals, which are safe and environmentally friendly, Calix aims at improving waste water treatment and phosphate removal, help protect sewer assets from corrosion, and help improve food production from aquaculture and agriculture with reduced anti-biotics, fungicides and pesticides.

Calix's technology has also been adopted overseas, where the company is working with some

of the world's largest companies, governments and research institutions on CO2 capture.

must therefore investigate ways to reduce emissions and quickly scale the technology to utilize it across the industry.

The industry has already seen good initiatives in Europe and the cement industry is moving quickly there. In other parts of the world, movement appears

slower. A lot of cement companies are global companies, so they need to continue to spearhead developing new technologies and spread their use quickly to help mitigate the industry’s emissions.

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Insight Analysis

ON SOLID GROUND

Norway’s plan to create an international CCS value chain

As Norway looks into the feasibility of an innovative CCS project, HeidelbergCement’s Norcem could become the world’s first cement plant with fullscale carbon capture

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Insight Analysis

C

arbon dioxide emissions are an increasingly pressing issue across industries, and an inevitability for the cement sector. After one failed attempt to make carbon capture and storage economically viable, Norway is back with a groundbreaking project that aims to sequester CO2 emissions from several industries… and countries.

BURYING THE PROBLEM

The cement industry has a sustainability problem. According to the Cement Sustainability Initiative (CSI) – a flagship sectoral project of the World Business Council for Sustainable Development (WBCSD) that counts among its members major players such as Cemex, CRH, HeidelbergCement, LafargeHolcim, and Votorantim Cimentos – the cement sector is the third-largest industrial energy consumer in the world, responsible for seven percent of industrial energy use, and the second industrial CO2 emitter, accounting for seven percent of global CO2 emissions.

With global cement production projected to grow by 12 to 23 percent by 2050, carbon emissions from the global cement industry are expected to increase by four percent. Nonetheless, according to the Carbon Disclosure Project, thirteen of the world’s largest publicly-listed cement companies need to more than double their emissions reductions if they are to limit global warming to below two degrees, as agreed in the Paris climate deal.

What is a company to do when emitting CO2 is almost an inevitability of its production process? It buries the problem.

Literally.

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A GROUNDBREAKING INITIATIVE Carbon capture and storage (CCS) technologies may be a pressing topic today, but capturing, transporting and storing CO2 has been done for decades.

Since 1996, as a response to high taxes on carbon emissions, Statoil (now Equinor), Norway’s national oil and gas company, has separated and stored over 20 million tons of CO2 underground. Now, Gassnova, the Norwegian state enterprise for carbon capture and storage, has entrusted Equinor with a more ambitious endeavor: the world’s first undersea CCS project to capture CO2 emissions from multiple industrial sources, which would then be stored in the Norwegian continental shelf (NCS). According to Equinor, the first

According to Equinor, the first phase of this CO2 project could reach a capacity of approximately 1.5 million tons per year phase of this CO2 project could reach a capacity of approximately 1.5 million tons per year. Norway would thus stimulate new commercial carbon capture projects in the country, Europe and more globally across the world. In addition, the project has the potential to be the first storage project site in the world receiving CO2 from industrial sources in several countries.

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The initial plan comprised proposals for capturing CO2 from a cement factory, HeidelbergCement-owned Norcem’s Brevik production unit, a waste incinerator from Fortum Oslo Varme, and Yara’s ammonia factory. The carbon dioxide would then be shipped from each plant to an onshore facility on the Norwegian West Coast for temporary storage, after which it would be sent through a pipeline in the seabed to several injection wells east of the Troll field on the NCS. In order to accomplish the storage stage of the process, last year, Equinor signed a partnership agreement with Norske Shell and Total E&P Norge.

THE CHALLENGES OF CCS The Norwegian government estimated the project will cost up to 12.6 billion crowns ($1.6 billion), and announced it would decide whether to invest in 2019.

With wind and solar technologies getting increasingly cheaper, carbon capture initiatives may seem like a heavy financial load, since they require significant capital expenditure. Furthermore, this is not the first time Norway gives CCS a try. In 2013, the country abandoned a similar project since it was proving challenging and costly.

When public funds are involved, deploying CCS technology becomes all the more intricate. In October 2017, Norway announced it would slash the budget for the new CCS project by 90 percent, which

cast doubt all over the world concerning its continuity. As a pioneering nation in the CCS department, Norway’s cancellation of the project would represent not only another failure for the country, but also a worldwide step back regarding the adoption of carbon and capture storage technologies.

For industries such as cement, CO2 emissions are practically inescapable.

As Phil Hodgson, Managing Director of Calix, told CemWeek in an interview published on this issue, limestone accounts for roughly two-thirds of emissions from a cement plant, making it all the more important to capture them. In addition, according to the 2017 update of the Global Status of the CCS report by the Global CCS Institute, in order to achieve Paris Agreement targets, more than 2,000 CCS facilities will be needed by 2040, and 14 percent of cumulative emissions reductions must be derived from CCS. Currently, there are only 17 large-scale CCS facilities operating globally, with four more coming online in 2018.

There is no solar route to making cement environment-friendly route since “it’s not green” and storing CO2 could seem “sort of a waste bin”.

THE WORLD’S FIRST CCS CEMENT PLANT?

Despite the support from the oil industry, in May this year, the Norwegian government declared the decision to invest was postponed to 2020 or 2021. At the same time, Yara was dropped from the project. According to the government, the company was dismissed for not having much commercial motivation to prioritize CO2 capture at its facility. Not only does Yara already capture carbon dioxide, which is then sold to fizzy drinks companies, When in doubt, a little incentive can’t it is also pondering to change its fuel to hurt. In February 2018, Equinor, Shell liquefied natural gas, which would reduce and Total gathered to urge the Norwegian CO2 emissions. government to carry the CCS initiative forward. As reported by Bloomberg, at Nonetheless, the Norwegian government HeidelbergCement’s subsidiary the time, Shell’s CEO Ben van Beurden gave Norcem the green light.

As reported by stressed the importance of speeding up Reuters, the government affirmed its the project, since “you do not have a intention to grant the company 80 million solar route to making cement.” Total’s CEO Patrick Pouyanne underlined the crowns ($10 million) for the annual struggle of convincing people CCS is an capture of roughly 400,000 tons of CO2 emissions at its Brevik plant. Norcem announced it received funding from the Norwegian state budget for 2018 for the last stage (FEED-study) before the final construction. According to the company, the aim of the FEED-study is a detailed review of the project to provide a basis for

an investment decision. The study will be ready by the end of August 2019.

Recently, in August 2018, the Ministry of Petroleum and Energy said it would also offer Fortum Oslo Varme grants for FEEDstudies of CO2 capture at their waste incineration plant at Klemetsrud, in Oslo.

THE NEXT STEP: HYDROGEN Concurrently, Equinor is looking into the feasibility of combining carbon capture storage with hydrogen production. In July 2017, the company announced in a press release it signed a Memorandum of Understanding (MoU) with the Swedish power company Vattenfall and the Dutch gas infrastructure company Gasunie to evaluate the possibilities of converting Vattenfall’s gas power plant Magnum in the Netherlands into a hydrogen-powered plant. The potential CO2 emission reduction is four million tons of CO2 per year. Equinor added that the scope of the MoU also includes exploring how to design a large-scale value chain where production of hydrogen is combined with CO2 capture, transport and permanent storage, as well as considering potential business models. For that purpose, in July this year, Jacobs Engineering Group was awarded a feasibility study contract from Equinor to evaluate the possibilities for building a hydrogen production plant, including CO2 capture and export facilities, in Eemshaven, the Netherlands.

When talking about the future and sustainability, people and companies always tend to look ahead. In its pioneering fashion, Norway may prove the world the future is well beneath us.

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FEATURE

CW RESEARCH

White cement consumption to accelerate on increasing purchasing power

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A premium building material traditionally favored by developed markets, white cement is carving its place among emerging economies. CW Research assesses the world white cement market, including global and regional trends on capacity, production, and end-use sectors, and presents a forecast on consumption trends through 2023

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FEATURE

W

hite cement, a premium building material as compared to grey cement, is a more expensive commodity due to its composition and production costs. It follows its own trends in terms of geographical distribution of output capacity, bagging and transportation, trade, and consumption. Developed markets with more purchasing power are the main users, but

cultural and climatic variables are also significant. The typical way in which white cement is applied – ranging from masonry and architectural precasting to pool finishes – also varies widely from region to region.

Since white cement has higher price margins and the raw materials for its production are scarce in some regions, trade plays an important role in the market. While some markets, such as China, have attained self-sufficiency, others, like the United States, remaining largely dependent on imports.

Capacity additions White cement production capacity has increased by an average annual rate of 2.5 percent between 2013 and 2018, a much faster pace when compared to the cumulative average growth of 0.6 percent registered in consumption. China, which has the capacity to produce 7.6 million tons of white cement per annum – representing around 25.4 percent of the global installed capacity – increased its output capabilities by 1.9 percent per annum during that period. To the contrary, Western Europe, which has the capacity to produce 4.4 million tons per annum, saw a fall of 0.3 percent per annum between 2013 and 2018.

Going forward, capacity additions will be c o n c e nt r at e d in the Middle East, where installed capacity

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is expected to increase by one million tons until 2023. Excluding China, the region will have the largest capacity of every other region by that year. Right now, Raysut Cement and Oman Cement Company are working on a joint venture called Al Wusta Cement that will produce 300,000 tons of white cement per annum once finished, in 2020. The new factory will supply white cement to the Duqm – a fast-growing special economic zone in central Oman – but also to markets across the Middle East, East Africa, and India.

Output distribution The availability of raw materials to manufacture white cement is confined to a few producing regions, thus prompting the trade of the premium commodity. China continues to be the largest white cement producer in the world, with a market share of around 28 percent, enough to make the country relatively self-sufficient. Western Europe is the second largest producer of white cement, with around 16 percent of market share, or an output of three million tons per annum.

White cement production capacity has increased by an average annual rate of 2.5 percent between 2013 and 2018 Production is also concentrated around a small number of manufacturers, a trend that has become more salient since 2014, with a wave of mergers and acquisitions.

Those include the takeover of Italcementi

by HeidelbergCement in October 2016 and the enlargement of Cementir through its subsidiary Aalborg, which bought two white

Regional and company-wise distribution of white cement production

Source: CW Research

cement plants from HeidelbergCement in Belgium, acquired Sacci in Italy and expanded into the Malaysian market.

Currently, the top 10 global producers of white cement control around 60 percent of the total production, with the table being led

by Cementir, followed by LafargeHolcim in second, and Cimsa in third.

Trade dynamics With production hubs normally far from the end-user markets, trade plays a key role on white cement distribution. In 2017, white cement trade reached 5.7 million tons, an increase of 1.8 percent compared to the previous year. Seaborne haulage represents most of the white cement trade globally, at around 65 percent. Most of that trade is made in large bags, which represent around 60 percent of all trade, while retail bags account for the remaining 40 percent. That is another distinctive aspect of white cement when compared to grey, which has even higher levels of bulk transportation, thus making white cement relatively more expensive to transport. However, there are some regional discrepancies when it comes to bagging, with big bags being much more used than retail bags in North America, while in Western Europe retail bags are more prevalent.

The largest traders of white cement are mostly developed markets, together with some developing ones like Middle East, where weather conditions play a large role, and North Africa, where white cement has an important cultural significance.

China continues to be the largest white cement producer in the world Western Europe is the largest exporter of white cement, with trade among regional markets representing 55 percent of the flow, with the remaining 45 percent finding its way mostly to North American, and Eastern Europe and the CIS. Denmark and Spain are the largest exporters within Western Europe. The region is also a top global importer, accounting for 22 percent of the total imports in 2017, a share similar

to that of North America and the Middle East. Eastern Europe and the CIS exported around 1.3 million tons of white cement in 2017, mostly to the Middle East and Western Europe.

The United States has the largest deficit of white cement in the world, with installed capacity representing only 10 percent of its needs. White cement used by the country comes mostly from Canada, Mexico, and Denmark.

Consumption and end-use sectors Producing white cement requires costlier raw materials and energy choices, such as using low-sulfur petcoke instead of coal, which could contaminate the final product, or adding pigments to achieve more brightness and cleanness. It is therefore a more expensive construction material not accessible to all.

Thus, consumption is concentrated in developed markets with more purchasing power, such as Western Europe and North America. Developing regions, like Africa, where practical concerns more often than not override aesthetical ones, have a low per-capita consumption of white

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FEATURE Regional distribution of white cement capacity

Source: CW Research

cement. The exception is the Middle East, where applying white cement finishes is a cultural aspect that has resisted modern construction techniques, making for a much larger per-capita consumption than more developed regions. Nevertheless, the popularity of white cement is increasing in emerging economies on the back of a growing purchasing power.

Given its properties, white cement is used in a variety of applications, including masonry, architectural pre-cast, and pool finishes. In most of the world regions, masonry applications – which include stucco, mortars, grouts, adhesives and

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There are some risks for the industry, including the high distribution costs and the competition by substitutes

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flooring – account for the largest share of white cement consumption. However, that can vary widely from region to region, with architectural precast being the main utilization in North America and Western Europe, and masonry accounting for 82 percent of total regional consumption in Africa so far in 2018. Especially in North Africa, the heat-reflective nature of white cement makes it attractive for flooring, plastering, and, to a smaller extent, wall building. Of all end-use niche markets, pool finishes accounted for the lowest share in the global consumption, with just 400,000 tons consumed in 2018.

Going forward

Conclusion

CW Research believes that white cement demand growth will accelerate to 1.8 percent per annum between 2018 and 2023, eventually reaching 19 million tons per annum. Asia ex-China and Eastern Europe and the CIS will lead the way, with an average annual growth of 4.4 percent and two percent, respectively.

When looking at white cement market trends, the disparity between regions stands out. Western European traders prefer retail bags, while large bags play a significant role in North America. On both of those markets, architectural precasting is the major application for white cement, contrary to what happens in every other region, where masonry prevails. China has become mostly self-sufficient, whereas the United States produces just a fraction of its domestic requirements.

There are some risks for the industry, including the high distribution costs and the competition by substitutes. Still, white cement continues to be more resilient to market cycles when compared to grey cement, and the growing purchasing power of emerging economies offers a good outlook for the product.

Production is also concentrated around a small number of manufacturers With demand reaching a plateau in more developed economies, white cement will likely find more opportunities for growth in emerging economies. Asia ex-China, and Eastern Europe and the CIS are expected to drive global growth in white cement consumption. The Middle East, where per-capita consumption of white cement is already very high, will record new capacity additions in the next five years that will ensure it a position as the second largest producing region, behind China.

Photo Credit - Eric Kilby

Meanwhile, on developed markets such as North America and Western Europe, white cement demand is expected to grow slower, at 1.8 and 1.3 percent per annum, respectively.

This is mostly because their economies are more mature and the margin for growth is lower.

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About the report CW Research’s Global White Cement Market and Trade Report (2018 update) examines the worldwide white cement industry and presents the latest market data which cover the 2008-2018 E period, with a medium-term forecast until 2023.

The comprehensive report includes cement consumption and production figures, import and export data, as well as pricing trends and white cement capacity developments.

Additionally, this data-rich research product provides extensive quantitative information on consumption, usage segments, production, local prices, trade prices, type of handling, trading facilities and trade-flows, by region and major countries. Furthermore, the report analyzes region specific user segments by white cement type and their main consumption drivers as well as perspective for 2023.

More information about the report can be found here: https://www.cwgrp. com/research/research-products/ product/274-global-white-cementmarket-and-trade-report-2018-update

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.

August July/August / September 2016 2018

19

Insight Analysis

How can a affec global cement

CemWeek draws a timeline of th China trade dispute and ponders o affect global cement marke

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trade war ct the ent industry?

he latest developments in the USon how a possible trade war could et dynamics and trade flows

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August July/August / September 2016 2018

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Insight Analysis

T

he United States and China, the largest global economies, have set high import duties on several of each other’s goods, among them cement. As US President Donald Trump moves forward with the plan and China retaliates, the world prepares for a plausible trade war and its impacts on the global cement market

US government has placed tariffs on cement and related products

A trade war is brewing The new president of the United States’ aggressive style of international politics has been wreaking havoc on the markets. It started with his import tariff on aluminum and steel on Chinese goods as well as other United States’ long-term allies, such as Canada and the EU, which prompted Canada to reply with its own tariffs, while the EU is aiming to clear a trade deal with the US. Yet, the latest move – which the government justified by saying it needs to protect national security, the intellectual property of US businesses, and to reduce the trade deficit between the two countries – consists of imposed tariffs on around USD 50 billion worth of goods coming from its largest trade partner, China. This move, however, set off a trade war whose effects are yet to be fully assessed, as it enters its initial stages.

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The US government first set tariffs on foreign solar panels and washing machines on January 2018, which China, the world’s largest manufacturer of both, decried.

Later, the Trump administration imposed tariffs of 25 percent on steel imports and of ten percent on aluminum imports, mainly targeting Chinese products. Yet, tariffs were extended to trade partners such as the European Union, Canada and Mexico, which some have matched, claiming that these were harmful to US manufacturing efforts. Later, the president had the United States Trade Representative apply tariffs of USD 50 billion on Chinese goods, based on Section 301 of the Trade Act of 1974, claiming that the tariffs were “a response to the unfair trade practices of China over the years”, such as the theft of US intellectual property.

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This prompted China to accuse the US of starting a trade war, and retaliated by imposing its own trade sanctions after negotiations between the two parties fell apart. The first tiff started on July 6, when the US imposed a 25 percent import tariff on USD 34 billion worth of Chinese imported products, while China responded with similar tariffs. This prompted the US to impose an additional ten percent tariff on USD 200 billion worth of Chinese imports, to begin in August 2018. Among these products were mineral goods, such as cement and other related products.

Cementing issues The proposed ten percent tariff on Chinese mineral products will come into force in August 2018, and includes over 600 items, among them cement, limestone flux, quicklime, slaked lime, gypsum, anhydrite, clinkers of Portland, aluminous, slag, super sulfate and similar hydraulic cements, white Portland cement, Portland cement, aluminous cement, slag cement, refractory cements, additives for cement, cement-based building materials, and more.

The United States is not only China’s main trade partner, it is also a large import market for cement and building materials. Lately, construction activity in larger US cities have been expanding, and the President’s USD 1.5

trillion infrastructure plan could accelerate this growth even further. After the steel tariffs kicked in, however, costs have expanded, thrust upward by an increase in energy prices, which could cause delays, scaling down, or even cancellation of some projects. This, in turn, could affect cement demand growth in the United States, although, for now, Chinese imports of the product aren’t the top concern.

The United States’ main cement provider is its neighbor Canada, which so far has responded to Trump’s aluminum and steel tariffs with their own set of import duties for US goods. Overall imports of cementitious materials into the US, however, remain at around USD 1 billion, with cement imports estimated below twelve million tons in 2017, a very small part of the total US imports. China supplied only around eleven percent of total cement imports, while Canada’s share reached almost 40 percent. For 2018, CW Research estimates that the United States will import around 14.3 million tons of cement and clinker, or USD 1.3 billion, although it remains to be seen how this forecast will be affected by the budding trade war.

Conclusion Despite the latest developments, the US tariffs on cement and other related materials are likely to be more of a hiccup than a choke: China is not the United States’ main cement supplier, and there are other nearby markets that are capable of supplying it to the country. However, the imposition of tariffs for products related to the industry is not negligible, since it could cause a rise in cement prices as domestic companies try to offset the higher input costs. The concerns regarding cement demand are not to be neglected as well, especially as prices for the construction industry seem to be rising, which could turn Trump’s infrastructure plan into a lot more expensive venture, or render some projects much less viable.

Cement imports to the US account for a low percentage of the country’s total trade

The concerns for the trade war should be placed on other markets as well, as it can affect supply and demand dynamics in other countries and regions, either due to the financial impacts, or in the two potencies’ search for other markets; Chinese cheaper cement exports into other nations could affect an emerging industry in developing nations, particularly in Africa, as China moves forward with its Belt and Road initiative, while the United States’ demand could affect supply flows in some of its trade partners, such as Canada and Mexico.

As the trade war is yet in the beginning, its full effects in the global economy remain to be seen, although many experts expect the worst, and have already spoken against the United States’ tariffs, claiming that these are harmful for global trade. China had proposed to increase its spending on US goods, which was still not enough to deter president Trump’s “America First” approach to global policies. If these are to continue, the playground of the global economy will have more losers than winners – and most seem to agree that the United States will have a hard time fitting in the latter category.

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August July/August / September 2016 2018

23

Country Snapshot: Dominican Republic

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cw research

Infrastructure projects and exports to boost Dominican cement demand to 6 million tons

CW Research offers a glimpse into the compact and saturated Dominican cement market, in a country where the construction sector accounts for almost 10 percent of the GDP

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August July/August / September 2016 2018

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Country Snapshot: Dominican Republic

B

ordered by Haiti to the West, the Dominican Republic is the second largest island country in the Caribbean region, as well as one of the fastestgrowing economies in Latin America over the past 25 years.

Its privileged geographic position makes it a preferred import source for neighboring markets where cement production is insufficient to meet demand – a factor that will prove decisive in the growth of the Dominican Republic’s cement sector over the forthcoming years.

Construction sector accounts for almost 10 percent of GDP

According to CW Research’s 2018 update of the Dominican Republic Cement Market Report, domestic cement demand is projected to increase to 5.8 million tons a year in 2023, rising at an annual average rate of almost six percent. This positive

The Dominican cement market landscape can be described as consolidated, with most manufacturers being part of large cement companies trend will be supported by increasing cement exports to neighboring Caribbean markets, coupled with cement-intensive infrastructure projects, both road- and energy-related.

Dominican Republic Santo Domingo

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The promising outlook for cement consumption in the coming years follows a growth cycle that dates back to 2013.

Over that period, the construction sector accounted for almost a double-digit share of the GPD. From 2013 through 2018, it has grown at a yearly average of almost four percent, despite a 2017 plagued by a slump in investments in mega projects.

A compact and saturated market The Dominican cement market landscape can be described as consolidated, with most manufacturers being part of large cement companies. There are eight cement manufacturers in the country (including a white cement plant) – each operating only one cement plant (both integrated and grinding ones) – with a combined cement capacity of 7.7 million tons per years, and a clinker production of 4.5 million tons. The largest cement manufacturer operating in the country is Cemex, which owns a cement plant and export terminals.

APPARENT CEMENT DEMAND AND PRODUCTION (mm tons)

About the report The Dominican Republic Cement Market Report, part of CW Research’s Cement Industry Country Report series, meets 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 a five-year 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.

Source: CW Research

The promising outlook for cement consumption in the coming years follows a growth cycle that dates back to 2013

Currently, the market is struggling with overcapacity. With cement production levels outstanding that of domestic consumption, Dominican Republic is a net exporter of cement, and one of the few at the regional level. That makes it the preferred import source for countries in the region where production does not meet demand.

Cement Industry Country Reports also cover demand drivers, including macroeconomic 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.

More information about the report can be found here: https://www.cwgrp. com/research/research-products/ product/278-dominican-republiccement-market-report-2018-update

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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August July/August / September 2016 2018

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CEMENT MARKETS

CW Research

Cement Volumes In May, some South American and Asian markets showed positive developments when it comes to cement production, while others are finding the beginning of 2018 more challenging.

Colombia, Japan and China are the markets that showed a yearto-date decrease in cement production in May 2018.

Year-to-date cement production in Peru increased 1.2 percent in May, as a result of a recovery from corruption scandals related to public tenders.

Argentinian cement output increased 8.2 percent on a year-to-date basis, supported by investment in the construction industry.

In May, Vietnamese cement production rose 11.9 percent year-to-date, due to good weather conditions and increased demand in importing destinations such as China. As Chinese production limitations hampered production by 9.9 percent in May, the remaining demand was sourced from Vietnam.

From this selection of countries, India registered the biggest year-to-date improvement in cement production in May 2018. The 15.2 percent increase was caused by a string of low-cost housing projects that are being implemented, mostly in the states of Andhra Pradesh and Telangana.

Colombia, Japan and China are the markets that showed a year-to-date decrease in cement production in May 2018.

Colombia recorded a production decrease of 1.1 percent, as housing sales dropped and slowed activity in the construction sector.

Cement consumption in the country registered a one percent year-to-date decrease in May due to few investments in the construction sector.

CHART: Year-to-Date Cement Demand (%)

Sources: CW Research

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CW Research CEMENT MARKETS

The Japanese cement market showed a decrease in production of 1.5 percent, year-to-date to in May, following a workforce shortage.

Of all the selected countries that presented a decrease, China was the one with the most pronounced, 9.9 percent, year-to-date in May. This decline was due to the bad weather conditions in the region.

In Pakistan, the reason behind a 14.4 YTD consumption increase in May was a massive ongoing investment in the infrastructure and housing sector. In Argentina, cement consumption rose 9.3 percent year-to-date in May, due to public and private investments in infrastructure. Cement consumption in Chile slipped two percent yearto-date in May due to the stagnation in real estate investment.

In Brazil, investors are inhibited to invest because of the political instability, which brought down cement consumption by 4.8 percent year-to-date in May. Moroccan cement consumption was affected by bad weather and lower activity in the real estate market, decreasing by 4.8 percent in May 2018.

In Kenya, political uncertainty affected investors’ confidence and values of building plans fell drastically. Therefore, cement demand recorded a 6.9 percent year-to-date decrease in May. If the Kenyan government had not invested in large infrastructure projects, such as the Standard Gauge Railway, the contraction in cement demand would likely have been more evident.

CHART: Year-to-Date Cement Production (%)

In Brazil, investors are inhibited to invest because of the political instability, which brought down cement consumption by 4.8 percent yearto-date in May.

Sources: CW Research

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DEPARTMENTS

PEOPLE Dalmia Cement designates new COO Ujjwal Batria has been appointed the new chief operating officer of Dalmia Cement.

He will be responsible for overseeing operations of sales and marketing, logistics, manufacturing and technical services departments.

Batria graduated from the Birla Institute of Technology and has 33 years of experience in the building materials industry. He specializes in structuring of teams, project delivery, and realization of corporate objectives. Formerly, he served as CEO of Lafarge India, and

has also been associated to the cement divisions of Tata Steel and Century

Textiles & Industries, and to Eicher Motors.

ARM Cement's investors appoint new turnaround managers directors. The two new board members have been appointed for their “substantial experience in turnaround situations and financial restructuring in emerging markets”.

Since April 2016, CDC owns 42 percent for ARM. At the time, the company paid KES 14 billion for the stake, which is now worth KES 1.1 billion. ARM Cement has faced rough market conditions that include a price war and a ban on coal imports in Tanzania.

The United Kingdom-based investment firm CDC replaced Ketso Gordhan and 30

August / September July/August 2018 2016

Pepe Meijer with Sophia Bianchi and Rohit Anand in ARM Cement’s board of

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Last year, ARM Cement’s posted a net loss of KES 6.9 billion, compared to KES 3.1 billion in 2016. In Kenya, the company has retreated to some strategic pockets, while its competitors take over its market share nationwide.

PEOPLE LafargeHolcim appoints new Head of Region Middle East Africa of LafargeHolcim, effective as of July 2018. He succeeds Saâd Sebbar, who has decided to pursue opportunities outside of the company.

Jan Jenisch, CEO of LafargeHolcim said: “Miljan is a very experienced and entrepreneurial manager to lead our business in the Region Middle East and Africa. In his previous roles, he has developed and executed successful growth strategies and brings an in-depth experience of the region”.

LafargeHolcim announced the appointment of Miljan Gutovic as the

Head of Region Middle East Africa and Member of the Executive Committee

Miljan Gutovic (39), an Australian national with over 13 years of experience in the building materials sector, joined LafargeHolcim in 2018 from a leading building materials company and has a successful track record as an Area Manager for the Middle East as well as General Manager for Australia. Since joining LafargeHolcim as Head of Marketing & Innovation he has been responsible for product development and commercial solutions. He holds a Bachelor's degree in Civil Engineering and a PhD in Engineering from the University of Technology in Sydney.

EuroCement's Voronezh branch names new CEO Arpad Farkas became the new CEO of EuroCement’s Voronezh branch, also known as Podgorensky Cementnik, replacing Sergey Marachkov.

Since September last year, Farkas was the general director of the company, after Johan Anton Nischwitz left for a similar post in EuroCement’s subsidiary in the Republic of Mordovia.

Podgorensky Cementnik, inaugurated in 2012, is one of the 19 cement plants operated by EuroCement in Russia, Ukraine, and Uzbekistan.

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August July/August / September 2016 2018

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DEPARTMENTS

EQUIPMENT Topkinsky Cement buys new cement trucks Four new truck tractors from Volvo, built and assembled in Belgium, have been delivered to Topkinsky Cement. The company has invested RUB 24 million to modernize its fleet, with four other trucks being replaced until 2020.

According to Alexey Ospelnikov, managing director of Topkinsky Cement, the company currently owns 13 cement carriers with semi-trailers, responsible for delivering cement during the peak construction season.

The new trucks have already been registered in Russia and made their first

trips. They are serving construction sites across the Kemerovo and Tomsk oblasts.

Loesche to deliver two vertical roller mills to Bangladesh At the same time as the order for the new grinding plant in Gazipur, Loesche also received an order for a further mill for end customer Shun Shing Cement Mills Ltd. (SSCML), also part of the Shun Shing Group. An LM 53.3+3 CS will be used, with three main and three support rollers and a drive power of 4,650 kW. The mill will grind clinker and slag at a capacity of 180 t/h in a newly-built grinding plant belonging to SSCML in Shikalbaha near Chittagong.

Loesche recently received an order from the cement manufacturer Seven Circle Bangladesh Ltd. (SCBL), part of the holding company Shun Shing Group (SSGIL) / Hong Kong, for a vertical roller mill for its new grinding plant in Gazipur, near the capital Dhaka.

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With four main and four support rollers, the mill will be used for grinding clinker/ slag and will have a throughput capacity of 400 t/h. This makes it the largest Loesche cement mill in the emerging Bangladeshi market.

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The scope of delivery for both mills includes the complete mill including the static mill components. Both mills will continue to be equipped with PRONAMICÂŽ wear parts, developed by Loesche, for the main rollers, support rollers and the grinding table.

It is anticipated that commissioning of both grinding plants will take place in autumn 2019.

EQUIPMENT Krasnoyarsk Cement modernizes palletization line

The cement manufacturer has installed a new pallet-winding machine, replacing an outdated equipment that was set ten years ago. With this switch, Krasnoyarsk Cement hopes to cut maintenance and repair costs.

Cement bags, weighing 50 kilograms, are put in a special platform with a help of a loader. Then, the platform rotates, rapidly wrapping it in stretch film.

Danila Botvinin, director of transport and logistics at Krasnoyarsk Cement, believes that the new equipment will increase shipping operations. The installation of the new equipment was carried out by PKG with a cost of RUB 4.5 million.

Ramco Cement orders new vertical roller mills The Indian cement producer has ordered Loesche mills for three of its cement plants for the grinding of clinker and/or slag. For each cement plant, one vertical roller mill type LM 41.2+2 CS with two grinding rollers and two support rollers with a power range of 3000 kW and a capacity of 130 t/h has been ordered to grind the Portland Pozzolana Cement (PPC). One of the two VRMs is to be implemented in Kolaghat, West Bengal (Northeast India, approx. 50 km from Calcutta), where RCL is currently increasing the annual tonnage of its grinding plant by 0.95 - 2 million.

Here, clinker, slag, gypsum and fly ash from the material starting point for the end product.

The second of these mills will be used in the grinding plant in Gobburupalam in Visakhapatnam, in the state of Andhra Pradesh in South India. LOESCHE could now sell this mill type in India for the first time. RCL has also purchased a third VRM type LM 46.2+2 CS with a capacity of 3.750 kW for its newly-constructed 900,000 annual tonnage cement plant in Haridaspur, Odisha in South east India.

This mill grinds PPC with a throughput

of 165 t/h. Mill fans, bag-type filters and further auxiliary equipment also belongs

to the delivery, which will be carried out in approximately six months.

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EQUIPMENT Loesche researching thermally reductive modification of steel slags Along with the F. A. Finger-Institut für Baustoffkunde (FIB) at BauhausUniversität Weimar, Loesche is working on the thermally reductive modification of steel slags for recycling iron and manufacturing “steelworks clinker”.

In contrast to the granulated blast furnace slag, original steel slag shows no appreciable binding behavior after normal finish grinding. That is why the resulting slags in Germany have not been used previously in cement, but instead are used in road construction in unbound base layers or even in bituminous-bound base and cover layers.

A significant portion must also be deposited.

Against the backdrop of the preservation of resources, the current debate regarding reducing CO2 and Loesche's experiences of being able to recycle higher metal contents from a siliceous matrix, a new research began to produce an innovative conditioning process for steel slags.

In a thermochemical procedure in a reducing atmosphere, the iron that is initially permanently bonded in mineral phases is transferred to an elemental, metallic form; this allows this iron to be separated and fed back into the process of steel production. By transferring the iron to its elemental form, the chemical

composition of the remaining molten metal is changed such that the optimum range for the formation of cement clinker phases (clinker standard in the range of 90 to 105) is achieved in many cases without the addition of any corrective components.

The hydraulic mineral binder manufactured on the basis of this procedure can be used as a composite material for cement or as an independent clinker material in accordance with the experience of Loesche.

Equipment for new clinker unit arrives in Luanda The equipment transfer for a new clinker line in Luanda was concluded.

For the past three years, the company Ba-Shi Yuexin has been transporting equipment for a new clinker line in Luanda, Angola. The equipment consists of steel, the barrel of a cement grinding mill, the main engine of the heavy oil power station, a transformer, and special vehicles.

In total, the 80,000 tons of equipment required 70 shipments to be transferred from Shanghai to Luanda, Angola.

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WORLD CEMENT, CLINKER &

SLAG SEA-BASED TRADE REPORT The World Cement, Clinker & Slag Sea-Based Trade Report offers a global analysis of seaborne cement, clinker, slag (GBFS), and fly-ash trade. Trade flows, pricing, trading infrastructure are also detailed, while providing a comprehensive review of terminals, and suppliers of cementitious materials to support your strategic decisions. The report projects main flows through 2023 expected to be shipped by ocean-going vessels and also includes prevailing cement trade prices and bulk / dry cargo shipping rates. Particular emphasis is given to understanding the possible supply options and export terminals around the world. Dedicated cement carriers are also analyzed in terms of routes, age, utilization rates and dead-weight tonnage.

Global analysis and forecast of seaborne trade.

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