GLOBAL CEMENT INDUSTRY. KNOWLEDGE.
ISSUE 47
December 2018
Made in USA
Q&A with Tom Tietz
Executive Director of California Nevada Cement Association
Can the US keep
up with a growing cement demand?
CW Research
Cement prices lose steam in 4Q 2018
News
•
Analysis
•
Market Coverage
•
Interviews
•
People Moves
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
Made in USA
CEMWEEK PUBLISHER HEAD OF CW GROUP RESEARCH
Traditionally known for its economic, military and cultural global reach, the US is no stranger to being in the limelight. Despite a decreasing overarching influence theorized by many, the US remains nonetheless a cornerstone for world politics and decisions, the stage where the main act takes place and to which all side stories end up converging. In this issue, we shift our eyes towards the US cement industry – an analysis that could not have excluded one of the country’s most important cement-producing states: California. Thomas Tietz, Executive Director at California Nevada Cement Association, paints the portrait of a state that can pride itself on city streets and freeways approaching 100 years with limited maintenance, and tells CemWeek Magazine how the story of concrete is underrated, and how California cement producers are planning to curb CO2 emissions over the long term. It will be interesting to witness how national cement producers combine that noble and much-necessary goal with meeting the needs of a currently growing cement demand in the US. Which raises the question: will the domestic construction industry be able to sustain the upward trajectory in the long term? Be sure to check our answer further ahead in the magazine. As the year draws to a close and the global cement industry retreats to a general slowing pace, one thing is certain: in 2019 and beyond, the world will still need a centerpiece to revolve around, one which is sure to be born, built, or made in the USA.
Margarida Cunha
Editorial Coordinator
Margarida Cunha Editorial Coordinator
LIVIU DINU Mihnea Manea ADVERTISING
João Sobrinho Paulo Cruz Raluca Cercel Sara Ruas Simão Alvarez
CONTRIBUTING WRITERS & RESEARCHERS
SANTOSH SHETTYE DESIGNER
To subscribe or advertise, please contact us at E: sales@cwgrp.com ©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. Cover image credit: Josh Rose for Unsplash Any submissions or contributions from readers shall be subject to and governed by CemWeek’s Terms and Conditions, which are available upon request. The publishers regret that they cannot accept liability for error or omissions contained in this publication, however caused. The opinions and views contained in this publication are not necessarily those of the publishers. Readers are advised to seek specialist advice before acting on information contained in this publication which is provided for general use and may not be appropriate for the reader’s particular circumstances. The ownership of trademarks is acknowledged. No part of this publication or any part of its contents thereof may be reproduced, stored in a retrieval system or transmitted in any form without the permission of the publishers in writing. An exemption is hereby granted for extracts used for the purpose of fair review.
CW Group CW Group
To subscribe please http://www.cwgrp.com/subscribe-cemweek
CW Analytics
contents FEATURES 4 Leaders Q&A: Tom Tietz With California among the top cement producing states in the US and some of its city streets and freeways approaching 100 years with limited maintenance, Thomas Tietz tells CemWeek Magazine how the story of concrete is underrated, and how California cement producers are planning to curb CO2 emissions over the long term 14 Insight Analysis: Can the US cement industry keep up with a growing demand? Although the US construction industry is feeling the positive effects of several government decisions, the headwinds of others could start to blow away their margins in the next few years. Can the industry continue its upward trajectory, or will its ascendance be cut short? 18 CW Research: Cement prices lose steam entering the fourth quarter Gray cement prices, both domestic and trade, recorded positive developments in the third quarter, boosted by higher input costs and a shrinking Chinese production. However, the winter season is bound to bring about a general slowdown
4 14
24 Country Snapshot: Infrastructure and housing boosting Kenyan cement demand CW Research analyzes the small and competitive Kenyan cement market, as the country’s construction industry is poised to become its fastest-growing sector over the coming decade
DEPARTMENTS 1 EdiTor's letter Made in USA
34 cw group meeting agenda CW Group’s upcoming events
3 numbers in brief 9M results show continuous improvement in the global cement market
2
28 Research Cement Volumes 30 Departments People Equipment
2
December 2018
35 BUZZ Top 10 CemWeek, BMWeek and PetcokeWeek stories
www.cemweek.com
numbers in brief
Cement prices and sales volumes continue to rise 9M results show continuous improvement in the global cement market
With positive market dynamics present in the current cement market, some of the largest cement manufacturers in the world registered encouraging results in the first nine months of the year. Encouraged by a positive market environment, some of the biggest cement companies decided to increase their product prices. Nevertheless, despite the general improvement in cement pricing, cement manufacturers still registered higher sales volumes and thus a general increase in revenues. CHART: 9M2017 and 9M2018 revenue (USD mn)
Source: Company reports, CW Research
Most of the largest players registered an increment in terms of revenue in the first nine months of this year when compared to the same period of last year. Increasing demand was the main driver behind the even more positive results of the first nine months of this year, which were enough to offset the bad start of the year – in turn damaged by seasonal bad weather. CHART: 9M2017 and 9M2018 EBITDA margin (%)
Source: Company reports, CW Research
Even though companies such as Cemex, LafargeHolcim, Cementir and Heidelberg raised their prices, most manufacturers still registered a small reduction in margins mainly due increasing energy costs.
www.cemweek.com
December 2018
3
Leaders Q&A
Tom Tietz
Executive Director, California Nevada Cement Association With California among the top cement producing states in the US and some of its city streets and freeways approaching 100 years with limited maintenance, Tom Tietz tells CemWeek Magazine how the story of concrete is underrated, and how California cement producers are planning to curb CO2 emissions over the long term.
4
August / September December 2018 2016
www.cemweek.com
www.cemweek.com
August / September December 2018 2016
5
Leaders Q&A
T
om Tietz is the Executive industry, and on the challenges of a sector Director of the California that is trying to keep up with increasingly Nevada Cement Association tight environmental regulations. (CNCA) and is actively involved with and oversees CNCA’s The resilience regulatory, legislative, marketing of concrete is a and education efforts. The core remarkable story that markets that the association is often unrecognized focuses on include pavement technologies, geotechnical soluand thus tions and buildings. underreported Tom’s career started in architecture. After receiving a Bachelor of Science and Master of Arts degrees in Architecture from the University of Illinois and practicing as a licensed architect, Tom has been working for trade associations since the mid 90’s. These associations include CNCA and the Concrete Reinforcing Steel Institute. He has provided seminar topics to agencies, architects, engineers, contractors and universities across the United States.
The California Nevada Cement Association (CNCA) is committed to developing sustainable and economical construction solutions for California and Nevada with an emphasis on the use of cement and concrete. How would you describe the role of the Association, and what achievements have been In an exclusive interview with CemWeek accomplished so far? Magazine, Tom shares his insights on the role the CNCA has been playing in advocating for the California cement
6
August / September December 2018 2016
www.cemweek.com
I believe that the role of our association is more important than ever. We are in a crucial moment of time where new metrics are currently under development by the State to compare construction materials, not just on the traditional initial cost to install, maintain, repair and replace, but on the basis of a product’s environmental footprint. It is crucial that any comparison of competing materials be conducted in a manner that is open and transparent and achieves an applesto-apples life-cycle analysis. We must assure that California and Nevada cement and concrete materials are understood accurately and truly valued for their superior performance. CNCA takes on these efforts by relentlessly advocating for our industry, whether that means providing project design assistance to testimony before State legislative committees to address crucial matters impacting our competitive standing. Ultimately, CNCA is committed to
protecting and improving market share in a very challenging dynamic market. This is difficult but very rewarding. CNCA’s engineers are highly regarded technical resources in our marketplace that are sought for their expertise on a full range of geotechnical and pavement solutions. They are also instrumental in pioneering innovative solutions that are both cost-competitive at initial installation with asphalt while reducing use-phase maintenance burdens. We have an excellent reputation for working collaboratively with State agencies and legislatures in both California and Nevada.
California already has benefited from city streets and freeways built in concrete that are still going strong for greater than 50 years
In 2017, CNCA released a “Study of Historical Concrete Pavements in California�. What are the main takeaways of this study, and how does it reflect the evolution of the California cement industry throughout the years? The resilience of concrete is a remarkable story that is often unrecognized and thus underreported. The simple fact is California
www.cemweek.com
August / September December 2018 2016
7
Leaders Q&A already has benefited from city streets and freeways built in concrete that are still going strong for greater than 50 years, with some approaching 100 years with limited or no maintenance cost whatsoever.
California is one of the top cement producing states in the US, which translates into high levels of energy consumption and of GHG emissions. How does the CNCA evaluate the environmental impact of the Californian cement sector? Since the implementation in 2006 of the California Global Warming Solutions Act (AB32) and a series of complimentary legislation, regulations, planning and Executive Orders, California has begun a process to reduce GHG emissions 80% by 2050. The California cement industry immediately recognized the importance as well as complexity and cost to achieve
8
August / September December 2018 2016
California has begun a process to reduce GHG emissions 80% by 2050 GHG reductions in the production of cement. For example, process emissions represent greater than 50% of the CO2 released during the production of cement. Because of the magnitude of this challenge, California cement producers established a separate association to specifically address the environmental, economic and legal dynamics of protecting the viability of producing cement in California. This group, the Coalition for Sustainable Cement Manufacturing and the Environment, has committed to working with the California Air Resources Board
www.cemweek.com
to achieve workable solutions to achieve the State’s environmental goals. This is an ongoing effort that will only get more challenging with increasingly aggressive goals being set by the State.
In 2017, the American Society of Civil Engineers’ (ASCE) rated the country’s infrastructure a D+, showing minor improvements since 2013. In February that year, an emergency evacuation was carried out in California, as the Oroville dam main spillway was in danger of imminent collapse, posing a threat to 188,000 residents. What are the main challenges currently faced by the US national infrastructure, and what can be done do address those challenges?
CNCA’s focus is specifically on California and Nevada and not on US infrastructure. However, events like the Oroville Dam auxiliary spillway failure is representative of the greater challenge facing the U.S. California’s pavements typically rank among the worst in the nation. To address these weaknesses and threats to public safety, we engage on two levels. One is to advocate to increase and protect transportation and infrastructure funding. The second is to provide expert technical assistance to assure our materials are used to provide the ultimate solutions to withstand the pressures of time and natural disasters.
Absent the development of carbon capture and sequestration there isn’t much more that [California cement producers] can do
the steel industry, with 6% of global emissions (IEA, 2017). It further states that 13 of the world’s largest publiclylisted cement companies need to more than double their According to “Building emissions reductions if they Pressure”, a report released are to limit global warming to in 2018 by CDP (Carbon below two degrees, as agreed Disclosure Project), the global cement industry is the second largest industrial emitter after
in the Paris climate deal. Why is the global cement industry taking so long to catch up with environmental commitments, and what can be done to accelerate the process? I am amazed by the progress and innovation of California cement producers. The challenge is that absent the development of carbon capture and sequestration there isn’t much more that they can do in the production process to make big emissions reductions. This is why CNCA is working toward the acceptance of portland limestone cement in this market, which will allow producers to reduce emissions by nearly 10%. There is still research to be done and outreach to be made to drive demand for this.
www.cemweek.com
August / September December 2018 2016
9
Leaders Q&A
10
August / September December 2018 2016
www.cemweek.com
The Bixby Creek Bridge built in 1932 on the California Coast is an example of concrete’s superior resilience
www.cemweek.com
August / September December 2018 2016
11
Leaders Q&A The California Nevada Cement Association (CNCA) is committed to developing sustainable and economical construction solutions for California and Nevada with an emphasis on the use of cement and concrete.
Nevada San Francisco
California CNCA serves these states as Las Vegas a non-profit association that provides expert technical leadership, research, and Los Angeles educational opportunities designed to responsibly transform the built environment and improve the lives of the people buildings, foundations, as well in pavement recycling, fullthroughout the region. reclamation, soil as concrete pavers, pervious depth concrete, roller compacted cement, cement modified CNCA specializes in providing concrete, concrete overlays soil, cement treated base, technical leadership for and concrete pavement lightweight cellular concrete, concrete highways, roads, restoration. The Association solidification, and brownfield bridges, parking lots, also has technical expertise remediation.
12
August / September December 2018 2016
www.cemweek.com
The research of the MIT Concrete Sustainability Hub has also been vital to the environmental dialog in California. MIT has effectively articulated the value of life cycle thinking that weighs the full environmental impacts of a given project from its cradle to grave so that cement emissions are put into proper context.
According to CW Research’s 1H2018 Global Cement Volume Forecast Report, factors such as environmental restrictions, cement substitutes and evolving construction methods will be among the main constraints
for cement consumption in developed markets by 2050. In an increasingly environmentaware global outlook, is there a place for the widespread use of cement and concrete? I am convinced that there will still be widespread use of concrete by 2050 but the pressure to reduce cement contents will increase greatly as more and more entities strive for GHG reductions. The important part of this equation is to assure that concrete is still being specified in lieu of competing products. There will be cement used in concrete, even if at lower amounts. It won’t be used in asphalt, steel or wood alternatives.
www.cemweek.com
August / September December 2018 2016
13
Insight Analysis
Can the US cement industry keep up with a growing demand?
14
December 2018
www.cemweek.com
Although the US construction industry is feeling the positive effects of several government decisions, the headwinds of others could start to blow away their margins in the next few years. Can the industry continue its upward trajectory, or will its ascendance be cut short?
www.cemweek.com
December 2018
15
Insight Analysis
C
onstruction companies in the United States are benefitting from the tax cuts that the current government administration has provided, but that same administration’s resolutions could prove more harmful in the coming years. An escalating trade war with China and other large trade partners such as the EU and neighbors Canada and Mexico, which has seen an imposition of heavy tariffs on items that are key for the construction industry, could productivity is decreasing and the market remains volatile. greatly affect growth in the construction sector. Heading towards a slowdown
Construction companies are benefitting from shortterm regulation, but their future growth remains uncertain
Costs of wood, steel and other items are rising, as the government has imposed steep import tariffs on several raw materials for these industries, in an effort to boost domestic production. Instead, it has been pushing prices for the manufactured product, which could further pressure companies’ margins and increase consumer prices. Although the economy is set to be propelled by investors’ response to the corporate income tax, according to the IMF’s latest World Economic Outlook, this boost is set to be only temporary, as
16
December 2018
As observed by Raluca Cercel, CW Group’s Associate, “all signs do point to an imminent slowdown.” Cercel stresses that, even though construction spending has grown in the 2014-2017 period, with residential construction leading the way, not just in growth, but also in costs, macroeconomic factors will have a large impact on the industry. Infrastructure growth has remained temperate, despite an urgent need of upgrading the existing infrastructure and investing in new one, but President Trump’s USD 1.5 trillion infrastructure plan is moving slowly. In fact, in 2017,
www.cemweek.com
infrastructure spending by the government contracted by almost twenty percent when compared to the previous year, with most of the investment coming from regional institutions and governments, rather than at the federal level. Prices for materials used in construction, such as steel and wood, are also increasing due to the trade dispute, as are prices for fuels such as coal and petcoke, which directly affect the cement industry, as well as other manufacturing sectors. The national debt has also been expanding at a concerning level, which will limit direct investment in infrastructure. All of this could point to a slowdown of the United States’ economy, which would directly affect the country’s construction industry, as well as other economies in the region.
Government spending less in construction In 2017, the value of construction put in place reached USD 1.23 trillion, rising by 3.8 percent from 2016, and the smallest gain since a 2.6 percent drop in 2011. Most of the growth was boosted by residential building, which grew by 10.6 percent year-on-year, while nonresidential construction increased
by only 0.6 percent, as projects related to power and manufacturing declined. Government spending in the sector declined by 2.5 percent during that year, or USD 279.8 billion, with key infrastructure projects being affected the most, particularly those involving highways, streets, power, waste disposal, sewage and water supply. Most of the spending had to be taken up by the regional government, as federal spending in those areas remains subdued. The construction industry makes up around 4.3 percent of the United States’ GDP. Meanwhile, cement growth was mostly lukewarm in the country, and, were it not for the boost provided by the residential sector, it would have only increased marginally, or possibly even decreased.
During the year, a rise in prices of coal and petcoke, used both to produce energy and during the manufacturing process, as well as an increase in freight costs, forced cement companies to raise their ex-works prices and adopt strategies that led to a rise in EBITDA. Over the medium term, CW Research forecasts cement demand to grow at a compound annual growth rate (CAGR) of below three percent between 2018 and 2023, while growth per capita is expected to remain below 2.5 percent.
Residential sector to continue to drive growth Although some of the government’s infrastructure plans are expected to be rolled out in 2018, in part due to political
How will the cement industry fare? In 2017, cement demand expanded by 2.4 percent when compared to the previous year, in which it had only grown by 1.6 percent, far from the surges in demand seen in 2015 and 2014. The growth was driven by the residential sector, and would have otherwise remained subdued or even negative.
Cement demand is likely to remain subdued over the next few years
reasons, most of the growth in the industry will not be driven by projects related to infrastructure, but rather by the residential sector – with growth being supported by favorable interest rates and single-family construction. The companies are expected to still be supported by corporate tax regulation, but their future still remains uncertain, as the growth of the industry will no doubt accompany economic growth, whose outlook remains uncertain. Margins could contract in the future if input and energy costs continue to increase, while demand for several materials, including cement, is set to remain mostly subdued. Also according to CW Research’s analysts, cement trade in the United States will grow much more smoothly when compared to the surge in shipments in the period between 2012 and 2017, with imports at the forefront. However, the experts still expect US cement producers to become more able to cope with the rise in consumption as they adopt several growth strategies, keeping greenfield investments to a minimum.
www.cemweek.com
December 2018
17
FEATURE
CW RESEARCH
Cement prices lose steam entering the
fourth quarter Gray cement prices, both domestic and trade, recorded positive developments in the third quarter, boosted by higher input costs and a shrinking Chinese production. However, the winter season is bound to bring about a general slowdown
18
December 2018
www.cemweek.com
www.cemweek.com
December 2018
19
FEATURE
A
massing data from over 70 markets, CW Research has concluded an assessment of global ex-works and FOB prices for July through September 2018. Those figures indicate an increase in ex-works prices in China, Northern Africa, the United States, and a decrease in Eastern Europe, Southern Asia, the Middle East, Brazil, and Argentina. In some of those markets, a hike in local currency denominated prices was masked by a devaluation of those currencies against the US dollar. As for trade, there was a marginal decrease in FOB clinker and gray cement prices during the third quarter. That contraction was accompanied by important movements in the list of top exporters, including China’s fading exports of gray cement, which were diverted to the domestic market. In the white cement market, there was a concentration of exports around the same four largest exporters in the equivalent quarter last year. In the future, cement prices are bound to be shaped by geopolitical and economic factors. According to CW Research, in the short term, cement prices are expected to enter a more sluggish time period given the seasonal effect of the northern hemisphere winter season and other, more regionspecific determinants, such as growing installed capacity, and political factors.
20
December 2018
ex-works prices Zooming in on ex-works prices across the world, markets such as China, Algeria, Egypt, and Central Europe stand out with a rapid growth in prices. In the case of China, there are great regional variations, with prices showing more strength in the south, where demand is growing faster. Overall, both demand and supply are falling in the country, but the decline in production has outpaced the decrease in consumption. Thus, manufacturers have been able to pass the rising costs with raw materials and coal onto consumers, resulting in a price surge of 31 percent year-on-year during the third quarter.
In the United States, ex-works prices recorded a modest increase, encouraged by a growing construction sector Egypt’s improvement in prices is tied to a faster-than-expected growth in demand backed by governmental investment in infrastructure. Not even the inauguration of the Beni Suef cement production complex, whose capacity was expected to lead to a sharp decline in prices, has been enough to revert the positive trend.
www.cemweek.com
Fuel costs have been rising in tandem with domestic inflation and, like in China, the favorable supply-demand balance has allowed manufacturers to pass those growing input costs onto cement buyers. In the United States, ex-works prices recorded a more modest increase of two percent year-on-year, encouraged by a growing construction sector, especially in the residential segment, and with more geographical emphasis in the southeastern states. To the south, Mexico registered a decline in cement prices when gauged in US dollars. However, prices actually increased in local currency thanks to a revival of the construction sector, ushered by a more stable political situation following the last presidential election. A similar situation can be observed in Argentina, where demand and prices are now at an all-time record, a fact that does not translate into the US dollar assessment given the devaluation of the Argentinian peso. Brazil, where the situation is far from the boom witnessed in Argentina, a devaluation of local currency, intertwined with a prolonged fall in demand, explains the decline in ex-works prices. Finally, in Russia, prices declined mostly due to the devaluation of the Russian rubble and in spite of an increase in input costs, namely with fuel and electricity.
FOB Prices and trade At a global level, gray cement prices have been rising thanks to an increase in exworks prices in major consumers and growing cumulative demand. As a result, prices have increased by nine percent year-on-year during the third quarter, to USD 63 per ton. Notwithstanding,
EX-WORKS CEMENT PRICES FOR SELECT MARKETS IN 3Q2018 (YoY% in USD/ton)
Source: CW Research
there are some regional differences that create a more intricate picture, including a healthy growth in FOB prices for trade in Western Europe and Africa and more depressed rates in the trade among Middle Eastern markets. For clinker, the price hike was thinner, at 2.5 percent, reflecting an increase in dispatches, especially in Asia-Pacific, South America, and East Africa. In the third quarter, the four largest exports of gray cement accounted for over a third of the global trade, a share that has remained more or less stable compared to last year. However, there was a change in leading exporting markets: China, with such a tight domestic demand-supply balance, has fallen from third to fifth place, with Canada entering the top with 1.3 million tons of gray cement exports, mostly to the United States, the largest importer in
In the third quarter, the four largest exports of gray cement accounted for over a third of the global trade the world. Thailand was the leading gray cement and clinker exporter during the quarter. India also surfaced as a major exporter of clinker during the quarter, with shipments heading mostly to Bangladesh, where the industry consists solely of grinding units.
As for white cement, exports reached a total of 1.5 million tons during the quarter, a growth of 14 percent compared to the same period last year. Four country markets alone dominated 70 percent of all trade, with Turkey accounting for a third of the market. Other major exporting markets include Ireland, Denmark, and Spain. CW Research’s figures demonstrate a concentration around those four exporters, given that their share was 53 percent in the third quarter of 2018. China’s drastic contraction in slag cement exports led to an overall decrease of 15 percent year-on-year in the total traded volume. Beijing’s restrictions on steel production and changes in the manufacturing process have led to a stark decrease in Chinese exports from 1.5 million tons a year ago to 200,000 tons during the third quarter. Slag cement has become a much-desired commodity, leading CW Research to expect an increase in prices.
www.cemweek.com
December 2018
21
FEATURE GLOBAL OUTLOOK: GRAY CEMENT EXPORT PRICES (USD/ton)
Source: CW Research
Outlook Traditionally, the fourth quarter is a slower period for cement trade due the Northern hemisphere winter, with trade prices and volumes likely tanking due to that seasonal effect. CW Research expects a widespread stagnation or depreciation of cement prices across every major global region, except for
22
December 2018
A generalized increase in input costs has also been an important explanatory factor for rising cement prices
www.cemweek.com
Asia Pacific. Cement prices are expected to keep their ascending, but decelerating, trajectory in China, as demand starts to cool down. In Indonesia, cement demand and prices are expected to improve after a ban on truck movement and a low number of working days limited sales in the past quarter. In South America, the turnaround of Brazil’s cement market may only become a reality in the next year. The victory
of far-right Jair Bolsonaro in the recent presidential election is expected to improve investor confidence and lead to an increase in public funding. As for the United States, prices will be vulnerable to the seasonal impact of winter, especially in the northern states, and to the upcoming political decisions in the aftermath of the November 2018 midterm elections.
CW Research expects a widespread stagnation or depreciation of cement prices, expect for Asia Pacific For some regions – such as eastern and central Africa and Southeast Asia – the increase in installed capacity is expected to foster competition, easing prices. In the Mediterranean Basin, Northern Africa is likely to push prices upwards while Italy, Portugal, and Spain are projected to push them downwards, with the likely regional outcome expected to be a decline in prices.
Conclusion During the third quarter, domestic cement prices expressed in US dollars, while tainted by the depreciation of some currencies such Brazil’s, Argentina’s, or Mexico’s, reflected the impact of movements in supply and demand particular to each market. China’s inevitable increase in cement prices, supported by a falling production outpacing the decline in demand, is an example of such movements. A generalized increase in input costs, be it with raw materials, fuel, or electricity, has also been an important explanatory factor for rising cement prices. However, not every market is equally prepared to pass that increase onto consumers. If in China, the aforementioned tightening of the supply-demand balance has allowed producers to pass those costs onto their customers, overcapacity in the Middle East has prevented it from happening. Going forward, the CW Research’s shortterm outlook presents a cloudy scenario, with the northern hemisphere winter coming together with more particular regional factors to reflect in a stagnation or decline of prices across every major region, except for Asia Pacific, where China will continue to drive cement prices upwards.
About the report The Global Cement Trade Price Report (GCTPR) is CW Research’s benchmark price assessment for monthly gray cement, white cement, clinker and granulated blast furnace slag prices and volumes. The 150+ page report, published on a quarterly basis, serves as the industry go to source for monthly price data for about 60 individual markets worldwide, including multiple cornerstone data series: import, export, ex-works and market prices. Additionally, the GCTPR includes extensive discussion of key players’ price strategies as well as trade price forecast and select trade volumes for each country. The report also provides regional price indices as well as a quick review of trading dynamics and drivers in the different regions. More information about the report can be found here: http://www.cwgrp. com/research/research-products/ product/1-global-cement-trade-pricereport
For more information and placing an order, please contact Liviu Dinu, Market Services & Marketing Consultant, CW Group (Europe), by phone at +40-74467-44-11, or e-mail at ld@cwgrp.com.
www.cemweek.com
December 2018
23
Country Snapshot: kenya cw research
Infrastructure and housing boosting Kenyan cement demand
24
December 2018
www.cemweek.com
CW Research analyzes the small and competitive Kenyan cement market, as the country’s construction industry is poised to become its fastest-growing sector over the coming decade
www.cemweek.com
December 2018
25
Country Snapshot: kenya
O
ne of the Sub-Saharan African countries that is succeeding in improving poverty indicators, Kenya plans to turn the economy into a middle-income one by 2030. The country’s economy has been growing steadily over the past five years on the back of strong governmental and external investments – a trend the government is keen on keeping and that is likely to help the Kenyan construction industry become the fastestgrowing sector in the country in the next decade. Public construction projects boosting demand According to CW Research’s 2018 update of the Kenya Cement Market Report,
cement consumption in the country is forecast to increase at an annual average rate of almost six percent, exceeding seven million tons by 2023.
Due to the competitiveness among cement companies, exworks prices in Kenya are decreasing The steady growth of cement demand is a consequence of the strong pipeline of construction projects, which remain a priority for the government. On a domestic level, public works continue to account for the largest share of cement demand.
Kenya Nairobi
26
December 2018
www.cemweek.com
As noted by Raluca Cercel, CW Group’s Associate: “The Kenyan construction industry is expected to be the fastestgrowing sector in the country over the next decade due to an increased number of projects being carried out. Most are related to infrastructure works targeting the improvement of road infrastructure and power supply. Housing is also a top priority, as the government plans to solve the current issue of lack of affordable housing.”
A small and competitive market The Kenyan cement market consists of fewer than ten cement manufacturers, among them Bamburi Cement, ARM Cement, and Mombasa Cement. Significant market movements are anticipated in terms of merger and acquisition activity in Kenya, with Dangote and Omani Raysut Cement expected to enter the market
CHART: APPARENT CONSUMPTION AND PRODUCTION FORECAST (2018E-2023F)
Source: CW Research
through the acquisition of troubled cement manufacturers. Athi River has the highest concentration of cement plants in Kenya, while the others are located mostly in the vicinity of Mombasa. Athi River is a preferred location for manufacturers given the vicinity to limestone reserves and to export markets south of Kenya.
Due to the competitiveness among cement companies, ex-works prices in Kenya are decreasing, being some of the lowest in the East African region. Nevertheless, cement producers are not shying away from increasing production capacity, in spite of the anticipated softening in demand for 2018.
About the report The Kenya 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. Cement Industry Country Reports also cover demand drivers, including macro-economic and construction sector dynamics, for the specific country. Industry reports are presented in an objective, easy-to-understand format, providing hard-to-find answers to top market research questions.
More information about the report can be found here: https://www.cwgrp. com/cemweek-reports/product/283kenya-cement-market-forecast-report%E2%80%93-2023
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.
www.cemweek.com
December 2018
27
CEMENT MARKETS
CW Research
Cement Volumes
In the US, cement production increased by 2.4 percent, while consumption rose 4.1 percent on a year-todate basis.
In China, infrastructure investments are slowing down. For the 2018 period, the investment is expected to grow around 12 percent, on a yearon year-basis, far from the 20 percent growth registered in 2017. This slowdown is a reaction to the authorities’ commitment to focusing on public debt. As a consequence, cement production in China declined 8.9 percent on a year-to-date basis, due to lower government investment.
This increment could have been higher if all governmental projects had been approved by the Congress.
In the US, cement production increased by 2.4 percent, while consumption rose 4.1 percent on a year-to-date basis. The increase in both production and consumption is a result of the continued growth of the residential sector, but the industrial and commercial sectors also contributed to this improvement.
From this country selection, India is the one that showed the best improvement in terms of cement production: 15.0 percent on a year-todate basis. This increase is a result of investment in infrastructure projects and the affordable housing program led by the government to meet affordable housing needs.
Kenya’s cement production weakened 9.6 percent year to date to 3.8 million tons in 2018 when compared to the previous year. This decrease follows a lower construction activity, and delays in several government projects.
CHART: Year-to-Date Cement Demand in August 2018 (%)
Sources: CW Research
To learn more, please contact the CW Research team at sales@cwgrp.com 28
December 2018
www.cemweek.com
CW Research CEMENT MARKETS
Argentina’s cement production improved by four percent on a year-to-date basis. This increase is continuing the trend from the previous year, when construction activity grew 12.7 percent comparing to the previous year. Cement companies, as Cementos Molins and LafargeHolcim, are planning on expanding their plants capacity for the coming years. From this set of countries, Saudi Arabia, on a year-to-date basis, is the market which saw the largest decline in terms of cement production (-13.2 percent). This decline is following the descending trend of cement consumption in the country (13.3 percent), given that the measures that the government has taken to encourage the construction sector have not yet reached cement manufacturers. As such, cement production and
consumption will likely see an increase until the end of 2018. Regarding cement consumption, Pakistan was the country that reported the largest increase from this country selection: 8.9 percent on a year-to-date basis. This demand increase is due to the cement needed for the construction of roads and tunnels that are meant to connect the major motorways and roads. In Brazil, cement consumption declined 1.7 percent, owing to the nationwide truck drivers’ strike, motivated by the increase in fuel prices. This strike paralyzed 70 percent of cement plants in the country, thanks to the lack of raw materials and to the impossibility of shipping the finished products to customers.
CHART: Year-to-Date Cement Production in August 2018 (%)
Pakistan was the country that reported the largest increase from this country selection: 8.9 percent on a year-to-date basis.
Sources: CW Research
To learn more, please contact the CW Research team at sales@cwgrp.com www.cemweek.com
December 2018
29
DEPARTMENTS
PEOPLE Mahendra Singhi elected president of the Cement Manufacturers Association, India Mahendra Singhi, managing director and CEO of Dalmia Cement Bharat Group, has been elected as the new president of India’s Cement Manufacturers Association. Singhi will take over from the outgoing president Shailendra Chouksey. He has previously served as the President of Rajasthan Manufacturers Association. "India is on the cusp of great growth and infrastructure development. The
Indian cement industry is at a significant moment of its history and I look forward
Votorantim Cimentos announces new Global CEO
Votorantim Cimentos announced that Walter Dissinger, after leading the company for more than 5 years, has decided to take 30
December 2018
on new challenges. Therefore, Votorantim Cimentos and Dissinger have mutually agreed on his resignation.
www.cemweek.com
to leading the association towards a sustainable global future," Singhi said. Votorantim Cimentos has also announced Marcelo Castelli as his successor. Castelli is an executive with a career of over 31 years. In 1997 he started working at VCP (Votorantim Celulose e Papel),since then, he has held several executive positions and coordinated the merger of Aracruz and VCP, which created Fibria. At the company, Castelli was the executive officer of different areas, such as Forestry, Paper, Strategy, Supply, and since July 2011 he has been the company’s CEO. Marcelo Castelli had a key role in consolidating Fibria as the largest producer, and in making it a global benchmark in innovation and sustainability. Castelli will take office on February 1, 2019, and Walter Dissinger will collaborate in the process to integrate his successor during the first months of the year.
The information you need to make the right decisions.
The “Cement and Clinker Price Assessment� product series is a monthly price marker which offers prompt cargo (next 30-60 day deliveries) pricing insights, monthly updates for prices, cement market news and an overview of key developments that are crucial for those involved in the cement and clinker trade. The monthly updates cover distinct price markers: Mediterranean Basin
Med Basin bulk Portland clinker and cement FOB
Persian Gulf & East Africa Arabian Sea and East Africa: Persian Gulf - Arabian Sea bulk Portland clinker and cement FOB East Africa bulk Portland cement CFR
PO Box 5263, Greenwich, CT 06831, USA sales@cwgrp.com
Cement and clinker price assessments
DEPARTMENTS
EQUIPMENT RM Rail to supply cement wagons to Russian, Kazakhstani companies The Russian equipment supplier is providing teardrop-shaped cement wagons to Russian and Kazakhstani companies. Russian Gazprombank Leasing and VEB-Leasing and the largest cement manufacturer in Kazakhstan have ordered over 1,000 Type 19-1217 cement hopper wagons from RM Rail to be delivered in September 2019. The wagon has an “innovative� teardrop shape that provides for a capacity of 73 tons or 60 cubic meters of bulk cement. The smooth inner walls improve the unloading process, and all hatches can
be locked simultaneously and sealed with a single seal.
The wagons are designed to have a lifespan of 26 years.
Ghorahi Cement orders new mill from Gebr. Pfeiffer The new MVR 5600 R-4 mill has the capacity to produce 525 tons per hour of cement raw material. With a grinding bowl diameter of 5.6 meters it will be by far the largest cement mill to be installed in Nepal.
Nepalese cement maker Ghorahi Cement ordered a new cement mill from Gebr. Pfeiffer to be installed at its cement plant
32
December 2018
in Ghorahi, at the foot of the Himalayas, as part of its expansion works.
www.cemweek.com
Apart from grinding and separating the materials, the mill will also simultaneously dry the feed material to a moisture content of under six percent. Moreover, Gebr. Pfeiffer will also supply an MPS 250 BK coal mill capable of handling the more abrasive Indian coal.
EQUIPMENT Loesche delivering two vertical roller mills to China's Guangdong Tapai Loesche will supply two vertical roller mills for Guangdong Tapai Co., Ltd. for its two 10,000 t/d cement clinker production lines in Jiaoling, Meizhou, Guangdong Province. This is the second repeated order after two LM 35.3 D coal mills were purchased for a same scale production line of the company in 2015. The 3-roller mill grinds 50 tph pulverized coal to a fineness of 3 % with a sieving residue of 0.08 mm. The installed power is 1200 KW. Guangdong Tapai Co., Ltd. has grown rapidly in the cement industry. There are several large-scale cement clinker production lines in Guangdong, which have made great contributions to the
development of the local building materials industry. This has already been reflected by two 10000 t/d cement production lines which were put into operation in 2017 and
another two cement production lines of the same size to be built. The two newly ordered coal mills are expected to be fully delivered in April 2019.
Shree Cement orders dryer from Gebr. Pfeiffer
Indian producer Shree Cement acquired a TRT Triplex dryer from German equipment maker Gebr. Pfeiffer. The TRT 5000/8.0 Triplex dryer will be the first of its kind to be delivered to the Indian market.
Shree Cement uses flue gas desulphurization gypsum, a leftover from its captive coal-fired power plants, as an additive on cement production. However, its moisture content may reach as much as 20 percent, forcing the company to use it wet or slightly dried on site.
With the new TRT Triplex dryer, the company will be able to reduce the moisture content to less than two percent. This allows Shree Cement to transport dried gypsum to other facilities across India without carrying unnecessary water.
www.cemweek.com
December 2018
33
Flashback NEWS FLOW IN CEMWEEK.COM LAST TWO MONTHS
Russia 25 articles
Uzbekistan 10 articles United States 21 articles
Egypt 45 articles
Pakistan 31 articles Philippines 19 articles
Nigeria 10 articles Kenya 17 articles Brazil 10 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 meeting agenda includes: December 13, 2018
How are recent changes on trade regulations in South Asian countries affecting their paper markets?
December 17, 2018
Will oil well cement continue to be a buyer's market in the coming five years?
34
December 2018
Cw Research's newest reportS:
Webinars
Webinars
www.cemweek.com
Kenya Cement Market Forecast 2023
World Oil Well Cement Market Forecast 2024
November 2018
November 2018
Ground and Precipitated Calcium Carbonate Industry and Outlook 2023 December 2018
BUZZ
exports consumption crore
economic
waste
global portland
materials
concrete
exports
growth
materials results
results
industrial
TOP BMWEEK STORIES activity 1. INC (Paraguay) launches new masonry cement IRAN 2.
Sika Group investing in new unit in Cameroon
3.
Qatar National Cement to produce white cement
4.
Researchers develop new 3D Cement
5.
SaskPower and Lehigh Hanson sign new fly ash supply agreement
6.
US building construction performance to improve in 2019
7.
US Concrete CEO believes in infrastructure resurgence
8.
Turkey’s construction output contracts
9.
Construction activity in the EU rises in September
10. Construction output in Hungary rises in September
region economic development
using
large
paid
industrial
power reach
short thermal volume
india
TOP petcokeweek STORIES 1.
Fives Group implementing new sales office in USA 2. China’s US coal imports decline in JanuarySeptember 3. China: Prices for petcoke continue to decrease 4. MGX Minerals completes study on petcoke gasification 5. Petcoke prices in China contract 6. Prices for petcoke in China hold steady 7. China’s Shandong province to restructure aluminum sector 8. Canadian government selling stake in petcoke handling terminal 9. Synthetic graphite to lead world graphite demand by 2023 10. Rusal’s net profit surges in 9M2018
ending
weather
produce
industrial metric
went
FACTORY
exports
products
recorded petroleum
imports russia
imports
1h2016
sold
investment
ministry products
slag
waste
decline
reach
produce www.cemweek.com
basis
recorded
IRAN
exports
vietnam
Cement demand increases in Peru, October 2018 2. Cement prices decline in India, November 2018 3. Cement prices in Egypt, December 4 4. South India's cement sector under pressure from lower prices 5. Cement prices increase in Paraguay 6. WCA expects cement demand growth to slow in 2019 7. Cement sales decline in Pakistan, November 2018 8. Cement production increases in Senegal 9. Iran exports more cement in March-October 2018 10. Cement and clinker trade prices decline in November
products
LAFARGE
increased
decline
refinery
1.
saudi
india
produce
TOP CEMWEEK STORIES
GRANITE
product
official
coke
imports
seeks
output
lafargeholcim short
imports
region results
technology
December 2018
35
World Oil Well Cement Markets and Outlook
Comprehensive outlook of the World Oil Well Cement Markets.
LET US GUIDE YOU.
The World Oil Well Cement Markets and Outlook report provides an in-depth, data-centric market assessmentof the global API certified oil well cement industry. The global report details market dynamics, product market size, as well as price trends and key demand drivers for major markets by type of well (onshore, offshore, shale in oil, gas and geothermal applications). The outlook report offers: A rigorous bottom-up regional and country-wise demand forecast model driven by indicators such as oil crude pricing, which provide an understanding of future drilling activity in terms of linear drilling distance and depth; An exhaustive scope to evaluate all well typology (API oil well cement classes A, G, H and other); A complete mapping of global oil well cement capacity; Strategic considerations and wild-cards and cementitious extender use, such as fly ash; The information is provided in a data-rich format that combines qualitative insights with extensive facts and data series to allow readers to make critical business decisions.
CEMENT • BUILDING MATERIALS • DRY BULK CARGO & SHIPPING • CHEMICALS • INDUST RIAL MINERALS • INDUST RIAL EQUIPMENT • PAPER & PULP • PETCOKE research.cwgrp.com
inquiries@cwgrp.com
sales@cwgrp.com