CemWeek Magazine #48: February 2019 by CemWeek

GLOBAL CEMENT INDUSTRY. KNOWLEDGE.

ISSUE 48

February 2019

Q&A with Paul Rodzianko President of Georgian Cement Association and CEO of Kavkaz Cement

Insight Analysis

4 Challenges facing the cement industry in 2019

The recovery of oil well cement News

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Analysis

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Market Coverage

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Interviews

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People Moves

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

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EDITOR’S NOTE Letter from the editor

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

STAFFBOX ROBERT MADEIRA

The timelessness of quality

CEMWEEK PUBLISHER HEAD OF CW GROUP RESEARCH

Quality is a timeless challenge facing any industry worthy of the name. The fight for a sustainable and more competitive cement industry is not just about producing cement that pollutes less; it’s about producing cement that withstands more. Better cement improves lives. In fact, quality was the cornerstone of our conversation with Paul Rodzianko, President of the Georgian Cement Association and CEO of Kavkaz Cement. What started as a conversation on the birth of the Association evolved into a discussion about the importance of good-quality cement, a possible dumping situation in the Georgian cement market, and a reflection on transparency and fairness in the cement-making business. Be sure not to miss it. Quality is also the keyword behind the oil well cement niche. Albeit small and volatile, the market for the (still) premium commodity is one where certification matters. The high-pressure environments in which oil well cement is used require limestone of superior quality and higher temperatures in the kilns, so quality is not an aspect the American Petroleum Association is willing to compromise. In this issue, CW Research reflects on how oil well cement is making its comeback, through an accurate analysis of global production, demand and prices over the quite challenging past few years. Challenging is, indeed, the word that best suits the future of the cement industry. From a slowing economic growth to stricter environmental policies, in this first edition of the year, CemWeek looks into the future and presents the main obstacles the cement sector is bound to face in the next years. For some, these obstacles will prove heavy and tiring. For others, they will represent an opportunity for learning and growing, even if at the expense of the immediate future. Automated, green, optimized… the future may change the face of the cement industry as time goes by. But if the industry plays fair and remains focused, time will not change its core. A core forged with resilience; a resilience built on quality.

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To subscribe or advertise, please contact us at E: sales@cwgrp.com ©2019 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: Zbynek Burival 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.

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CW Analytics

contents FEATURES 4 Leaders Q&A: Paul Rodzianko In an exclusive interview with CemWeek Magazine, Paul Rodzianko addresses a major issue in the Georgian cement industry: poor-quality cement. In a comprehensive discussion, Rodzianko explains the background for the creation of the Georgian Cement Association, the impact of a possible dumping situation, and what the Georgian cement industry can do to become more competitive and sustainable

14 Insight Analysis: Most read stories of 2018 in the global cement industry CemWeek Magazine compiles the most popular news of a dynamic year that shows a cement industry willing to embrace a challenging future 20 Insight Analysis: 4 Challenges for the cement industry in 2019 and beyond The IMF and the World Bank are expecting the world economy to face several challenges in 2019, as some key economies cool down. As governments face issues that will affect their decisions for investment in the construction sector, how will the global sector be affected by an expected economic slowdown during the year? 26 CW Research: Volatility ahead as oil well cement prices head towards recovery An improvement in crude oil prices has resulted in a timid recovery in oil well cement demand and prices at the global level. Going forward, both markets will remain under the threat of global macroeconomic and country-specific risks

DEPARTMENTS 1 EdiTor's letter The timelessness of quality

40 cw group meeting agenda CW Groupâ&#x20AC;&#x2122;s upcoming events

3 numbers in brief Demand slightly decreased in most geographies, leading to a price contraction on a USD basis 34 Research Cement Volumes 36 Departments People Equipment

February 2019

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41 BUZZ Top 10 CemWeek, BMWeek and PetcokeWeek stories

numbers in brief

Cement prices decrease globally in 3Q 2018 Demand slightly decreased in most geographies, leading to a price contraction on a USD basis During the third quarter of 2018, cement ex-works prices declined in most geographies. A slight softening of demand year-to-year and the depreciation of local currencies in key markets were the main reasons behind the downward trend. CHART: 3Q2017 and 3Q2018 Ex-Works Regional Prices (USD/t)

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

The most notable decrease in ex-works cement prices in USD per ton occurred in the Middle East. Intense competition from neighboring countries and lower demand are the two main factors for the average ex-works price to have decreased 11.3% in this region. Nevertheless, ex-works cement price in USD per ton registered a 27.9 % YoY increase in China. A steep increase in the cement price in China is mainly attributed to the closure of several cement plants (as part of the government’s consolidation and scaling down process), which limited cement supply, coupled with a decline in consumption that is slower than the decrease in production. CHART: 3Q2017 and 3Q2018 selected retail prices (USD/t)

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

A similar increase was registered in the Chinese cement retail price during 3Q 2018. In the Mediterranean Basin region, retail prices decreased when considering the regional average. Turkey was the country with the biggest decline retail price-wise, registering a 24.1 percent contraction year-on-year. The depreciation of the lira (when compared to US dollars) and a decrease in cement demand played an oversized role in the Turkish pricing decline. Egypt’s pricing appreciation (in USD terms) was not enough to offset a decrease in the cement regional average retail price. The slight recovery of domestic cement demand was not sufficient to counter the regional price decline. www.cemweek.com

February 2019

Leaders Q&A

August / September February 2019 2016

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Paul Rodzianko President â&#x20AC;&#x201C; Georgian Cement Association; Chairman/CEO â&#x20AC;&#x201C; Kavkaz Cement

In an exclusive interview with CemWeek Magazine, Paul Rodzianko addresses a major issue in the Georgian cement industry: poor-quality cement. In a comprehensive discussion, Rodzianko explains the background for the creation of the Georgian Cement Association, the impact of a possible dumping situation, and what the Georgian cement industry can do to become more competitive and sustainable

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August / September February 2019 2016

Leaders Q&A The Georgian Cement Association (GCA) is a very recent one, having been formed in 2017. What factors played into the creation of the Association? For several years, the Georgian Building Group (GBG), a wholly-owned subsidiary of our Kavkaz Cement holding company, conducted market surveys the way any responsible company should, to evaluate and see for ourselves the quality of competing bagged cement products available on the Georgian market. We visited different markets, purchased sample bags from different producers, and then tested these products in our accredited laboratory. We were shocked by the results. Some bags advertised a strength of, say, 32.5 mpa but, in

actuality, the range of tested strengths was huge: about one-quarter of the samples tested to the advertised specification but three-quarters failed by as much as 90% – a shocking disparity. Clearly, the purchasers of these products were being cheated as to the quality of the product they thought they were buying.

If you don’t put clinker into cement according to standard industry formulas, you will produce a product that costs a lot less and looks the same as quality cement The other major conclusion was that certain producers, by selling an inferior product disguised as a quality product,

were competing unfairly with the producers who were producing quality cements. Clinker is the most expensive raw material for making cement. If you don’t put clinker into cement according to standard industry formulas, let’s say 70% to 80%, and you instead put in 20% to 30%, you will produce a product that costs a lot less to make and yet visually looks the same as quality cement. As a result, the cheaters, even while discounting their prices somewhat, make a lot more money – at the expense of their customers and at the expense of the quality producers’ market share. One of the ironies of this situation is that a number of these small producers are fully capable of manufacturing good-quality wholesale cement because builders they sell to test every shipment to ensure quality for their construction. Retail customers who buy bags do not test the product they buy. As a result, by putting bad cement into bags that cannot be traced to them, the cheaters realize a much higher profitability – at their customers’ expense – as well as engage in unfair competition with the quality producers. Once all this became clear to us, we compared notes with HeidelbergCement. They too had been performing similar

August / September February 2019 2016

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ormed in January 2017, the purpose of the GCA is to inform all Georgian cement producers and users as to how (1) construction safety is affected by cement quality and (2) customer protection is guaranteed by “truth in advertising” of cement products sold in bags. Furthermore, it is important to note that maximizing domestic production of quality cement results in job creation and incremental economic growth. To meet this need, HeidelbergCement Caucasus

(HCC) and the Georgian Building Group (GBG), a wholly-owned subsidiary of Kavkaz Cement, have decided to form the Georgian Cement Association.

market tests and had encountered the same situation. We both agreed that a sustainable Georgian cement industry could not tolerate such cheating. As a result, we decided to form the GCA in order to bring the issue of cement quality into the public’s view by educating the consumer and the government as to what was really going on. To do so in in the

most proper way, we decided to enlist the support of the Georgian Chamber of Commerce to purchase the samples anonymously in the open market four times a year and to organize a blind testing with the Georgian Technical University. Membership is open to any Georgian producer whose products meet international quality specifications. Our initial press conference took place in January 2017. It was well attended by

The founding members have united around the issue of cement quality. To achieve this goal, it is essential to test all domestically-produced products, those of the founding members as well as those of all other local producers, in order to ensure that the quality of cement in the bag corresponds to the

quality of the product specified on the bag. Bags to be tested will be purchased anonymously in the open market quarterly and distributed to laboratories on a “blind” basis. Testing shall be conducted primarily by an independent and neutral laboratory, such as Georgian Technical University, and reconfirmed by parallel testing. Additionally, the overall process will be supervised by Chamber of Commerce and industry of Georgia, as an independent and neutral side. both government and industry as have subsequent ones. Our next one should take place in February 2019. While the number of conforming products has increased somewhat over the last couple of years, there is much that needs to be done and we welcome the Government’s responsiveness and initiatives in this direction.

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Leaders Q&A What role can the Association play in stimulating and promoting the Georgian cement industry? The Georgian cement industry does not operate in a vacuum. Turkey has a very large cement production capability. Azerbaijan has a pretty substantial one, while Armenia is quite modest. Iran not only has one of the largest production capacities in the world, about 90 million tons, but also possibly the largest currently unutilized capability – about 50 million tons. In Georgia, three major companies – ourselves, i.e. Kavkaz Cement; HeidelbergCement; and more recently Lafarge – produce most of the cement in Georgia and about 25 small producers the rest. HeidelbergCement is the only

August / September February 2019 2016

There’s enough milling capacity to meet all current and potentially all future cement requirements of Georgia producer of clinker in Georgia and, until late last year, had been operating a mixture of wet lines and dry lines but, with the completion of their large dry line project in Kaspi, they have shut down the wet lines which could, however, be reopened if market demand justifies such a move. With all lines running, Heidelberg’s clinker production capacity could

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potentially supply the entire Georgian cement market even if today’s market demand increases substantially due to all of the expected infrastructure projects. The same is true with respect to milling capacity if you include the capacity of all the small mills in the country as well. There’s enough milling capacity to meet all current and potentially all future cement requirements of Georgia. The role of the GCA is to encourage as much quality domestic clinker and cement production as possible in order to ensure a sustainable building materials sector contributing significant jobs and tax revenues. If there is sufficient clinker and cement milling capacity in-country at least at present, the big question becomes, how does one deal with all of the potential imports of both clinker and cement from nearby countries?

Over the last few years, clinkers primarily from Turkey, Azerbaijan, Armenia and Iran have been imported into Georgia but a little has also come in from farther away. Currently, Azeri and Iranian clinker are present on the market but at significantly differing price levels. Some of the imports are priced at levels comparable to those offered by HeidelbergCement and others at very significant discounts to the prevailing market price. The Government has now also instituted a process of testing imported clinkers and/or requiring a certificate as to guarantee of quality. Perhaps it is helpful to remind ourselves now that clinker and cement are large-scale commodity items. To be manufactured cost-effectively, clinker is manufactured in large kilns. The components of clinker are also commodities: limestone, slag, electricity, etc. The result is that the cost of manufacturing clinker of a certain quality is pretty standard and well-known around the world. It is just not possible to have

It is just not possible to have huge discrepancies in the intrinsic cost of clinker huge discrepancies in the intrinsic cost of clinker. The same is true of cement since a certain amount of clinker is blended with proportions of gypsum, additives and energy to produce the finished product. Once again, the cost structure of cement is quite predictable. The question that needs to be asked is: if Georgia has the overall lowest-cost of cement in the region, why are other countries able to import competitively into Georgia while Georgia is in effect prevented from exporting to those same neighboring countries? The four major clinker suppliers have also imported cement into Georgia. In

December last year, the GCA for the first time tested a few samples of foreign cement bags. Roughly half of the samples tested turned out to be below-specification. The Georgian government was concerned by this situation and, as a result, temporarily banned all imports of cement. It is not clear currently whether or how the border might be re-opened but product testing or certificates of quality should certainly have to be part of any new procedure. We have discussed that the role of the GCA is to represent the industry in making recommendations to the Georgian government as to what measures would be appropriate in light of the foregoing. One of the two most important issues certainly is that some cement is coming into the country at extremely low prices. The logical question: If cement is being shipped from a thousand or two thousand kilometers away and the price is substantially lower than any produced locally, are we dealing with a dumping

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Leaders Q&A situation? In our opinion, it is important, not only in cement but also in any industry sector, for governments to have anti-dumping regulations that can be triggered in such situations following an in-depth analysis of any such situation. If no such legislation exists, then dumping, i.e. an economic attack, can take place with impunity at any time, in any business sector and from any country. In the case of cement, such an attack could destroy Georgia’s domestic industry and result in the loss of thousands of jobs. Some nay-sayers believe that such legislation might be wrongly applied to sectors where inexpensive imports provide an economic benefit to Georgia. My response would be that, in such an instance, it would not make sense to activate such a legislative defense. Such actions would only apply to dumping actions that threaten Georgian economic well-being. The other critical issue is to address relations with neighboring countries who wish to export to Georgia while prohibiting exports of similar commodities from Georgia to them. Some restrictive actions result from high import duties on these products and other measures. The question here is

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If cement is being shipped from a thousand kilometers away and the price is substantially lower than any produced locally, are we dealing with a dumping situation? whether Georgia should enact legislation analogous to the legislation in whatever neighboring country effectively prohibits Georgian exports. This might be called “the shoe on the other foot” test. Finally, it is most gratifying that the Georgian government has now enacted measures to test the quality of production internally with real penalties to be levied on those companies that engage in manufacturing malpractice. To summarize, there’s a number of policy levels on which we can advise the Government. It’s important for a country

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such as Georgia that doesn’t have a large industrial base, to protect, not unfairly, its manufacturing sector and the jobs of the working people. Our mutual goal should be to make sure that cement and concrete are sustainable, long-term contributors to job growth and the economy.

According to the Association, in tests conducted in December 2017, out of 26 samples of cement produced in the country, only eight turned out to be of high quality. In the most recent test conducted by the GCA, nine out of 21 samples met European Standards. How challenging is cement quality for the Georgian cement industry, and what can be done to improve it? Since January 2017 until December 2018, we’ve had mixed results. In some testing rounds, a few more samples came in favorably, but the percentage fluctuates. We don’t have a steady line of improvement. We’re seeing a certain amount of movement to improve quality overall but there’s still way too much cheating going on. As I mentioned above, the flood of imports – Iranian, in particular, at exceptionally low prices, caused us to start testing those products as well.

We were actually surprised to discover that roughly half of the samples tested did not meet specifications. Those results demonstrated that the GCA has to be vigilant and test absolutely everyone and every product that is on the marketplace. I also want to stress the irony that some of the international products that were tested and turned out to be off-spec came from very large producers who are perfectly capable of producing excellentquality cement.

So, clearly, you have to ask yourself the question, just as in the case of small mill producers who produce off-spec cement: are they doing it deliberately for greater profit? Are they just getting rid of their off-spec product? Iâ&#x20AC;&#x2122;d say itâ&#x20AC;&#x2122;s a mixed result. Thereâ&#x20AC;&#x2122;s some improvement with some players, and lack of improvement with others.

What are the other main challenges of the Georgian cement industry in the coming years? On a macro level, thanks to the infrastructure projects that could very well start hitting this year, a very substantial increase in demand for product is likely to take place. The challenge will be how to meet that demand. I discussed above that Georgia has the potential to meet most if not all of this demand by domestic clinker, cement and concrete production. Notwithstanding this potential, it is clear that neighboring countries are interested in supplying the Georgian market. We have discussed these issues above but at present I cannot predict how it will all play out. However, it would most certainly be beneficial for Georgia to meet the challenge of increasing domestic production if the market size expands dramatically due to infrastructure projects.

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Leaders Q&A A major challenge concerns modernization. There are basically two dry line kilns in operation and three producers who run modern cement mills with closed circuit grinding capability in the country. As far as I know, all the other cement producers have older-generation equipment and cannot operate with the degree of economic and environmental efficiency that a more competitive market will require, especially if competitivelypriced imports become a larger factor on the market. As a result, I’d say that the challenge for a large number of small cement producers is to decide whether they can afford to modernize. Their trade-off is between reinvesting money into their business in the form of more hard assets so as to be able to compete in the longer term or whether to adopt a short-term mentality by saying “we’re going to cheat on quality, since we don’t want to invest long term in the plant, and we’ll hang in there as long as we can.”

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Are producers of off-spec cement doing it deliberately for greater profit? As such, the challenge would be for small players to modernize their facilities, so that the Georgian cement industry as a whole can consistently produce a high-quality cement, while addressing environmental issues.

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The cement industry continues to be one of the most polluting in the world. What steps is the Georgian cement industry taking towards a more sustainable production approach? There’s a big difference between producing clinker by the wet method or by the dry method. The dry method is a much more cost-effective and environmentally friendly way. The dry method uses fewer resources, less water, less electricity, and it’s much more effective overall. HeidelbergCement has shut down their wet lines in Georgia and is now producing exclusively on dry lines. This step alone has addressed a major environmental aspect of in-country clinker production.

That being said, in the region, every country around Georgia, Turkey, Azerbaijan, Armenia and Iran all operate dry line capacity â&#x20AC;&#x201C; the environmentally friendlier production of clinker. But, since we are addressing imports, let us examine another environmental aspect related thereto: transportation. Clinker is transported to Georgia via rail, truck or combination of rail and ship. The further away that an exporter has to ship their products to Georgia, the larger the environmental footprint â&#x20AC;&#x201C; from transportation. As far as to further optimize the dry line environmental efficiency, that could be achieved potentially by burning tires and garbage. Is that a feasible option? The new Kaspi dry line is configured in such a way that such a fuel option can be implemented technically but the logistics and economics of collecting and delivering this material would have to be studied fully.

The challenge for a large number of small cement producers is to decide whether they can afford to modernize When it comes to the production of cement from clinker, which is primarily a milling activity, youâ&#x20AC;&#x2122;re dealing with two aspects: 1. the amount of energy necessary to operate the facility; 2. how much dust is produced by the mill. In the case of the three producers with the most modern mills, they have already optimized the cement milling process by increasing energy efficiency (more efficient mills), closed circuit grinding and state-of-theart filtration systems.

A couple of years ago, Kavkaz Cement/ GBG upgraded our mill capacity and added a separator. As part of the EBRD/ BoG financing facility, we received a substantial grant for having dramatically improved our energy efficiency. I think that the way for the industry to become more sustainable and profitable over the long term is to have people committed to upgrading, investing, and honoring quality by producing the product that is specified on the bag. The government also has an important role to make sure that appropriate measures are triggered should a dumping or similarly unfair competitive practice appear in the market. Assuring the Georgian customer that all cement producers are producing a quality product is also essential, even to the extent that enforceable regulatory policies are adopted.

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Insight Analysis

Most read stories of 2018 in the global cement industry

February 2019

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CemWeek Magazine compiles the most popular news of a dynamic year that shows a cement industry willing to embrace a challenging future

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February 2019

Insight Analysis

he most read stories of 2018 on CemWeek reveal an industry immersed in a new reality, one that will require optimizing efficiency and reducing production costs, exploring alternative fuels, and preparing for a softer cement demand.

Informed by extensive primary research conducted with both suppliers and end users across the cement equipment value chain, the CW Research study emphasizes that behind the growth remains an everexpanding focus on automation, control, environmental, and testing throughout the production processes to deliver higher efficiency and performance.

With a trade war already wreaking havoc on markets across the world, and a far-from-promising world economic outlook devised by the IMF, the global cement industry is now faced with the challenge of adapting to a greener and stricter reality.

Robert Madeira, CW Group Managing Director and Head of Research, notes: “decision making for cement manufacturers is becoming more and more complex as players aim at achieving higher efficiency and reducing operating costs. As a result, more technology-intensive functions such as automation, control and testing are becoming more prominent, and representing an ever-growing share of the cement plant equipment spend mix.”

Cement plant equipment market to reach USD 9.0bn by 2022 According to CW Research’s recently published World Cement Equipment Market and Forecast Report, the market for cement manufacturing related equipment and services is projected to reach USD 9.0 billion by 2022.

LafargeHolcim announces overhaul plan LafargeHolcim’s new CEO issues plan to refocus the company and slash costs. Jan Jenisch, the CEO of LafargeHolcim, has announced his five-year plan to boost returns, decrease costs, and sell some of the company’s assets, writing off USD 4 billion.

However, as greenfield cement plant projects remain scarce, upgrades to existing cement plants will become relatively more important; equipment relating to upgrades (i.e., excluding service-related spend) will move from representing a quarter of the total cement manufacturing equipment capital spend in 2017 to over 40% by 2022.

According to the plan, LafargeHolcim will reach a sales growth of three to five percent in those five years, while posting a recurring EBITDA growth of at least five percent, and improving its free cash flow to over 40 percent of the EBITDA. Investment is expected to increase by more than eight percent in that period.

Consequently, notably what CW Research defines as “functional” equipment (i.e., conveying, automation, filtering, environmental control, etc.) will be a central growth driver of cement plant-related equipment sales over the next five years.

“The merger is now behind us… it was quite an exercise and not an easy one. Building materials is a market that is growing above GDP globally, so would we would expect building materials to grow 2 to 3 percent,” Jenisch said.

February 2019

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In the last quarter of 2017, the company posted a net loss of CHF 3.1 billion, as Jenisch cleared the slate for his overhaul plan.

Vicat prepares capacity expansion in India The French cement maker Vicat will invest EUR 217 million to expand its operations in India. The investment will include an expansion of its cement plant in Kaburagi, Karnataka and a new plant in Vizianagaram, Andhra Pradesh. The Kalaburagi cement plant will absorb EUR 153 million in investment, which will allow it to increase its production from 2.75 million to five million tons of cement per annum. Meanwhile, the new plant in Andhra Pradesh will have the capacity to produce 1.75 million tons once finished, for an investment of EUR 64 million, Guy Sidos, chairperson of Vicat Group, accompanied French President Emmanuel Macron’s visit to India. During the trip, Sidos signed two memorandums of understanding over the new investments with the governments of Andhra Pradesh and Karnataka.

New cement projects emerge in India New cement projects to come up as utilization rates rise in India. A rise in demand, for now still partitioned over regional pockets, has been improving capacity utilization rates in the Indian cement sector. Those utilization rates are expected to peak by 2019-20, as new investments are prepared. Dalmia Bharat has recently announced its plans for the construction of a new cement plant in Odisha that would add eight million tons of cement capacity to the eastern Indian market.

Ambuja Cements has also announced plans for a new clinker factory in Rajasthan, with the capacity to produce 3.1 million tons per annum, while JK Cement sets course for an increase of eight million tons per annum in capacity over the next five years. At least six cement companies are preparing new greenfield investments on capacity at different stages of announcing and implementation, concentrated around the areas of East India, North India, Andhra Pradesh, and Telangana.

e m i s s i on s associated with production processes and product end uses.

World Cement Association urges industry to focus on innovation in fight against climate change The World Cement Association (WCA) is urging the global cement industry to increase efforts to adopt new technologies faster and put greater focus on innovation in order to make crucial progress on reducing CO2 emissions. This is the key message from last week’s WCA Global Climate Change Forum in Paris, where WCA President Zhi Ping Song told members: “no more words, but actions are needed”. Delegates also heard that current technology being deployed by the sector worldwide can only deliver 50% of the CO2 savings required to achieve the Paris Agreement goal of keeping the global temperature rise well below two degrees.

C h a n g e Forum also heard that existing CO2 emission mitigation technologies are typically adopted too slowly, resulting in only a gradual decrease in carbon

“The Global Climate Change Forum made clear the importance of stimulating innovation if we are to have any hope of achieving the Paris climate goals,” said Bernard Mathieu, Director of the WCA Climate Change Programme. “What has been very positive is to see the enthusiasm among our members for sharing knowledge and best practice, and we will continue to focus on being a

A significant technology gap has been revealed that the cement industry needs to address if it wants to transition towards low-carbon production and to help achieve a carbon-neutral built environment. The WCA Global Climate

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February 2019

Insight Analysis

platform for change, delivering concrete action against the climate challenges of today and tomorrow.” Based on the results of the conference, the WCA will develop a Climate Change Action Plan, which will be published in September. The focus will be on clear and tangible actions for transition towards lowcarbon production and will also identify successful approaches to contribute to a carbon-neutral built environment. “Since inception the World Cement Association has championed greater collaboration and higher standards across the sector globally,” said Emir 18

February 2019

Adiguzel, Chairman of the World Cement Association. “There are few areas where this is more important than tackling climate change, and we are proud to be stepping forward to lead our industry towards a more sustainable future.”

Dalmia Cement studies replacing coal with plastic waste Indian manufacturer Dalmia Cement wants to use plastic waste as an alternative source of fuel in the state of Meghalaya. The project was presented in a public meeting with the presence of several citizens, environmentalists, and officials from the Meghalaya State Pollution Control Board.

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“They (Dalmia Cements) are requesting if we can get them the waste, especially plastic, wood chips and rubber crumbs and the calorific value of the plastic is very high, around 8,000 and it helps in the heating process of cement,” said WR Kharkrang, environmental engineer on the board. For now, the board must discuss ways of transporting and cleaning the plastic. The use of wasted plastic as an alternative fuel source is seen as a way of solving the waste problem in the state.

WCA expects cement demand growth to slow in 2019 The World Cement Association has said it expects global cement demand growth to slow next year, as the positive outlook and signs of recovery seen in the second half of 2016 have started to fade away in the face of rising downside risks emerging in Q2 2018. WCA forecasts that in 2019 world cement demand will grow by 1.5%. China’s dwindling needs are a significant factor, but even excluding this, overall demand will only rise by 2.8% in 2019, lagging the levels of global economic growth anticipated by the IMF.

Escalating trade wars between US and China and its disruptive spill-over impact cause a serious setback for the global growth. Economic growth expectations have deteriorated in developed markets on the back of higher trade costs and tightening financial policies, as well as in major emerging markets due to higher borrowing costs, vulnerable exchange rates and reduced capital inflow. In 2019, the WCA expects the US cement market will grow at a moderate pace, around 3% lower than that seen in 2018, after upside associated with the Trump administration’s large infrastructure investments has failed to materialise. Construction confidence indicators in key European countries, like Germany and France, are losing momentum and activity is slowing down. While for Germany cement demand is expected to remain flat, French cement market growth is projected to remain steady at its 2018 level of 3%. Rising political risks in Italy limit its cement demand, and construction confidence is in decline. Spain’s strong cement market recovery by two-digit growth is the major positive news for the continent, with the market expected to grow by 10%. Even more importantly, China’s economic slow-down continues and the country’s cement market, representing more than 50% of world cement demand, is stagnant. WCA expects demand to grow by only 0.5% in 2019. Cement market outlook and risks are more heterogeneous for emerging markets.

Asian emerging markets, relatively insulated from FED activity, are expected to continue their solid cement demand growth. India, Vietnam, Indonesia, Philippines and Bangladesh will remain attractive cement markets with high single-digit or double-digit growth. WCA expects to see a significant downturn in the Turkish cement market. The construction industry boom of the last decade will see a drastic correction in 2019, which will negatively impact cement demand. Recent currency devaluation and high private-debt ratios will reduce investments substantially and WCA expects Turkish cement demand to shrink by 10%. Saudi Arabia, Libya and Malaysia are emerging markets where cement demand is expected to contract. In Latin America, Brazil might finally see growth in 2019 after their worstever recession since 2014 and a series of debilitating political crises. While these catastrophes have caused Brazil’s cement market to shrink by more than 25% over these years, in 2019 a strong rebound is predicted with growth increasing by 5%. Overall WCA forecasts indicate 2019 will be a year when the world cement market will see subdued demand, and the outlook is relatively weaker than 2017 and 2018. Together with existing global issues, a long-standing overcapacity problem in the industry and higher CO2 emission prices in the Eurozone, the year ahead will be a challenging one for many cement producers.

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February 2019

Insight Analysis

4 Chall e n the cem ges for e in 2019 nt indust ry and be yond

February 2019

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The IMF and the World Bank are expecting the world economy to face several challenges in 2019, as some key economies cool down. As governments face issues that will affect their decisions for investment in the construction sector, how will the global sector be affected by an expected economic slowdown during the year?

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February 2019

Insight Analysis

019 could be a proving year for the cement industry at worldwide level as the global economy is expected to face several challenges, which in turn could dampen investment in construction projects, and lead to a decline in consumption of cement. The slowing economic growth

The forecast for the global economy in 2019 has been lowered, with the IMF decreasing its global growth expectations to 3.5 percent, 0.2 percentage points below its October report, while the World Bank is projecting global growth to slow down to 2.9 percent during the year in its most recent Global Economy Prospects. The slowdown is mostly expected due to the impact of the trade conflict between the US and China, among others, and to softening international investment and production, as well as financial distress in some of the strongest economies, such as Germany and China. Financial policies around the world are also expected to tighten as economic conditions are set to worsen, which could make it more difficult for investors to borrow credit, a problem that could impact the industry in both the growth of supplies, and in the number and size of projects, leading to a decline in demand.

The Chinese headwinds Chinaâ&#x20AC;&#x2122;s sluggish economy in 2019 is one of the most concerning factors for the global cement market, as the country is one of the largest producers and consumers of cement. The IMF and the World Bank are

February 2019

forecasting the Chinese economy to grow by 6.2 percent in 2019, a pronounced decrease from the exponential expansion from the previous decades, and one of the smallest since 1990, according to Bloomberg. Cement companies in the country are expected to shut down some of their capacity due to tighter environmental regulations, which could offset the increase of almost four percent per year between 2018 and 2023 projected by CW Research for global ex-China.

Financial policies around the world are expected to tighten as economic conditions worsen In its latest Global Cement Volume Forecast Report, CW Research projects cement capacity in China to slow down and contract at an annual average of 3.0 percent between 2018 and 2023, as the country rolls out new capacity rationalization efforts related to its new environmental policies. Likewise, CW Research forecasts Chinese cement demand will continue sliding through 2023, whereas consumption in

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global ex-China is poised to improve by one percent during the same period. The lack of investment in the real estate and infrastructure sectors by the Chinese government is one of the factors weighing cement demand down, as the marketâ&#x20AC;&#x2122;s consumption is estimated to have decreased by almost three percent from 2017 to 2018, to 2.55 billion tons.

One, two, three, four, I declare a trade war The trade tensions between the United States and some of its major trade partners, including China and the European Union, are also one of the major dampeners for the global cement trade from 2019 onwards. Some investors are holding out to see if the most recent trade truce announced in early December at the G-20 summit, in Argentina, will achieve any positive outcomes, especially as the recent tariffs and trade barriers concerned many raw materials used in the construction industry, including iron, steel, wood, and fuels, such as coal, diesel, and petcoke. The conflict is already having an impact on the trade of key commodities between China and the United States, with other global players in key sectors, such as grain, benefitting from the heavy tariffs that the two nations imposed on each otherâ&#x20AC;&#x2122;s products. This could prove an opportunity for some, but as the global macroeconomic picture remains challenging, several governments could hold out investment in infrastructure and other large-scale construction projects, which could further dampen demand.

An automated and sustainable future The cement industry is increasingly under pressure to reduce emissions, as carbon dioxide production during the manufacturing process is very high, with estimates from Chatham House placing it at around eight percent of all fossil fuel emissions, the third largest source of anthropogenic emissions of carbon dioxide. Not only that, but cement production is also an energy-intensive

process, which usually means the burning of fossil fuels such as coal, petcoke and fuel oil, which have a high rate of emissions.

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February 2019

Insight Analysis Furthermore, automation is a cement equipment sub-segment that is bound to shape trends in the future. An increase in automation – be it in process monitoring, control, regulation, or optimization systems – could help companies optimize their existing facilities in order to cut emissions and improve compliance with regulations, as it eliminates inefficiencies. According to CW Research’s World Cement Equipment Market and Forecast Report, companies are expected to invest in equipment to their existing facilities rather than in greenfield or brownfield expansions, particularly in machines that provide more flexibility in the fuel process. The use of alternative fuels by the cement industry in the European Union was studied by the International Financial Corporation, which shows that they comprise 31.6 percent of the total fuels used in the cement industry, with conventional fossil fuels representing 63.7 percent of the total, and biomass accounting for 4.6 percent. The preferred alternative fuels are plastics (37.1 percent), mixed industrial waste (17.7 percent), and the burning of tires (14.9 percent). While the industry in Europe has a good rate of replacing their fossil fuel consumption, they only account for a small portion of the global cement production; but the alternative fuels that they use is a good representative of the

February 2019

Cement companies in China are expected to shut down some of their capacity due to tighter environmental regulations industry on a global scale, and shows that, while there have been significant strides in reducing the share of the use of fossil fuels in the industry, there is still much to be done, and the switch to these fuels needs to be coupled with other initiatives, such as carbon capture. Processes such as waste heat recovery and carbon capture could also provide added value for the industry, once they are optimized. Carbon capture and storage is no stranger to the green agenda, but Norway has come up with a plan that has renewed global interest in the process:

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the world’s first undersea CCS project to capture CO2 emissions from multiple industrial sources, which would then be stored in the Norwegian continental shelf. The first phase of the project could reach a capacity of approximately 1.5 million tons per year. Norway would thus stimulate new commercial carbon capture projects in the country, Europe and more globally across the world. In addition, the project has the potential to be the first storage project site in the world receiving CO2 from industrial sources in several countries. When it comes to carbon capture and storage, the challenge for companies would be the initial investment, which is significant and could deter producers with the best of intentions. Other solutions involve the use of industrial waste during the manufacturing process. In India, manufacturers have begun incorporating fly ash, a byproduct of coal burning, in the cement production process. Thanks to this, the country has been able to consume about 63.3 percent of the fly ash it produces, with the cement industry being the top consumer of the ash, with a share of around 24 percent. The use of renewable energies in the industry is also being studied, with the most

An increase in automation could help companies optimize their existing facilities in order to cut emissions and improve compliance with regulations recent international case involving the use of a solar reactor and how it could be used in the production of cement. Companies such as Dalmia Bharat and LafargeHolcim are also investing in solar energy research so that they can more easily incorporate it into their operations.

More solutions such as these are necessary, especially if the industry at a global scale is to contribute to the Paris Agreement goals, which aim to keep temperature rises below two degree Celsius above preindustrial levels by 2050. A new study by Chatham House calls for the sector to reduce emissions by around sixteen percent up to 2030 in order to be able to comply with the Paris Agreement goals.

Conclusion The worldwide cement industry should expect a challenging 2019, as the global economic prospects are not very positive. As macroeconomic conditions worsen, financing is set to be tighter, and trade conflicts between large economies are not likely to benefit the climate for large investments either in the industry or in large projects that require cement. The Chinese economy remains the most concerning factor and challenge for the industry during the year, as the country plays a major role in both the supply and demand sides. Chinaâ&#x20AC;&#x2122;s size in both the industry and the global economy is a huge influence on smaller markets, so any negative effect on its market is likely to have repercussions throughout the world.

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February 2019

FEATURE CW RESEARCH

Volatility ahead as oil well cement prices head towards recovery An improvement in crude oil prices has resulted in a timid recovery in oil well cement demand and prices at the global level. Going forward, both markets will remain under the threat of global macroeconomic and country-specific risks

February 2019

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February 2019

FEATURE

ased on production, pricing and demand trends, CW Research has prepared an overview on the oil well cement market, which includes both an analysis of the past years and an outlook for the period between 2018 and 2024. Oil well cement is traditionally anchored to crude oil markets, with crude oil prices and the distance covered by new drilling projects being crucial factors to understand market variations. When crude oil prices tanked to USD 40 in 2016, the oil well cement market entered a new period of low prices, very narrow premiums compared to ordinary Portland cement, and buyers’ dominance. The past two years have brought a small recovery, yet not enough to replicate the consumption and prices achieved by the oil well cement segment at its apex.

Oil Sector Trends in the oil well cement market are inextricably intertwined with the crude oil sector. Thus, crude oil prices tend to have a strong correlation with oil well cement demand; when crude oil prices tanked below USD 40 per barrel in 2016, the number of new rigs and demand for oil well cement plummeted accordingly. Apart from the baseline demand provided by the steady rate of decay sustained by existing oil wells, demand for oil well cement comes mostly from new drilling ventures. In the past two years, crude oil prices have partly recovered, leading to an increase in the number of new wells, but both figures are still far from 2014 levels. This has led to an increase in drilling

February 2019

distance, with all types of oil exploitation – onshore (including geothermal perforations), offshore, and shale drilling – during both 2017 and 2018, pushing figures closer to those observed in 2014. Not every kind of drilling requires the same consumption of oil well cement, since drilling distances vary widely. Shale exploration can go to around 5,000 meters deep while offshore and onshore drilling stay at 3,000 and 1,500 meters marks, respectively. Consequently, shale exploitation may use between two and three times more oil well cement than regular rigs.

The past year ended with oil reserves falling behind the past five years’ average The past year ended with oil reserves falling behind the past five years’ average, meaning that, in 2019, prices will be more sensitive to geopolitical events. Meanwhile, the construction of new wells throughout the world will be exposed to several risks, including the debt crisis faced by Venezuela, the unresolved political instability faced by Nigeria and Libya, and the low cost of shale oil production in the United States. At the macro level, the cooldown in economic growth predicted for 2019-2020 could decrease demand for oil, especially in

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emerging markets facing inflation. CW Research believes that crude oil will not be able to force the USD 85 per barrel resistance point during the coming years. CW Group’s analysts expect the global count of wells to increase from an estimate of 74,500 in 2018 to more than 91,000 wells in 2023. In the United States, shale oil exploration rose rapidly since 2005, with two exceptions: in 2009, right after the global crisis, and in 2015, when crude oil plunged. China and Saudi Arabia plan to challenge the dominant position of

the United States by increasing shale oil production, an effort that will likely have a positive impact on oil well demand. However, even as Saudi Arabia embraces the challenge of surpassing the United States in terms of shale oil production, the endeavor will likely have a timid impact on the global drilling distance, given that the country’s shale oil reserves are at a shallow depth. For now, the United States holds a comfortable leading position in terms of the total number of oil wells, but that hegemony could be slashed by the ambitions of the Middle East and North Africa.

US boosting oil well cement demand through 2024 CW Research, in its World Oil Well Cement Market Forecast 2024, projects consumption of cementitious materials for drilling in the US to reach roughly 4,000 million tons by 2024. The upward trend will be supported by an improvement in drilling activity, in turn underpinned by the recovery of oil prices. “Finding its footing, US exploration activity has again wound up with drilling activity resuming after a period of ‘cricket- like’ silence. Although global oil dynamics are still playing out, somewhat reducing demand for sweet light US-type crude, a reasonably strong US economy is supporting renewed drilling and consequently a notable uptick in oil well cement demand,” notes Robert Madeira, Head of Research for CW Advisory and Research.

Oil well cement consumption recovers One of the world’s largest crude oil producers, the US market has an estimated daily production of around 10 million barrels per day. That makes the US the leading oil and gas well driller in North America, and also the leading market for oil well cement consumption in the region. The US alone accounts for roughly 40% of the global oil well cement consumption, thus making North

America the largest regional consumer of the commodity. Oil well cement demand in the country peaked in 2014 at over 7,000 thousand tons. However, consumption collapsed in 2016 following challenging conditions in the oil and gas industry. By 2018, oil well cement consumption recovered by over 50 percent, mainly on the back of a large addition of onshore and shale wells.

Buyers require API certification On the production side, Cemex is the major oil well cement manufacturer in the United States, with four manufacturing units, followed by LafargeHolcim with three, and Buzzi Unicem with two. Customer-wise, Schlumberger, Halliburton, and Baker Hughes emerge as some of the largest oil well cement consumers. Although buyers in the US market require API certification, the market for non-monogrammed oil well cement is strong. This is due to the pricing deferential between monogrammed and non-monogrammed oil well cement, amidst a premium pricing strategy adopted by renowned manufacturers for their API-certified cement. As a consequence of the acceptance of non-monogrammed cement in the market, API-certified companies are oftentimes discouraged from renewing their certification.

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February 2019

FEATURE CEMENTITOUS DEMAND FOR CEMENTING PURPOSES (K tonS)

Source: CW Research

Supply and demand Last year, the number of oil well cement production lines increased across the world, especially thanks to smaller, national-level players outside the big four â&#x20AC;&#x201C; LafargeHolcim, Cemex, Buzzi Unicem, and HeidelbergCement. These producers

February 2019

are normally already engaged in ordinary Portland cement production and strive to obtain certification by the American Petroleum Association when the market for oil well cement expands, only to exit the market once demand declines again.

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Even within oil well cement producers certificated by the American Petroleum Association, there is a wide range of product quality, providing buyers with a vast choice. At the same time, the emergence of those smaller players further squeezes an already overcrowded market. In some segments, oil well cement is also forced to compete with ordinary Portland cement. Traditionally, drilling and oil companies prefer certified oil well cement because it increases its leverage over health and safety concerns, which have increased since the Deepwater Horizon oil spill. Lower prices and more regulatory oversight have actually led drilling companies to migrate from more resistant grades of oil well cement, but sluggish crude oil prices have also pressured some companies operating outside the OPEC, especially in North Africa and North America, to use ordinary Portland cement in a bid to cut

Last year, oil well cement demand reached 4.6 million tons, an increase of 30 percent compared to 2016 costs and survive the market. Saudi Arabiaâ&#x20AC;&#x2122;s plans to increase shale oil production may contribute to force down the share of ordinary Portland cement again. Last year, oil well cement demand reached 4.6 million tons, an increase of

30 percent compared to 2016, the year when demand was most aggressively hit by low crude oil prices. However, the figure still only accounts for half of the demand reached in 2014. CW Research expects consumption to increase by a compound annual growth rate of seven percent between 2018 and 2024, eventually reaching 6.8 million tons.

Price Historically, oil well cement is sold at a premium compared to ordinary Portland cement. At some point, the price of oil well cement was five to eight times that of ordinary Portland cement. However, with the decrease in demand witnessed after 2014, that premium has shrunk to between one and 1.1 times the price of ordinary Portland cement and, in certain geographical locations, the relation between the two commodities was actually reversed.

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February 2019

FEATURE OWC CAPACITY REGIONAL PRICING (USD/t)

Source: CW Research

This is, of course, far from the ideal situation for manufacturers, since by producing oil well cement these companies face a myriad of additional costs compared to other types of cement. The high-pressure environments in which

February 2019

oil well cement is used require limestone of superior quality and higher temperatures in the kilns. Safety conditions of oil well cement are strictly regulated by the American Petroleum Association, with annual certification always required.

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The high-pressure environments in which oil well cement is used require limestone of superior quality and higher temperatures in the kilns Notwithstanding regional differences, the downward trend in oil well cement prices was generalized between 2012 and 2016. In the United States, the largest market for oil well cement, prices fell by a compound annual rate of 15 percent during that period and a full-blown recovery is not a likely scenario for the coming years. CW Research estimates prices to have reached between USD 110 and USD 120 per ton in 2018.

About the report

Conclusion Crude oil demand and pricing continues to set the tune for the oil well cement market. While the past two years have seen crude oil prices recovering from their 2016 low, the market remains besieged by several risk sources. Still, CW Research expects the recovery to continue, thanks to an increase in crude oil prices, a higher number of crude oil wells at the global level, and the shale exploration ventures of Saudi Arabia and China. Overall, the oil well cement market remains more favorable to buyers. A string of mergers and acquisitions between drilling companies has eliminated competition, reducing the pool of potential consumers and putting more pressure on manufacturers. Meanwhile, in some geographies, especially where the crude oil market is dominated by domestic companies, oil companies have become direct procurers of oil well cement in detriment of drilling companies.

CW Researchâ&#x20AC;&#x2122;s World Oil Well Cement Market Forecast 2024 provides an indepth forecast analysis of the worldwide oil well cement market, including regional market shares, demand, imports, exports and types of oil well cement used by geography, as well as price trends. The report highlights detailed and specific demand by main types (including Class G & H) of oil well cement for key countries, and trends in the oil well segment. The World Oil Well Cement Market Forecast 2024 presents the role of extenders and onshore, offshore, and shale well counts with trajectory, depth, and well type to help ascertain oil well cement usage. Bringing together CW Groupâ&#x20AC;&#x2122;s principal research team, this business intelligence tool addresses important market dynamics about API-certified oil well cements, including a global capacity overview (market and major producers), regional market shares, demand, imports, exports, the types of oil well cement, and pricing trends. The scope of the report is further extended to include key operations of the main oil well cement producers, such as Dyckerhoff, HeidelbergCement, LafargeHolcim, Cemex, and of the most important well drillers, namely Halliburton, Baker Hughes and Schlumberger.

More information about the report can be found here: https://www.cwgrp. com/cemweek-reports/product/281world-oil-well-cement-marketforecast-2024

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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February 2019

CEMENT MARKETS

CW Research

Cement Volumes In October, Peru’s cement production increased 0.2 percent to 8.2 million tons when comparing 2018’s year-to-date to the previous year. This slight increase followed an investment in business buildings.

The Russian economy is recovering, with its cement production rising by 0.4 percent on a year-todate basis as compared to 2017.

Cement production in Argentina rose by 1.7 percent on a year-to-date basis in October 2018 compared to the same period in 2017, and its consumption by 0.7 percent. These shy increases in both production and consumption were due to a slowdown in construction activity. The Russian economy is recovering, with its cement production rising by 0.4 percent on a yearto-date basis as compared to 2017. This humble increase follows the armed conflict with Ukraine.

From this country selection, India was the one that showed the biggest increase in cement production on a year-to-date basis (15.4 percent), due to the government’s investment in infrastructures and its housing program. The second highest increase in cement output from this set of countries was recorded in Vietnam, with the 5.4 percent improvement on a year-todate basis following increasing exports and a recovering construction sector. Cement demand in Pakistan increased 8.4 percent on a year-to-date basis. However, without new construction projects announced, cement consumption has reached stagnation. A great improvement in exports is helping the smallest producers to face rising input costs.

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

Sources: CW Research

To learn more, please contact the CW Research team at sales@cwgrp.com 34

February 2019

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CW Research CEMENT MARKETS

In Kenya, cement consumption dropped 5.7 percent, due to the slowdown in the real estate market, when comparing the year-todate through October with the same period in 2017. Cement production is following the same declining trend, by decreasing 9.0 percent on a year-to-date basis.

elections in June, cement consumption has been growing, due to the increasing confidence in the market and in the housing sector.

Brazil saw its cement consumption decrease by 1.4 percent on a year-to-date basis, due to October elections and to the increasing interest rates that are delaying investment.

Cement demand in Morocco decreased 3.4 percent year-to-date in October 2018, when compared to the same period the previous year, following a decline in the housing and urbanism sector.

In Colombia, despite a month-on-month improvement, cement consumption slipped 0.5 percent on a year-to-date basis through October, when compared to 2017â&#x20AC;&#x2122;s YTD. Since the last

Mexican cement consumption rose 1.5 percent on a year-to-date basis, as a result of growing demand in the industrial and commercial sectors.

Due to the economic crisis and lower purchasing power, cement consumption in Chile decreased 0.1 percent on a year-to-date basis through October.

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

In Colombia, despite a monthon-month improvement, cement consumption slipped 0.5 percent on a year-to-date basis through October, when compared to 2017â&#x20AC;&#x2122;s YTD.

Sources: CW Research

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February 2019

DEPARTMENTS

PEOPLE Saudi Cement appoints new chairperson The board of directors of Saudi Cement has appointed Khalid bin Abdulrahman Saleh Al-Rajhi as the new chairperson of the company. In the same statement, the board announced the appointment of Muhammad bin Abdul Karim AlKhariji as vice chairperson. Finally, the company also appointed new representatives at the Capital Market Authority and the Saudi Stock Exchange.

LafargeHolcim changes management The company has decided to hand its legal and human resource functions to the executive committee while distributing the growth and performance functions along three centers of excellence. Feliciano GonzĂĄles MuĂąos, head of human resources with over 11 years of experience in senior roles in that area within the company, was appointed to the executive committee. Keith Carr, who joined LafargeHolcim in 2017 and is the current head of legal and compliance, was also appointed to the committee. Urs Bleisch, the current head of corporate growth & performance, will step down from his position as the function is distributed along the three centers of excellence and leadership is assumed by region heads. The changes became effective as of January 1, 2019. 36

February 2019

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PEOPLE Tabuk Cement appoints new general manager Ali Bin Mahgaha Al Asmari resigned from the post of general manager at Tabuk Cement on January 6, a decision that has been accepted by the board of directors. The same board appointed Al Bin Mohammed Al Saif Al Qahtani as the new general manager of the company. Al Qahtani holds a bachelor in chemical engineering from the King Saud University and has previously worked for several high-profile companies, including Saudi Aramco.

Lafarge Zimbabwe appoints new CEO Kaziwe Siame Kaulule has been appointed as CEO of Lafarge Cement Zimbabwe. The former CEO, Amal Tantawy Emam Naiel, left after five years in the post to pursue personal interests. Kaulule, a Zambian national, is said to be goal-oriented and an accomplished executive. He has 14 years of experience leading teams in operations, digital transformation, and business development across Europe and Africa. Before becoming the CEO of Lafarge Cement Zimbabwe, Kaulule was the general manager for Lead Retail Division

at LafargeHolcim UK. He has also worked as regional marketing director of the

Cemex makes changes to executive structure

Zimbabwe, Zambia, and Malawi cluster between 2012 and 2013. Several senior executives of Cemex have been transferred to new posts. Juan Romero Torres, will go from president of Cemex Mexico to executive vice-president for global commerce development of Cemex. Ricardo Naya Barba, until now Cemex Colombiaâ&#x20AC;&#x2122;s president, will assume the post left opened by Torres. Jaime Gerardo Elizondo Chapa, president of Cemex Europa, is the new executive vice-president for the global supply chain development. Sergio Mauricio MenĂŠndez Medina, current commercial vicepresident for the distribution segment at Cemex Mexico, will be the new president of Cemex Europa.

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February 2019

DEPARTMENTS

EQUIPMENT Aumund supplies clinker conveying machinery to Loma Negra German equipment maker Almund will supply a plethora of clinker conveying machinery to Argentinian cement manufacturer Loma Negra. The order will be fulfilled by the company’s Chinese and Brazilian units. The company will supply three chainbucket elevators, five pan conveyors, one drag chain conveyor, and eight bucket elevators that will be installed at L’Amali cement plant’s second production line.

The order was placed by Loma Negra in August 2018. The company is building a second kiln line with the capacity

to produce 5,800 tons per day, with production scheduled to begin in early 2020.

FLSmidth signs contract for cement plant equipment in South America the production line and will deliver energy-efficient equipment for the entire production line, from crushing to packing, while the customer will be in charge of the civil design and construction of the plant.

FLSmidth has been awarded a contract to deliver equipment for a greenfield cement plant in Paraguay, South America. The contract is valued at more than DKK 350m.

February 2019

The expected plant start-up is within 24 months and the plant is expected to be fully operational in 2021. The plant will have a capacity of 2,500 tons per day and will mainly supply cement to its local market. FLSmidth will design and engineer

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"The customer needed a state-of-the-art solution to meet the steady demand for cement in this developing region. This contract reinforces our position as the leading supplier of the most productive and energy-efficient equipment and technology for customers in the cement industry who focus on productivity, reliability and sustainability," says Jan Kjaersgaard, President, Cement, FLSmidth. FLSmidth has received the down payment and the order becomes effective immediately and will be part of the order intake for Q1 2019.

EQUIPMENT Timlyusky cement plant buys new trucks Russian manufacturer Timlyusky Cement invested RUB 17.7 million to expand its special vehicles fleet having acquired two BelAZ-7540V mining trucks with the capacity to lift 30 tons. The new trucks were delivered in December 2018 via railway and were subsequently assembled by the company. They have already been commissioned and are being used to transport rocks on its quarry. Timlyusky Cement has eight BELAZ trucks in operation. According to Vladimir Klitschko, the new trucks will increase the overburden transportation capacity of the company.

SEW-Eurodrive ships spare parts to major Zambian cement maker The Finnish and German units of SWEEurodrive shipped dozens of spare parts to a major cement producer in Zambia striving to build a stockpile in order to prevent costly downtime and loss of productivity. The order consisted of 40 units, including geared motors, planetary units, Industrial Gear units ranging between 7.5 and 250 kilowatts. “This is testament to the internationalization of SEW-Eurodrive, which can call on its extensive global capabilities in order to

be able to meet the specific requirements of this major client in the required

timeframe,” commented Marcio Sicchiero, the company’s head of exports.

Raysut Cement modernizes clinker cooling system equipment for the modernized line will be sourced from IKN, in Germany. “The upgrade of clinker cooler is in line with Raysut’s strategic plan to install the latest in production technology to reduce costs as well as to scale up its plants with state-of-the-art equipment,” said Joey Ghose, CEO of the company.

Oman-based Raysut Cement signed an agreement with Ayoki Engineering for

the upgrade of the clinker cooler line number 3 at the Salalah cement plant. The

Ayoki Engineering will take the existing grate cooler and replace it with an IKN Pendulum clinker cooler with the designed capacity to handle 4,000 tons per day. The company will deliver civil works, supply, and installation.

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February 2019

Flashback NEWS FLOW IN CEMWEEK.COM LAST TWO MONTHS

Russia 10 articles

Uzbekistan 10 articles

Spain 9 articles

United States 12 articles

Egypt 41 articles

Mexico 14 articles

Pakistan 9 articles

Indonesia 11 articles Brazil 9 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: February 28, 2019

Global Cement Trade Prices 4Q 2018

March 14, 2019

Global Cement Volume Forecast 1H 2019

Cw Research's newest reportS:

Webinars

World Oil Well Cement Market Forecast 2024 November 2018

February 2019

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Ground and Precipitated Calcium Carbonate Industry and Outlook 2023 December 2018

Global Calcium Aluminate Cement Market Report and Forecast 2023 January 2019

BUZZ

Cement prices rise in Algeria

Brazilian cement sector starts 2019 with confidence

CO2 emission allowance prices rise in Europe

Indonesia's cement sector continues to expand

Oil well cement demand to grow through 2024; premium pricing to slowly recover

exports consumption crore

economic

ministry products

slag

waste

global portland

materials

concrete

exports

growth

sold

10. Vietnam exports record levels of cement in 2018

recorded

waste imports russia

materials results

investment results

industrial

TOP BMWEEK STORIES activity 1. Indian government considering putting IRAN construction materials in new tax slab 2.

Lafarge Cement realeses new cement production in the US 3. Grupo Polpaico signs deal with Colbún over energy supply 4. Turkey’s construction materials exports surge in October 5. Sika makes offer to acquire Parex 6. Femern’s tunnel project in Germany set to be approved 7. Malaysia’s building materials suppliers face challenging outlook 8. Brazil: Construction sector hits new record in Brusque in 2018 9. Ireland’s construction activity rises in December 10. UK’s construction sector is not very optimistic for 2019

region economic development

using

large

paid

industrial

power reach

short thermal volume

india