CemWeek Magazine #46: October 2018

GLOBAL CEMENT INDUSTRY. KNOWLEDGE.

ISSUE 46

October

Cement industry on the rise 

Global cement companies report solid results in 1H2018

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Emerging markets boosting cement demand Leaders Q&A

Ahmad Al-Rousan

Secretary General of Arab Union for Cement and Building Materials News

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Analysis

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Market Coverage

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Interviews

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People Moves

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STAFFBOX ROBERT MADEIRA

The permeability of cement

CEMWEEK PUBLISHER HEAD OF CW GROUP RESEARCH

The cement industry is displaying some interesting movements. In the first half of the year, LafargeHolcim, Cemex, HeidelbergCement, Intercement, CRH and Dangote Cement all reported an increase in cement sales, with global sales improving across most regions.

According to the outlooks of some of the major cement players, expectations for the second half of the year are of continued growth in sales volumes and prices.

Concurrently, according to CW Research, global cement consumption is poised to continue to grow, albeit at a softer rate. China’s once booming economy is finally reaching a maturation phase characterized by slower growth – which, coupled with its cement production rationalization efforts and an ongoing trade war between the country and the United States, is bound to take a severe toll on world cement demand. As many countries are facing a period of economic stabilization and even slowdown, it will be stimulating to witness how developing nations will play a role in tipping the scales. Markets in Northern Africa, the Middle East, and Asia are showing a growing appetite for cement, which is likely to help offset the shrinking effect a slowing Chinese market can exert on a global scale.

Other than growing economies, what does play a prominent role in fostering strong cement industries is associations that help them become more productive and competitive. In this issue of CemWeek, we feature an exclusive interview with Eng. Ahmad Al-Rousan, Secretary General of the Arab Union for Cement and Building Materials (AUCBM), who explains how the Damascus-headquartered association has been prompting Arab countries to sharpen their building and construction industries. It’s an unmissable conversation that assesses how oil prices, terrorism and the global economic crisis are impacting construction projects in the region.

As the articles featured in this issue attest, cement may be durable and resistant, but it’s still permeable to politics and economics. As such, and with a few election cycles right around the corner, let’s wait and see what people choose to build their lives with.

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Margarida Cunha Editorial Coordinator

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CW Analytics

contents FEATURES 4 Leaders Q&A: Ahmad Al-Rousan In an exclusive interview with CemWeek Magazine, Eng. Ahmad Al-Rousan discusses the evolution of the Arab Union for Cement and Building Materials throughout the years, and assesses how oil prices, terrorism and the global economic crisis are impacting construction projects in the region

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10 Insight Analysis: Global cement companies report solid results in 1H 2018 The top cement companies in the world have reported an increase in sales for the first half of the year, with prospects for 2018 remaining overall positive 14 CW Research: Global cement consumption to soften on Chinese slowdown With economic growth fading out in some markets and improving in others, the overall macroeconomic scenario is moving towards a cloudier period. Cement demand will continue to grow outside China, but at a slower pace

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20 Country Snapshot: Cement production in Oman to reach 19 million tons by 2023 CW Research analyzes the small and consolidated Omani cement market, as the country’s construction industry is bound to recover, following a couple of challenging years

DEPARTMENTS 1 EdiTor's letter The permeability of cement

32 cw group meeting agenda CW Group’s upcoming events

3 numbers in brief Improved demand and growing production costs led to prices expanding on a USD basis

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24 Research Cement Volumes 26 Departments People Equipment

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33 BUZZ Top 10 CemWeek, BMWeek and PetcokeWeek stories

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numbers in brief

Cement prices rise in 2Q2018 Improved demand and growing production costs led to prices expanding on a USD basis During the second quarter of 2018, cement prices improved in most geographies, both ex-works and retail-wise. Though the trend reverses in the third quarter due to a slight softening of year-to-date demand and depreciation of local currencies in key markets, the headwinds made in the second quarter of the year will be instrumental in companies’ end-year results.

CHART: 2Q2017 and 2Q2018 Ex-Works Regional Prices (USD/t)

Source: Company reports, CW Research’s Global Cement Trade Price Reporth

The most notable increase in ex-works cement price in USD per ton occurred in China. Limited cement supply caused by the closure of outdated cement plants (as part of the government’s consolidation and scaling down process), coupled with a decline in consumption that is slower than the decrease in production, have led to the price increase. Year-on-year, cement ex-works prices improved by 42 percent.

CHART: 2Q2017 and 2Q2018 selected retail prices (USD/t)

Source: Company reports, CW Research’s Global Cement Trade Price Report

A similar hike happened in the case of the Chinese cement retail price during the quarter. In South America, both cement ex-works and retail prices decreased when considering the regional average, representing a 2.0 percent decline quarter-on-quarter, and a 9.6 percent contraction year-on-year. The depreciation of the Colombian peso (when compared to US dollars) and a decrease in cement demand played an oversized role in Colombia’s pricing decline. Brazil’s pricing depreciation (in USD terms) also contributed to the regional cement average ex-works price decrease. The national cement demand slight recovery was not sufficient to offset the depreciation of the Brazilian real (USD basis). www.cemweek.com

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Leaders Q&A

Eng. Ahmad Al-Rousan Se c re t ar y Ge n era l ,

A ra b U n i o n f o r Ce m e n t a n d B u i l d i n g Ma t er i a l s

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August / September 2016 September/October 2018

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In an exclusive interview with CemWeek Magazine, Eng. Ahmad Al-Rousan discusses the evolution of the Arab Union for Cement and Building Materials throughout the years, and assesses how oil prices, terrorism and the global economic crisis are impacting construction projects in the region

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Leaders Q&A The Arab Union for Cement and Building Materials (AUCBM) completed 40 years in March 2017. How has the organization evolved since its inception to the current day?

When the AUCBM was established back in the seventies of the last century, the cement industry was geographically limited in terms of spread on the Arab scale. It was present in a few Arab countries with a capacity not exceeding 40 million tons.

The industry was mostly state-owned; it lacked qualified staff and relied on foreign expertise. Thus, AUCBM started giving priority to qualifying Arab cadres and conducting studies for the expansion of this industry, which has become a pioneer and is now spread all over Arab countries with a capacity of around 340 million tons. No doubt, the development and growth of the cement industry has led to the expansion of AUCBM tasks on both Arab and global scales, and it has now become one the most important associations globally.

growth of building and construction industry – the essential industry for infrastructure and housing. Since the cement industry is a highly important component in the building and construction industries, AUCBM efforts were concentrated on helping countries create an advanced cement industry that meets the market demands. Additionally, the cement industry has generated others related to the construction sector, as well as other supporting industries – thus contributing in establishing an industrial base, providing jobs and qualifying workforce.

The Arab cement industry lacked qualified staff and relied on foreign expertise

What new cement projects are being developed in the The cement industry has region? contributed significantly The past few years have witnessed a to the economic growth of large number of Arab and international Arabia. What has been the investments in the cement industry, role of Arab Union for Cement and the number of cement factories and Building Materials in the increased significantly, particularly in the GCC countries and Arab North industry’s growth?

It is well known that economic growth in developing countries, including Arab countries, has a positive impact on the

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African countries. However, the recent global economic crisis, lower oil prices, the invasion of several Arab countries by

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armed terrorist acts, and the movements subsequent to the “Arab Spring�, all have led to the decline of these industries in terms of building new factories and to the consequent lower consumption rates.

Currently, the only countries with new cement projects are Algeria and Egypt, as well as Saudi Arabia to a certain extent.

The global economic crisis led to a decline in building new factories and in cement consumption How have oil prices influenced the industry lately?

Overall, the Arab cement industry, particularly the GCC countries, was affected by the decline in oil prices in 2017, and a large number of planned construction projects were postponed or canceled; naturally, this has led to the decline in demand for cement. The political instability in a number of countries has also contributed for this backdrop.

However, the recent increase in oil prices so far in 2018 may, to some extent, positively influence demand for cement in a limited manner. Additionally, expectations for reconstruction may open up demand growth.

How does AUCBM cultivate its goals and relationships on a daily basis?

The current conditions experienced by some Arab countries, accompanied by a decline in demand for cement, oil prices and the large expansions in the cement industry, appealed for a review of the situation of this industry at the Arab level. In light of this, AUCBM is currently working on developing practical proposals to meet these challenges: 1. Applying unified Arab standard specifications; 2. Limiting expansions, now that design capacities have exceeded 340 million tons; 3. Deepening inter-Arab cement trade; 4. Adherence to global terms and conditions with a view to making way for Arab cement exports; 5. Diversifying cement products.

In addition to other companies related to the cement industry, AUCBM is a member of Arab centers that work in the area of research and industrial development. What is being done in Arabia to improve and unleash this sector?

The most important matter we are working on is ensuring a sustainable Arab Cement industry through improving the performance of factories and upgrading them; embarking on the use of alternative fuels based on municipal and industrial

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Leaders Q&A

wastes in order to serve this industry and contribute to environmental conservation; diversifying the product in a way that serves the building and construction industry’s requirements; locating new markets; and limiting expansions in the current stage.

Companies’ investments in green technology attest the increasing importance of sustainability and environmental commitments.

How important are environmental considerations for AUCBM?

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The recent increase in oil prices may positively influence demand for cement The environment is one of the most important issues for AUCBM. Several years ago, AUCBM published a guide about environmental requirements in the cement industry. Moreover, AUCBM has been coordinating with CSI (The Cement Sustainability Initiative) for this purpose; it also translates CSI’s publications and distributes them to its members. In addition, AUCBM pursues the development of factories in this regard.

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What are the main expectations for the Arabian cement sector in 2019?

Some Arab countries have been suffering from political and economic instability for a long time, particularly Syria and Yemen in the Levant, and Libya and Tunisia in North Africa. These difficult situations have been reflected in most industries and development projects, including cement and building materials, which are the main motive for the construction industry, the core of the economy in these countries and neighboring states.

Founded in 1977, Arab Union for Cement and Building Materials is an inter-Arab International organization, affiliated to the General Secretariat of the Arab League and the Council of Arab Economic Unity.

Syria

Headquartered in Damascus, AUCBM aims Damascus principally at developing and supporting technical, industrial and commercial relations; coordinating industrial activities amongst its members in the field of cement and building Arab countries materials; and participating industries in Arab countries among in suggesting general in order to achieve technical through practicing its tasks, grounds for developing these and economic integration responsibilities and expertise.

Moreover, the decline in oil prices in GCC countries during recent years has also led to the cancellation or postponement of many of the planned projects. Of course, these factors have adversely affected the cement industry, and demand has declined significantly. Production capacities were decreased to less than 70% and prices fell to their lowest levels.

In the second half of this year, political and security changes began to emerge in some countries, in addition to a rise

We expect 2019 will see a growth in the building industry

in oil prices, which will necessarily lead to improved economic conditions.

Accordingly, we expect that the year 2019 will see a growth in the building industry for the sake of reconstruction in some countries that have suffered instability, as well as the execution of some planned projects due to high oil prices, which will contribute to the rise in demand for cement.

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Insight Analysis

Global cement companies

report solid results in

1H 2018 The top cement companies in the world have reported an increase in sales for the first half of the year, with prospects for 2018 remaining overall positive.

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Insight Analysis

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afargeHolcim, Cemex, HeidelbergCement, Intercement, CRH and Dangote Cement all reported an increase in their cement sales in the first six months of the year, with overall global sales increasing across most regions.

Expectations for the second half of the year are of continued growth in sales volumes and prices.

First half of the year is highly positive LafargeHolcim, headquartered in Europe, reported a rise of 4.8 percent in global net sales due to a strong growth in most regions, with the exception of Middle East and Africa, where conditions remained difficult. This situation also reflected in Dangote Cement’s results: despite the Nigeria-based manufacturer reporting an increase in both cement revenue and volumes, pan-African sales contracted by 3.9 percent from the first half of 2017, with production decreasing due to a shutdown of output in Tanzania.

HeidelbergCement’s results for the first half of the year show an increase of three percent in cement sales volumes when compared to the first half of 2017, while aggregate sales rose by two percent. All global areas where the company is located contributed to growth in cement sales, while aggregates deliveries recorded increasing volumes across all areas with the exception of Africa-Eastern Mediterranean Basin.

InterCement is located in South America but the group has a global presence. The company has faced volatility in Latin American countries, but has seen growth across its Europe, Middle East and Africa assets. Overall sales revenue declined by

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5.9 percent from the first half of 2018 to the first half of 2017, despite an increase of 0.2 percent in cement and clinker volumes.

Sales revenue for CRH during the first half of the year expanded only by one percent as construction markets continued to recover, despite significant weather disruption in Europe and North America during the first quarter of the year. In

Results in 1H2018 were very positive in the global cement market the Americas, the company saw growth in price and volumes, as the economic backdrop of the region improved.

Vicat’s sales displayed a growth of 9.6 percent in sales, and the company’s net debt declined strongly when compared to the first half of 2017, with most of the growth contribution coming from Europe, especially from France, where the company is located. Asian sales were also positive, as were US sales, with Asia’s and France’s contribution for the company’s growth increasing during this period, whereas Europe’s declined.

For Cementos Argos, consolidated cement volumes expanded by 0.9 percent year-onyear in the first half of the year, reflecting negative effects in the Colombian market, which were partially offset by positive developments in the United States and in the Caribbean.

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Companies expect continued growth in second half Some companies, such as HeidelbergCement and LafargeHolcim, have maintained their outlook for the year, hoping to benefit from positive macroeconomic conditions across most regions, and for that to translate into increased sales volumes of cement. In specific, HeidelbergCement is expecting growth in the USA, Canada, Germany, Australia, and countries in Northern Europe. In other places, such as France, Spain and Italy, as well as Egypt, Indonesia, Thailand, India and Morocco, and in Western and Eastern Africa, the company is also expecting to benefit from the ongoing economic recovery.

LafargeHolcim is expecting a net sales growth of three to five percent for the full year of 2018, in particular due to strong market trends in Europe, as well as continued solid growth in North America. Despite the outlook remaining challenging in a number of countries in the Middle East and Africa region,

Revenue and EBIDTA margins of select cement manufacturers in 1H 2018

Revenue (USD bn)

EBITDA Margin (%)

Source: CW Research

overall growth in the remaining locations of the globe are boosting the company’s confidence regarding its yearly results.

The outlook as per Cementos Argos is also positive, as consumer confidence in the United States is up, and the residential segment is expected to continue to improve, as building permits have expanded over the last few months.

Despite a sluggish start of the year in Colombia, the company expects that demand will recover positively during the second half of the year, with the outlook for other regions remaining bright as well.

Meanwhile, InterCement is facing negative headwinds in Latin America and in Africa, although the prospects for its European assets remain very positive, especially as investment in real estate and exports

expands. CRH has a similarly positive expectation for the remaining of 2018 in its European and American operations, despite facing challenging conditions in the Philippines.

construction activity, thus boosting sales of cement. Across Asia, there are some mixed trends, with some countries expecting a more pronounced economic recovery, while others face a slower economic growth throughout the year.

Challenges remain, but overall business sentiment for 2018 is highly positive

Political issues are also weighing on companies’ outlook for the year; across Latin America, some of the larger economies, such as Brazil and Argentina, are facing an unstable situation with their governments, which will dampen their economic growth and investment in infrastructure and real estate. In Middle East and Africa, growth prospects are also subdued due to some civil conflicts and other issues, such as currency fluctuation.

Conclusion The global cement market seems to be headed for a positive year in terms of sales, although challenges remain in some regions.

Overall, economies in North America and Europe are seeing an upward turn in their

The largest global cement companies have already recorded an overall growth in cement sales and volumes in the first half of the year, a trend that they expect will hold throughout the second half, thus translating into a positive year for the global cement industry.

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FEATURE CW RESEARCH

Global cement consumption to soften on Chinese slowdown

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With economic growth fading out in some markets and improving in others, the overall macroeconomic scenario is moving towards a cloudier period. Cement demand will continue to grow outside China, but at a slower pace.

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FEATURE

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ased on its reading of the macroeconomic scenario, trends on the construction sector, and geopolitical factors, CW Research has prepared a forecast on cement demand between 2018 and 2023.

China, responsible for half of the world’s demand, is reaching a maturity level that foretells a prolonged, but controlled decline in cement consumption.

Faced with this new cycle, Beijing has introduced swift measures to limit production and capacity that will also have an impact on the local demand.

Meanwhile, cement consumption is expected to continue its growth in the rest of the world. However, economic prosperity is starting to fade out and regional risks could rapidly turn into a full-blown recession.

Macro-Economic Scenario The global economy is currently experiencing a period of stabilization. With few exceptions, global economies are growing in tandem, especially

since Brazil and Russia managed to partly recover from their recessions.

However, there are some risks that must be accounted for, including the upcoming election cycles in Europe and United States. Anti-EU parties continue to gain traction, threatening investor’s confidence on the euro market, while in the United States, mid-term elections may create some turbulence on the economy and the stock market after a prolonged period of growing productivity and confidence. Also, the full effect of the ongoing trade war between the United States and China has not yet been assessed, and the unsolved questions regarding the North-American Free Trade Agreement persist. Finally, an increase in interest rates could increase volatility in the international markets.

Some economies, including the United Kingdom and Turkey, are already facing slow gross domestic product growth The latest forecast indicates that the global economy will continue to grow in the coming years. However, some markets may experience a slowdown, as is the case of China. The local economy is reaching a new level of maturity, and the advanced countries that have already experienced a period of strong growth find it difficult to maintain it.

Some economies, including the United Kingdom and Turkey, are already facing slow gross domestic product growth, with the latter expected to face a recession in the coming quarters as it goes

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through a period of monetary chaos and political instability. To the contrary, emerging and developing economies in Asia are experiencing a period of both strong domestic demand and exports.

Similarly, oil exporters in Northern Africa and the Middle East are benefiting from an increase in the price of crude, but they require further economic diversification in order to avoid future shocks. Finally, the sub-Saharan region has benefited from an increase in commodity prices and from a recovery in its largest economy, Nigeria.

Demand Cement demand has been positively influenced by the current macroeconomic scenario, achieving healthy levels of growth. Likewise, it is also exposed to the aforementioned risks. Those risks could rapidly lead to a new recession and, as the past trends show, the global economy is characterized by periods of growth followed by periods of recession.

While the global demand for cement is expected to fall by 0.2 percent this year, that decline can be attributed to China. Beijing has decided to focus on debt control, leading to many infrastructure projects, such as new subway networks, being put on hold and stricter regulations being imposed on public-private partnerships.

In China, cement demand is being dragged down by lack of investment in the real estate and infrastructure sectors. In total, China is expected to consume 2.55 billion tons of cement in 2018, a decrease of 2.8 percent compared to the past year.

The country's economy is now reaching a mature stage similar to that grasped by the western markets 20 to 30 years ago, when demand for cement started to reach its plateau. Excluding China, cement demand will likely grow by 3.3 percent this year, to 1.79 billion tons, sustained by an improvement in the residential sector in the case of developed markets and by higher investment in infrastructure in developing ones.

This represents one of the fastest growth rates for global ex-China in recent history.

HEATMAP: GLOBAL 2018 YEAR-OVER-YEAR OUTLOOK GROWTH

Source: CW Research

Capacity As on demand, China has a disproportional weight on the global increase of cement capacity. Last year, the country represented

In China, cement demand is being dragged down by lack of investment in the real estate and infrastructure sectors over half of all new cement production capability added to the global fleet.

However, the Chinese government has introduced stiff regulations on capacity increase, including the latest rules on inputs for captive power plants. Thus, China’s share of worldwide capacity

additions is expected to decline by two percentage points this year.

Excluding China, the rest of the world will probably witness an addition of around 117.5 million tons per annum to cement capacity, compared to 105.3 million times in 2017. Asia ex-China accounts for over a third of the increase in capacity expected for this year, with India representing 40 percent of the new additions in that region. Indian manufacturers have already announced the construction of production lines with the capacity to produce 60 million tons of cement per annum for this y e a r .

O t h e r

national markets such as Turkey, Egypt, Nigeria, and Algeria are also worth mentioning when it comes to capacity additions. Lastly, in the wake of the end of the ISIS conflict, Iraq alone is adding four million tons per annum in capacity until the end of 2018 in a bid to become self-sufficient, with a substantial effect on the figures for the Middle East.

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2018 and beyond Going forward, CW Research foresees a slowdown in demand growth at the global level based on both macroeconomic and local factors.

In the Middle East, cement consumption will decline

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FEATURE CHART: GLOBAL CEMENT CAPACITY (Mn tons)

Source: CW Research

in 2018, as the two major producers and consumers in the region – Saudi Arabia and Iran – continue to struggle with overcapacity and sluggish demand domestically. The next five years are believed to bring a recovery in cement consumption for the region.

The forecast for the African continent has been revised downwards from early predictions due to lower-than-expected growth in 2018. Consumption in the region is expected to grow by 1.6 percent in 2018 and by 3.6 percent per annum through 2023. This year’s figures have been negatively impacted by underperformances

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The forecast for the African continent has been revised downwards due to lower-thanexpected growth in 2018

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of the Egyptian, Tunisian, and, especially, the Kenyan markets. Kenya has faced a protracted presidential election that resulted in delays on state-backed infrastructure projects and in a fall in the confidence of private investors.

CW Research expects cement demand to grow by 2.8 percent on a cumulative annual growth average in United States, following an improvement of three percent this year.

In Western Europe, cement demand is expected to increase by 2.8 percent yearon-year in 2018 to 129.2 million, while maintaining an average growth of 2.2 percent for the period between 2018 and

The market of Latin America is expected to display a recovery this year, following consecutive years of declining cement demand. During the next five years, growth will likely accelerate as the regional economy recovers. In 2018 alone, consumption of cement is projected to

CW Research expects Latin America, as well as Africa, to benefit from the latest improvement in commodity prices expand at an annual average growth rate of 1.4 percent, and by 2.4 percent by 2023.

This year, Argentina has outperformed the remaining countries of the region thanks to a dynamic construction sector and large projects such as dams, highways, bridges and tunnels. To the contrary, Brazil continued immersed in political and social instability.

The truck drivers’ strike, which occurred in May, paralyzed most of the country, including the majority of cement companies.

The Brazilian economy will likely stabilize in the coming years, contributing to an improvement of the cement sector. CW Research expects Latin America, as well as Africa, to benefit from the latest improvement in commodity prices, increasing both state expenditure on much-needed infrastructure and the purchasing power of citizens and private companies.

Conclusion Outside China, the global economy is performing well, with economic growth trickling down to construction activity and to cement consumption. While cement demand is expected to keep growing in the coming years, the macroeconomic scenario may become clouded by political instability, friction in trade relations, and an increase in interest rates. Advanced economies will, most likely, be unable to keep the current growth rates and the world’s economy will enter a period of more tepid growth, with the aforementioned risks coming into play and potentially triggering a recession.

At the same time, some markets are in another stage of the cycle. Those include the Middle East, Africa, and Latin America, hit by a decline in commodity prices and other internal problems. CW Research expects most of those economies to experience a recovery in the coming years, benefiting from a rise on those commodity prices.

Photo Credit - Eric Kilby

2023. In those advanced markets, cement demand has been sustained by a steady growth in the economies but, as it was already mentioned, those economies will likely fail to maintain those growth margins.

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About the report CW Group’s Global Cement Volume Forecast Report (GCVFR) is a twiceyearly update on projections for cement volumes on a national, regional and global level.

The forecast provides global and regional outlooks, as well as detailed perspective on 57 of the world’s most important countries’ cement consumption, production, net trade and cement production capacity. The five-year outlook presented in this benchmark study enables industry professionals to shape their perspective on markets and business priorities.

The Global Cement Volume Forecast Report has two updates a year: Extended (October): an extended update (includes briefs on 57 key markets with principal supply-demand impacting drivers and CW Research's analyst market assessments presenting a detailed numerical worldwide analysis, as well as the regional and global supply-demand model).

Quantitative update (March): a quantitative update (only includes the numerical sections of the report, not country write-ups).

More information about the report can be found here: https://www.cwgrp. com/research/research-products/ product/12-global-cement-volumeforecast-report

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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Country Snapshot: Oman cw research

Cement production capacity in Oman to reach

19 million tons by 2023

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CW Research analyzes the small and consolidated Omani cement market, as the country’s construction industry is bound to recover, following a couple of challenging years

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Country Snapshot: Oman

T

he Sultanate of Oman is an Islamic country situated on the southeastern coast of the Arabian Peninsula, with its capital in the city of Muscat.

Part of the Gulf Cooperation Council, but not part of the OPEC, the country’s economy is dependent on revenue coming from oil exports, making it susceptible to the volatility of the international price of the commodity.

Low construction costs attracting private investors According to CW Research’s 2018 update of the Oman Cement Market Report, cement apparent consumption in the country is forecast to increase to almost eleven million tons in 2023, encouraged

Private investments in construction are likely to offset the cut in public investments the government decided on for the 2018 budget

by growing construction activity both due to private and public investments.

Production capacity is also projected to rise within the next five years, underpinned by capacity expansions of existing plants and the entry of new market participants.

The improving trend forecast for both consumption and production contrasts with the evolution of the construction sector in the last couple of years. The country’s construction activity declined in 2016 and in 2017 due to the shocks the decline of oil prices had over the sector. However, in 2018, private investments in construction are likely to offset the cut in public investments the government decided on for the 2018 budget. Furthermore, private investors are attracted by the ease of doing business and by the low construction costs in Oman.

A small and consolidated market Muscat

Oman

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The Omani cement industry is fairly consolidated, with four cement plants, and another one starting operating by the end of the year. Two of the cement plants are integrated, whereas the other are grinding ones.

About the report CHART: APPARENT CONSUMPTION AND PRODUCTION FORECAST (2012-2023E) (Mn tons)

Source: CW Research

Private investors are attracted by the ease of doing business and by the low construction costs in Oman

Currently, cement plants only exist in the North and South of the country, and mostly supply their respective regions.

Nevertheless, all of the new plants scheduled to start operations after the start of 2019 are located in the Duqm SEZ, in the central part of the country.

Oman’s cement market is split among very few players, among them Oman Cement Company, and Raysut Cement Company.

The Oman 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 fiveyear 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.

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Industry reports are presented in an objective, easy-to-understand format, providing hard-to-find answers to top market research questions.

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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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September/October 2018

23

CEMENT MARKETS

CW Research

Cement Volumes Year-to-date cement production in Argentina increased five percent in July as a result of the positive trend in the construction sector and government investment in highways, bridges and tunnels. Production has given signs of softening after a rapid growth in the first six months of the year.

India is the country from this market selection that displayed the highest improvement in cement production, reporting an increase of 15.5 percent on a year-to-date basis.

Colombian cement output decreased two percent on a year-to-date basis, due to the delay in several construction and infrastructure projects. However, an increase in cement production and consumption is anticipated for the following years as a response to the continuing 4G projects.

To reduce investment and balance public debt, the Chinese government created publicprivate partnerships to avoid investing in metro infrastructures, the most expensive type of

project the Chinese government had planned.

These government measures led to a decrease of 9.5 percent in cement production in China on a year-to-date basis.

India is the country from this market selection that displayed the highest improvement in cement production, reporting an increase of 15.5 percent on a year-to-date basis. The main reason is the fact that the government is about to invest in low-cost housing to meet the urgent residential needs of 30 million families.

In spite of the Tokyo Olympics event in 2020, Japan decreased its cement production by two percent and consumption by 0.1 percent on a year-to-date basis. This decrease was due to a contraction of the housing sector and to the government’s attempt to reduce public debt, which led to savings in public investment.

CHART: Year-to-Date Cement Demand in July 2018 (%)

Sources: CW Research

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CW Research CEMENT MARKETS

Saudi Arabia is the country that recorded the biggest reduction in both cement production and consumption, 11.2 percent and 11.6 percent, respectively, on a year-to-date basis. The cement consumption decrease continues to be affected by the aftermath of the decline in oil prices.

Investments in construction and infrastructure projects are getting delayed, due to the drop in the main driving sector of the kingdom’s economy: oil.

Cement consumption in Brazil dropped 1.7 percent when comparing July 2018 year-to-date to that of the previous year. The main reason for this drop is the lack of government investment in the construction sector, due to the focus on the fiscal consolidation agenda and on the elections.

The election result may be unfavorable for the construction industry, so investors are waiting for the outcome to invest.

From our country selection, in terms of cement consumption, Peru is the market that improved the most, posting an increase of 1.4 percent due to the wage increase and a low inflation rate, which promoted an increase of condominiums and multi-family buildings. The Peruvian Chamber of Construction (CAPECO) announced its expectation for the construction sector to expand by three percent during the current year.

In Morocco, cement consumption declined from eight million to 7.8 million tons, a decrease of 1.3 percent on a year-to-date basis, due to a stagnation in the real estate market. For the coming year, cement consumption is expected to improve due to the implementation of several projects in the construction sector.

CHART: Year-to-Date Cement Production in July 2018 (%)

Saudi Arabia is the country that recorded the biggest reduction in both cement production and consumption, 11.2 percent and 11.6 percent, respectively, on a year-to-date basis.

Sources: CW Research

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DEPARTMENTS

PEOPLE New cement director at Global Cement & Concrete Association Claude LorĂŠa has been appointed the new cement director at the Global Cement & Concrete Association, a new entity set up earlier this year. The appointment will become effective starting in early November.

Currently, Claude LorĂŠa is deputy chief executive and industrial affairs director at Cembureau. She will report to the future chief executive of Global Cement & Concrete Association, Benjamin Sporton.

The new director will handle questions regarding practical understanding of

cement chemistry, production, coprocessing, data collection and standards,

as well as international climate policy, regulatory requirements and trends.

Martin Brydon to step down from Adelaide Brighton By the end of this year, Martin Brydon will quit his position as managing director of Adelaide Brighton, the largest cement manufacturer in Australia.

Brydon will become non-executive director of Fletcher Building.

"Our new strategy focuses Fletcher Building on the New Zealand and Australian markets, and we believe the addition of a director with such extensive experience in Australia will be a valuable addition to our board," commented Ralph Norris, the outgoing chairperson of Fletcher Building.

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PEOPLE Çimsa White Cement designates new general manager Ülkü Özcan has been appointed the new general manager of Çimsa White Cement and the special products sales and marketing assistant general manager at Çimsa. The nomination became effective on October 1.

According to Tamar Saka, president of Sabancı Holding Cement Group, Özcan has served the group for eight years. She graduated from the Marmara University Business Administration Department in 1999.

Dangote Cement appoints new country director in Ghana

Brice Houeto has become the new country director of Dangote Cement in Ghana, replacing Tor Nygard, who has retired after two and half years on the post. According to Houeto, the Ghanaian cement market is

currently experiencing significant growth in terms of storage capacity.

“The supply chain market requires the need for product research and continuous

improvement. The cement industry is still evolving, hence our determination to scale up the quality of our products to maintain our position in the market,” Houeto stated.

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September/October 2018

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DEPARTMENTS

EQUIPMENT

ABB upgrading Tan Thang Cement with digital automation Zürich-based ABB was contracted

by Vietnamese manufacturer Tan Thang Cement Company to install an additional integrated digital automation and electrical equipment solution to

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the latter’s cement plant in Nghe An province. “We are aiming to have the most modern cement production plant, equipped with the latest digital technology, that will help us to achieve our production and efficiency goals,” said Hoang Anh Tuan, general director of Tan Thang Cement.

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The order includes a 110kV AIS Substation (Air Insulated Substation), with a SCADA (Supervisory Control and Data Acquisition) system based on ABB AbilityTM System 800xA for Power Control, as well as telecommunications, and High Voltage primary and secondary equipment.

EQUIPMENT Loesche to supply vertical roller mill to Flying Cement

Loesche has received the order for the delivery of a vertical roller mill for a new 7,000 t/d production line from the Flying

Cement Company Ltd (FCCL) based in the Pakistani city of Lahore. The raw material mill will be used in the FCCL

cement plant in Mangowal in the heart of the province of Punjab, where it will grind 600 t/h of cement raw material. In the Khushab plant, the Flying Cement Company mainly produces Ordinary Portland Cement (OPC).

Along with the mill, the scope of supply also includes a Hurriclon system from ATEC, a member of the Loesche Group, for separating finished material from the gas flow leaving the mill. The benefits of the patented Hurriclons compared to conventional cyclone separators are in the reduction of pressure losses by 30% and more, which results in a much lower electrical energy demand for the mill fan. Not least the space requirement for the product separation is considerably reduced thanks to the very compact construction of the Hurriclons.

Commissioning is expected to take place at the end of 2018.

Siwertell secures ship unloader order from South Texas Cement Siwertell, part of Bruks Siwertell Group, has secured an order from US-based GCCM Holdings LCC to supply a highcapacity ship unloader for South Texas Cement’s terminal in the US port of Corpus Christi.

The Siwertell ST 640-M unit will have a continuous rated cement-handling capacity of 1,500t/h and will be able to unload ships of up to 60,000 dwt.

“GCCM and South Texas Cement made the decision that their new terminal would be best served by a mechanical unloader,” says Patrik Henryson, Sales Manager, Siwertell. “The factors considered by the companies during the decision process included unloading times, venting requirements, electrical demand, capital and lifetime maintenance costs, ship size, and storage capacity.”

“Siwertell’s demonstrated ability was a large factor in the decision to choose them for this project,” says Earl Ingram, President of GCCM Holdings and South Texas Cement. “Machine size and unloading rate were extremely important. This particular machine is well within the operational range of many other machines that Siwertell currently has in service, and when combining all of the deciding factors that led to choosing a mechanical

unloader, it was apparent that Siwertell was the best fit for our needs.

“We especially like the high rate of unloading combined with the versatility to handle various ship sizes.” The unloader is currently being built and will be delivered fully-assembled by heavy-lift ship to the port. Siwertell will supervise its commissioning and the unit is expected into operation in JuneAugust 2019.

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EQUIPMENT Loesche delivering two grinding plants to San Miguel Northern Cement

San Miguel Northern Cement Incorporation is relying on proven Loesche technology for the new 5,000 t/d production line at the Sison site in the province of Pangasinan, in the Philippines.

The scope of supply includes two complete grinding plants, one with a LM 56.4 for cement raw material and one with a LM 35.3 D for sub-bituminous coal.

In addition to the mechanical equipment, Loesche also supplies a majority of the electrotechnical components and the automation with modern control technology, e.g. the software LM Master developed by Loesche for process optimization. Loesche is also responsible for the plant engineering, the supply of filters, blowers, etc.

The delivery will be made at the start of the coming year.

Skanska to set first carbon-free limestone quarry Skanska has turned a quarry near Gothenburg, Sweden, into an emissionfree site.

With the help of Volvo Construction Equipment, the Swedish project development and construction group expects to cut carbon emissions by 95 percent on the Vikan Kross quarry.

Volvo will install its Electric Site concept, which includes electric and autonomous Volvo vehicles, at the site. The equipment is being tested under real conditions. “This is the first time that anything like this has been attempted in the quarrying industry and, if successful, Electric Site could serve as a blueprint for transforming the efficiency, safety and environmental impact of quarries around the world,� said Gunnar Hagman, CEO of Skanska Sweden.

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Flashback NEWS FLOW IN CEMWEEK.COM LAST TWO MONTHS

United States 22 articles

Russia 24 articles

Turkey 11 articles

Iran 12 articles Egypt 58 articles

Pakistan 26 articles

Kenya 15 articles Tanzania 16 articles

Brazil 14 articles

Zimbabwe 18 articles

cw Research 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 https://www.cwgrp.com/research/webinars-and-meetings

Cw Research's newest reportS:

World Natural and Oman Cement Synthetic Graphite Market Report Market Demand Forecast Report September 2018

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October 2018

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Global Cement Trade Price Report

October 2018

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Researchers develop new concrete using textiles Wagners acquires quarry in Australia BASF to develop new concrete additives production facility in Ukraine 5. US: Production of aggregates increases in second quarter 6. Irish construction activity slows down in September 7. New Zealand government to crack down on construction industry 8. Construction material prices in Canada rise in July 9. Austria: Construction sector grows in first half of the year 10. European companies recycling construction waste

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India: Supreme Court sets petcoke import limit John Wood Group to provide coking equipment to Omani refinery 3. India: Goa Carbon’s earnings decline in second quarter 4. Norsk Hydro to halt production in Brazilian plant 5. India: Graphite electrode industry allowed to import petcoke 6. Pemex sale of Tula refinery delayed 7. Global graphite market to reach 6.3 million tons by 2023 8. Petcoke importers in China turning to alternative suppliers 9. Rusal postponing commissioning of new aluminum operation 10. BP considers closing of coking unit in the US

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National Cement Company may not be revived Siwertell to supply ship unloader to South Texas Cement 3. Cement production rises in China 4. New cement project in New Valley, Egypt 5. Indian cement makers turn to marketing 6. Dalmia Cement studies replacing coal with plastic waste 7. Loesche delivers three vertical roller mills to Lubao Cement 8. Lafarge Zimbabwe with high hopes for the housing sector 9. Cement makers in India suffer due to higher oil prices 10. Chinese builders use rockfill concrete technique

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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.

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