India Cement & Construction Materials (vol 1 / issue 30) by CemWeek

india A CemWeek Publication

ISSUE 30

CEMENT

MAY - JUNE 2016

& CONSTRUCTION MATERIALS

CW RESEARCH HIGH-SULFUR IMPORTED PETCOKE PRICES INCREASE CW RESEARCH POSITIVE OUTLOOK FOR THE INDIAN CEMENT INDUSTRY

FEATURE

THE NEXT STEP: OPTIMIZATION OF CEMENT PLANT UTILIZATION News

Analysis

Market Coverage

Interviews

People

The must-have cement and clinker

price intelligence

chartbook

Global Cement Trade Price Report We know that the everyday challenge for cement traders, independent traders, shippers as well as buyers in cement sector is the pricing strategy. The Global Cement Trade Price Report is CW Research’s benchmark price assessment for monthly gray cement, white cement, clinker and granulated blast furnace slag market prices, imports, exports and ex-works.

+ 1 - 7 0 2 - 8 6 6 - 9 4 74 research.cwgrp.com inquiries@cwgrp.com sales@cwgrp.com

Published on a quarterly basis, the GCTPR brings you all the cement sector's insights and helps you gauge what’s driving the cement market. We consistently track cement trade prices to keep you informed, so that you can make the best strategic decisions. For more information visit: http://goo.gl/eib8fE

We know the industry. let us guide you.

Our global presence: Greenwich (US) • Mumbai (IN) • Porto (PT) • Bucharest (RO) • Sao Paulo (BR)

FEATURES

DEPARTMENTS

A closer look at how Indian cement companies try to reduce environmental impact, while achieving cost and energy- efficiency.

and environmental impact

The Next Step: Optimization Of Cement Plant Utilization

10 Global Cement Trade Price Report (GCTPR)

The Indian cement industry has a positive outlook, as the country became the fastest growing economy

16 CW Research’s India Petcoke CFR Imported petcoke prices increase 15%

india

EDITORIAL LETTER

NUMBERS IN BRIEF

20 21

ANALYST RECOMMENDATIONS research and analytics

MARKETING & COMMUNICATIONS COORDINATOR

ADVERTISING

RALUCA CERCEL SILVIU STEFANESCU STEFANA ABICULESEI SUSHMITA RAI CONTRIBUTING ANALYSTS

24 MARKET AND COMPETITION

28 PROJECTS AND EXPANSIONS

LUCIANA MURARASU

LIVIU DINU

Cement Volumes Cement Energy

cement 26 M&A and FINANCE

GABRIEL BURETE CONTENT EDITOR & ONLINE COORDINATOR

Latest Broker Recommendations

ROBERT MADEIRA CEMWEEK PUBLISHER HEAD OF CW GROUP RESEARCH

Performance of India’s Cement Sector

& CONSTRUCTION MATERIALS

www.cemweek.com/india

LESS IS MORE: A future of reduced costs

CEMENT

ALEXANDRA PAUN SANTOSH SHETTYE

DESIGNERS To subscribe or advertise, please contact us at T (India): +91-989-236-1085 T: +1-702-430-1748 F: +1-928-832-4762 E: sales@cwgrp.com

30 VOLUME AND PRICING

32 PEOPLE

SUBMISSIONS To submit a contribution to the India Cement & Construction Materials magazine send us an email at inquiries@cwgrp.com

33 REGIONAL News

Any submissions or contributions from readers shall be subject to and governed by CemWeek's Terms and Conditions, which are available upon request.

35 orders and equipment

The CemWeek Magazine is published by the CW Group LLC

35 INFRASTRUCTURE AND PROJECT

Greenwich: PO Box 5263 Greenwich, CT 06831 USA T: +1-702-866-9474 F: +1-928-832-4762 www.cwgrp.com www.cemweek.com

India: B1/203A, Boomerang Chandivali, Andheri East, Mumbai - 400072 Maharashtra T: 022 6607 2700

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.

TO SUBSCRIBE please visit www.cemweek.com/india

LETTER FROM EDITOR

LESS IS MORE: A FUTURE OF REDUCED COSTS AND ENVIRONMENTAL IMPACT Cement manufacturing is a costly, energy-intensive and environmentally-sensitive process. Optimization of cement plant utilization could shape the future of the industry. The 30th issue of India Cement & Construction Materials journal (ICCM) covers viable solutions for the Indian companies.

he current issue of our magazine also features an analysis of petcoke prices, made by the CW Research team. Find out more on the increase of high sulfur imported petcoke prices and cement demand in India, while domestic retail petcoke price fell, as well as other relevant indicators, in this excerpt from the CW Group’s bi-monthly report. The Indian cement industry has a positive outlook, as the country became the fastest growing economy, surpassing China for the first time this millennium. Gray cement, slag and clinker trading outlook remains positive, with increasing export prices, according to figures highlighted

MAY / JUNE 2016

by the 1Q2016 update to the CW Research’s Global Cement Trade Price Report (GCTPR). And as usual, India Cement & Construction Materials journal provides all the relevant news about the main indicators of the industry, including the latest facts and figures about cement volumes, energy prices, relevant people in the business, regional developments, equipment and construction projects. Don’t miss out the numbers and the trends laid out in the special sections.

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

Gabriel Burete

CONTENT EDITOR & ONLINE COORDINATOR

NUMBERSIN BRIEF MAJOR INDIAN COMPANIES PICK THE LOW HANGING

FRUITS OF FAVORABLE LOCAL DEMAND

A favorable cost environment and a hefty improvement in India’s demand scenario had a positive bearing on India’s top cement producers for the quarter ended March 31, 2016. REVENUE OF INDIAN CEMENT COMPANIES YEAR AND QUARTER ENDED MARCH 31 2016. CHART: REVENUE (RS CRORE) Year ended March 31 '16

30,000

Quarter ended March 31 '16

10,000

Shree Cement

JK Lakshami

Ultratech

Following a lackluster rest of the year, sales volume of cement companies were supported by sharp execution pickup in infrastructure activity across the sub-continent. Nevertheless, excess supply of the commodity on the market has restricted cement companies from improving pricing for cement. On a year on year basis, Indian average cement prices fell by about 7 percent year on year during the quarter, and by 2 percent quarter on quarter. On the plus side, operating costs are favorable to cement manufacturers across the country, especially for manufacturers who

Prism Cement

Source: annual reports

20,000

use petcoke as the main energy generation source. Coupled with favorable freight, petcoke remains the best alternative to coal pricing and operational efficiency wise. On the other hand, Coal India intends to increase the price of coal, which will also lead to an increase in the price of electricity in the country. Coal India will increase coal prices by around 15 percent, leading to a 30% increase in kWh price

NET PROFIT OF INDIAN CEMENT COMPANIES YEAR AND QUARTER ENDED MARCH 31 2016. CHART: REVENUE (RS CRORE) Year ended March 31 '16

Quarter ended March 31 '16

5,000 4,000

2,000 1,000 Shree Cement

JK Lakshami

Ultratech

Prism Cement

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

MAY / JUNE 2016

Source: annual reports

3,000

FEATURE FEATURE

THE NEXT STEP:

OPTIMIZATION O PLANT UTILIZATI Cement manufacturing is a costly, energy-intensive and environmentally-sensitive process. Optimization of cement plant utilization could shape the future of the industry.

MAY / JUNE 2016

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

OF CEMENT ION

Source: google.com

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

MAY / JUNE 2016

FEATURE he optimization of cement production is one of the greatest challenges of todayâ&#x20AC;&#x2122;s cement industry. As an energy-intensive and environmentally-sensitive process, cement manufacturing is the subject of intense research efforts, driven by the huge importance of the product itself for the global economy, which requires ever larger amounts of cement. There are solutions to be found, as the promise of high benefits is a strong motivator. However, getting there is not easy. Considerable resources have been spent in recent years to investigate emerging and, hopefully, non-controversial and nonpolluting technologies. Unfortunately, many such technologies have low capacities, are technically sophisticated, and are currently not affordable by many developing countries. The objective is

clear for all the players in the industry: optimization is about lower costs and cleaner production.

WAYS TO BECOME MORE EFFICIENT

When comparing the state of the art technologies in terms of sustainability, suitability, performance, robustness, costefficiency, patent restrictions (availability), Manufacturing and production processes and competence requirements, the only can be improved by changing energy current conclusion is that, at least in management and by investing in new equipment and/or upgrades. the short Changes in the chemical term, cement formulation of cement have been industries are going to be based on pyro The cement industry in the processing and United States burns 53 million used grinding mills.

tires per year

Cement production involves the heating, calcining and sintering of blended and ground materials, in order to form clinker. As a result, cement manufacturing is the third largest cause of man-made CO2 emissions due to the production of lime, the key ingredient in cement. Therefore,

Binani Cement India Plant

MAY / JUNE 2016

energy savings during cement production could lead to higher efficiencies and a lower environmental impact. In the cement and concrete industry, improvement of energy efficiency and reduction of CO2 emissions could be mainly achieved by changes in the manufacturing and production processes, and by adjusting the chemical composition of cement.

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

demonstrated to save energy and reduce CO2 emissions, but their widespread adoption has so far been hampered by the fact that developing a new industrial standard is complex and requires time. This holds in particular for the cement industry which is a highly capital intensive

Refuse Derived Fuels (RDF) is used as substitute fuel in the clinker process of cement plants

and competitive sector with long economic lifetimes of existing facilities so that changes in the existing capital stock cannot easily be made.

energy consumption. These operations have an energy efficiency ranging from 6 to 25% and they also offer a significant opportunities for energy saving.

Germany, the Netherlands and Switzerland have reached average substitution rates ranging from 35% up to more than 70%. Some individual plants have even achieved a 100% rate of substitution, when using The most important opportunities for Another way to reduce emissions is to appropriate waste materials. However, very improving energy efficiency high substitution rates can only and reducing CO2 emissions be accomplished if a tailored seem to be in the field of pre-treatment and a surveillance improving the cement system are in place. Municipal manufacturing process. In solid waste, for example, needs Used tires, wood, plastics, chemicals and the cement industry, pyro to be pre-treated in order to other types of waste are co-combusted in processing (processing the raw obtain homogeneous calorific material into cement under a values and feed characteristics. cement kilns in large quantities. high temperature, e.g., above 8000C) is a very common The cement industry in the technological procedure, which accounts substitute fossil fuels with either waste or United States burns 53 million used tires for 74% of the energy consumption in biomass. Cement kilns are well suited for per year, which accounts for 41% of all global cement and concrete industries. waste-combustion because of their high tires that are burnt, being equivalent to Since the thermal efficiency through the process temperature and because the 0.39 Mt or 15 PJ. About 50 million tires, use of this conventional technology of pyro clinker product and limestone feedstock or 20% of the total, are still used as landfill. processing is slightly higher than 30% on act as gas-cleaning agents. Used tires, Another potential source of energy comes average, there could be considerable scope wood, plastics, chemicals and other types of from carpets: the equivalent of about for improvements. Grinding and milling waste are co-combusted in cement kilns in 100 PJ per year are dumped in landfills, account for 5.8% of cement and concrete large quantities. Plants in Belgium, France, when they could be burnt in cement

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

MAY / JUNE 2016

FEATURE kilns instead. Although these alternative materials are widely used, their utilization is still controversial, as cement kilns are not subject to the same tight emission controls as waste-incineration installations.

Used tires ready for co-processing

Yet another way to reduce energy and process emissions in cement production is blending cements with increased proportions of alternative (non-clinker) feedstocks, such as volcanic ash, granulated blast furnace slag from iron production, or fly ash from coal-fired power generation. The use of such blended cements varies widely from country to country. It is high in continental Europe, but low in the United States and the United Kingdom. In the United States and China, other clinker substitutes are added directly in the concrete-making stage. On the long run, cement lacks a viable carbon-free alternative, and the International Energy Agency scenarios imply a heavy reliance on Carbon Capture and Storage cement kilns with oxy-fueling. Moreover, receiving and handling of alternative or waste fuels can raise technical liability and political concerns. Cement manufacturing companies do not want to be labeled as handlers of hazardous wastes and surrounding communities may have concerns about hazardous waste transport and handling in a nearby cement plant.

EFFICIENCY THROUGH TECHNOLOGY

as efficient as the most advanced US kiln utilizing a preheater and precalciner, and 37% more efficient than an average US plant. According to the US Department of Energy, the required capital costs for fluidized-bed systems are about 12% lower than those of a modern cement facility and

In terms of new technologies in the cement sector, several options are being tested and demonstrated, A full-scale fluidized-bed system would such as fluidized-bed be as efficient as the most advanced US kilns. Several large-scale kiln utilizing a preheater and precalciner fluidized-bed kiln pilots (200 tons/day) have been developed since the mid-1990s having demonstrated their operating costs are about 75% of a significant energy savings. For instance, modern cement facilityâ&#x20AC;&#x2122;s operating costs. it is estimated that a full-scale fluidized- However, in comparison with older, fully bed (3,000 tons/day) system would be capitalized kiln-based plants, the fluidized

MAY / JUNE 2016

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

bed systems are relatively expensive so that they are likely to only be considered for future capacity expansion. Another barrier in adopting fluidized-bed systems is the reluctance to invest in such large capital expenditures, as the systems have only been demonstrated at small-scale facilities. Another solution for improvement is the co-generation of electricity and/or steam production. Given their large-scale industrial thermal energy demand, cement plants offer opportunities for power generation or steam production, particularly if the co-generation system is part of the initial plant design. This could significantly improve the overall energy efficiency of some manufacturing operations. Moreover, utilization of waste heat in preheater heat exchange systems is usually more energy efficient than the co-

in the country (a dry process system with preheater with precalciner technology), the industry would lower its energy consumption by 30% to approximately 3,4 MJouls/ton of cement and reduce CO2 emissions by 13% to 75.3 Mt/year.

generation of electricity, with its inherently low conversion efficiency of thermal to electrical energy (typically about 10,481 Jouls are required to produce 1 kWh). Although co-generation of steam at a cement plant is possible, cement plants typically require a reduced amount steam and they are located in isolated areas where markets for excess steam generation are often not available. An important benefit of enhancing energy efficiency in the cement industry would be the reduction in energy costs. Japan is the leading country when it comes to energy efficiency in the cement sector. Europe (4.1 GJ/t cement on average) comes second, after Japan (3.1 GJ/t), but many other parts of the world show much higher energy consumption patterns, e.g. the average US (5.3 GJ/t) or Chinese plant are well above the European average plant, regarding energy consumption. Estimates indicate that if all US plants upgraded their pyro processing to the level of the best plant

at least 50% higher than the theoretical minimum determined by the basic laws of thermodynamics. Energy efficiency tends to be lower in regions with low energy prices. Cross-cutting technologies for motor and steam systems would yield efficiency improvements in all industries,

Generally speaking, in the EU cement industry the energy bill represents about 40% of total In the EU cement industry the energy production costs. Since the 1970s, the bill represents about 40% of total energy required for production costs producing cement in Europe has fallen by about 30% and with typical energy savings in the range of the scope for further improvements has 15% to 30%. The payback period can be as become rather small. However, larger short as two years, and, best case scenario, energy cost savings are still possible in the financial savings over the operating other parts of the world. life of improved systems can run as high as 30% to 50%. In those processes In cement manufacturing, cost-effective where efficiency is close to the practical efficiency gains in the order of 10% to 20% maximum, innovation in materials and are already possible using commercially processes would enable even further available technologies. The energy gains, according to International Energy intensity of most industrial processes is Agency estimates.

Using whole car or truck tire fuel in a precalciner cement kiln

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

MAY / JUNE 2016

FEATURE

Indian cement rides the wave economic growth The Indian cement industry has a positive outlook, as the country became the fastest growing economy, surpassing China for the first time this millennium.

10 MAY 10 JANUARY / JUNE 2016 - FEBRUARY INDIA CEMENT 2016 & INDIA CONSTRUCTION CEMENT & CONSTRUCTION MATERIALS MAGAZINE MATERIALS MAGAZINE

Source: chicagomag.com

INDIA CEMENT &INDIA CONSTRUCTION CEMENT & CONSTRUCTION MATERIALS MAGAZINE MATERIALS JANUARY MAGAZINE - FEBRUARY MAY / JUNE 2016 2016

FEATURE trong prospects for India’s and consumption in 2016, mainly driven Worldwide gray cement trade has been under pressure from weak economic cement industry as the country by the slowdown in China. growth which impacts global demand. replaces China to become the According to the GCTPR update, the Volumes have generally declined at a fastest growing economy in the world. Gray cement, slag decline in global sales, coupled with global scale, while pricing has seen further and clinker trading outlook remains overcapacity in some exporting markets, contraction. Over the twelve months will pressure leading to December 2015, the global positive, with increasing exporters to find other average of gray cement export prices export prices, according markets ultimately peaked in January 2015 at USD 73.5 per ton. to figures highlighted On top of declining demand for by the 1Q2016 update The collapsing price of oil helped taming the cement, the decline in FOB prices to the Global Cement Trade Price Report food price inflation that has long plagued for cement can also be traced back to currency depreciations in most (GCTPR), CW Research’s the economy.” major cement markets. Global benchmark price FOB prices for gray cement assessment for monthly are projected to fall further in worldwide trade of cement, clinker, and slag, as well as ex- affecting cement prices. The global most regions, while regions such as Asiaeconomic growth scenario remains bleak Pacific-Japan and Western Europe could works and effective market prices. due to China’s slower growth model, see marginal recovery in export prices. price declines and overhangs STRONGER AGAINST THE commodity from past rapid credit growth. Advanced India however benefits from a strong TIDE economies are pointing to a stronger macro-economic momentum, as it India is expected to benefit from better outlook when compared to the recent managed to outpace China in 2015 cement trade prices in 2016 despite the past, while developing and emerging ones economic growth. India's economy grew at estimated 1.9 global decline in demand are under pressure. an average rate of 7+ percent in 2015, faster

SNAPSHOT: EX-WORKS CEMENT PRICES IN SELECT MARKETS (USD/ton)

4Q 2014

200

4Q 2015

150

100

-23%

-11%

-3%

-1%

China

India

Colombia

Saudi Arabia

Source: CW Research

MAY / JUNE 2016

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

+9% U.S.

MAIN GRAY CEMENT EXPORTERS IN 4Q2015

LH-axis: Gray cement exports (mn tons); RH-axis: Gray cement FOB (USD/ton)

LH - Exported cement volume in 4Q2015 (mn tons)

2.0

RH - Average FOB price in 4Q2015 (USD/ton)

100

1.5

60 1.0 40 0.5

Vietnam

Ireland

India

Korea

Portugal

Greece

Canada

Japan

Turkey

Thailand

Source: CW Research

than the growth in China, official figures taming the food price inflation that has record growth on ex-works cement prices on quarter on quarter basis, along with show. India's government said growth in long plagued the economy. other key markets such as the United States the October to December quarter was 7.3 percent, a slight In recent history it has and Saudi Arabia. This occurred against a drop on previous been unusual, but not significant decline in the average selling quarters which unprecedented, for India cement prices in dollar terms on other were revised major markets during the sharply higher. same quarter. In recent history it has been unusual, but not Even though the unprecedented, for India to grow faster than China. economy lost This average selling prices steam in the last decline is most severe in quarter, its pace to grow faster than China. China where ex-works price were down 23 of expansion was According to the IMF it also percent QoQ, according to CW Researchâ&#x20AC;&#x2122;s faster than the growth posted by China in happened in 1981, 1989, 1990 and 1999, Global Cement Trade Price Report. The the same quarter. Prime Minister Narendra with 2015 being the first instance in this decline is in sharp contrast with the Modi's government said growth for the millennium. increase in the average ex-work prices. fiscal year ending March 2016 is forecasted to accelerate. STEADY EX-WORKS CEMENT Average ex-work prices increased 9 percent in 4Q2015, as compared to the The collapsing price of oil has acted as a PRICES previous quarter. The U.S. saw stronger major boom for the world's second most In the fourth quarter of 2015, India was pricing on account of a sustained populous nation, and it has helped with among the countries which succeeded to economic recovery.

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

MAY / JUNE 2016

FEATURE ASIA-PACIFIC-JAPAN: WHITE CEMENT EXPORT PRICES (USD/ton)

China

India

Malaysia

Thailand

Asia Pacific Japan

180

160

140

120

100 Jun-15

Jul-15 Aug-15 Sep-15

Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16

Apr-16 May-16

Jun-16

Source: CW Research

A key exporter for the Asia-Pacific region CW Researchâ&#x20AC;&#x2122;s Global Cement Trade Price Report projects export prices in AsiaPacific-Japan to continue their recovery at a modest pace by June 2016, up 0.7 percent as compared to estimated prices for March 2016. In the Mediterranean Basin, prices are under more pressure. CW Research analysts expect prices to decline by 0.2 percent as compared to estimated levels in March.

CLINKER AND SLAG EXPORTS TO SEE PRICE GROWTH As far as clinker is concerned, total global traded clinker volumes (including countries with incomplete data sets for the period) decreased by 11+ percent QoQ in 4Q2015. For the set of reporting countries with complete data for the fourth

the global average FOB price declined by almost 4 percent QoQ. In the fourth quarter of 2015, India also continued to be a leading clinker exporter in Asia Pacific region, along with Vietnam. The overall average price for the region is expected to improve on strong pricing trends in India, Thailand, Japan and China.

Median slag prices on a global level registered an 18+ percent QoQ decline India remains a major cement India remains a major cement exporter in in December 2015, exporter in the Asia Pacific region. while global slag export The country is expected to see the Asia Pacific region, with 497,000 tons volumes fell by almost stronger prices for gray cement exported in the fourth quarter of 2015. 3 percent YoY. Asiaexports. CW Researchâ&#x20AC;&#x2122;s benchmark Pacific-Japan continued price assessment projects prices to to be the leading region with a share of decline in June 2016 in Asia Pacific-Japan to USD 129.9 per ton. Stable pricing is quarter of 2015, the trade volume for 90+ percent of global slag exports. Notably, clinker increased by 14+ percent QoQ and Japan is the main slag exporter in the world, expected in the Mediterranean Basin.

MAY / JUNE 2016

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

Cement Bags

with the lowest export price in 4Q2015, while India and France were the second and the third largest exporters of slag. In the fourth quarter of 2015, India was the second largest slag exporter in the world, right after Japan and ahead of France, with a market share of almost 9 percent. As far

“Several developments that marked 2015 will continue to leave their imprint in 2016, but by far the most pressing issues in 2016 will be sluggish capital flows to emerging and developing countries, anemic trade and continuously weakening commodity prices.” explains Stefana Abiculesei, Consulting Analyst with the CW Group’s European team

India also continued to be a leading clinker exporter in Asia Pacific region with 5.1 percent of global trade. as destinations are concerned, India’s slag exports mainly went to Bangladesh, which accounted for 62+ percent of total exports for the fourth quarter of 2015. Other importers include the UAE, Pakistan, Sri Lanka, Japan, Nepal, Saudi Arabia, Malaysia, Indonesia, and Kuwait.

blast furnace slag prices and volumes. The 180+ page report, published on a quarterly basis, serves as the industry go to source for monthly price data for 70+ 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:

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

http://www.cwgrp.com/research/researchproducts/product/1-global-cement-tradeprice-report

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

MAY / JUNE 2016

FEATURE

CW Research:

15%+increase imported petco High-sulfur and mid-sulfur imported petcoke prices increased

MoM, while domestic retail petcoke price went down 4 percent, as compared to the previous month.

16 JANUARY - FEBRUARY 2016 INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE 16 MAY / JUNE 2016 INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

for oke prices Source: chicagomag.com

17 17

INDIA CEMENT &INDIA CONSTRUCTION MATERIALS MAGAZINE JANUARY - FEBRUARY 2016 2016 CEMENT & CONSTRUCTION MATERIALS MAGAZINE MAY / JUNE

the high proportion of heavy, low quality residues in a barrel of bitumen into high value liquid fuels, vast amounts of energy are expended in a complex, multistage process. even so, 15 percent of the barrel commonly remains as this solid high carbon byproduct, petcoke.

FEATURE

May prices of high-sulfur and mid-sulfur imported petcoke went up by more than 15 percent MoM

Delayed coking unit at Total's Port Arthur, Texas refinery

ay prices of high-sulfur and mid-sulfur imported petcoke went up by more than 15 percent MoM for both CFR East and West coasts of India, according to CW Research’s May update of India Petcoke CFR price assessment.

The freight rates for bulk shipments reflect an upward trend

The monthly update sees the average cost of burning high sulfur petcoke on per unit of calorific value basis at a discount of 21 percent as compared to the cost per ton of Richards Bay coal for West Coast. In comparison, the average cost of burning high sulfur petcoke decreased 32 percent in April and 39 percent in March.

Domestic retail petcoke price went down The delayed coking unit at Total’s Port Arthur, almost 4.0 percent when compared to Texas refinery. The drums are emptied of April prices. petcoke daily into the pit below.

Petcoke imports by cement companies accounted for more than half of the total petcoke volume imported by India in the month of April, decreasing significantly when compared to March. However, on a year-on-year basis, petcoke imports increased in April 2016. The freight rates for bulk shipments also reflect an upward trend. “Avails for petcoke from the US are fine now. Demand from Indian cement makers is quiet at the moment, since most companies have already booked their petcoke cargoes to fill up their inventories, which would last the monsoon," said Sushmita Rai, Sr. Associate Analyst, CW Group. The May update of India Petcoke CFR price assessment also includes refinery news, shipping updates, coal and cement market highlights

FOR MORE INFORMATION OR INTERVIEW INQUIRIES, PLEASE CONTACT LUCIANA MURARASU, MARKETING & COMMUNICATIONS COORDINATOR, CW GROUP (EUROPE), BY PHONE AT +40-748-91-84-50, OR E-MAIL AT LM@CWGRP.COM.

MAY / JUNE 2016

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

ABOUT THE REPORT India Petcoke CFR is CW Research’s bi-monthly price assessment and monthly price index for India uncalcined petcoke. The updates cover two key price markers: India East Coast and India West Coast, providing prompt, end-user centric CFR prices for high and medium sulfur grades. Drawing on its deep expertise in the petcoke sector and other industrial segments, CW Research takes an end-user centric approach to understand pricing and underlying drivers. The report is part of India Petcoke CFR Price Assessments that complement other CW Research’s other price assessment product series providing regional insights for end-user centric pricing information for gray cement and clinker.

The monthly update is available as an annual subscription in individual or corporate license forms. ABOUT CW RESEARCH CW Research is a leader in syndicated and data-driven market research solutions. The company offers independent perspectives on multiple industrial market segments (e.g., cement, metals & minerals, and specialty chemicals) and deep functional expertise in market intelligence, sourcing intelligence, commodity pricing intelligence.

CW Research also provides custom industry and competitive research programs for operating companies, financial analysts, consultants, governments, suppliers and many others as well as tailored studies together with CW Advisory. Our team operates in the USA, India, Brazil, Portugal and Romania. For more information: research.cwgrp.com

For those interested in CW Research’s “Price Assessment: India Petcoke CFR”, please contact the sales team at sales@cwgrp.com.

Mining bitumen at the Suncor Millennium tar sands mine Source: metso.com

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

MAY / JUNE 2016

CEMENT MARKETS

CW Research

CEMENT VOLUMES Cement production in Argentina recorded a large contraction of 26.2 percent in the month of April, in comparison with homologue month last year. Furthermore, the same scenario was seen on the demand side as consumption decreased by 27.6 percent from a YoY perspective to around 750,000 tons.

Japan saw the levels of cement production decrease 3.2 percent from a year-on-year perspective in April. Steeper declines were seen in the country’s cement consumption as contractions reached 5.6 percent in comparison to the same month last year. Spanish cement consumption decreased 1.6 percent year-on-year in April 2016. The country’s demand stood at around 0.9 million tons. However, demand increased 2.0 percent on a monthly basis, but year-to-date volumes were 0.3 percent below last year’s. April 2016 cement demand – YoY change (%)

Cyprian cement production saw some positive trends with an increase of 58.7 percent year-onyear in April, whereas on a month-on-month perspective this figure decreased by 10.8 percent, reaching 98,500 tons. At the same time, cement consumption increased by 39.7 percent year-onyear, while on a month-on-month perspective, the numbers decreased by 4.8 percent. Cement consumption in Cyprus stood at around 50,000 tons in April 2016. Cyprus is passing through an economic recovery by showing in first quarter the fastest annual increase recorded in the last seven years. Countries such as Pakistan and Colombia registered a positive trend in terms of cement consumption, hiking by 14.2 and 5.9 percent year-on-year, respectively. On the production side, Ukraine and Vietnam also showed some positive changes, reaching a 37.6 and 12.7 percent growth in April in comparison with the homologue month. April 2016 cement production – YoY change (%)

50%

70%

30%

50% 30%

10%

-10%

Source: CW Research

To learn more, please contact the CW Research team at sales@cwgrp.com or +1-702-866-9474

MAY / JUNE 2016

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

Cyprus

Ukraine

Peru

Vietnam

India

Colombia

Italy

China

Japan

Saudi Arabia

Russia

Thailand

-30%

Belarus

Cyprus

Pakistan

Colombia

Indonesia

Peru

Spain

Saudi Arabia

Japan

Thailand

Brazil

Ecuador

Argentina

-30%

-10% Argentina

In Brazil, cement consumption continues to decline in the month of April, falling by 12.5 percent year-onyear to 4.7 million tons.

In Brazil, cement consumption continues to decline in the month of April, falling by 12.5 percent year-on-year to 4.7 million tons. The result represents a 4.4 percent contraction from a month-on-month perspective. The country is experiencing weak economic development and, as a result, cement demand has been declining in the first months of 2016 in comparison to the previous year.

In Saudi Arabia, while cement consumption decreased by 5.3 percent in April, production contracted by 1.7 percent from a year-on-year perspective. In the fourth month of 2016, Saudi Arabian cement demand reached around 5.4 million tons, a 7.3 decline on a month-on-month basis, while production stood at 5.6 million tons, a 4.6 percent decrease.

CW Research

CEMENT PRODUCTION (million tons) Country

MoM (%)

CEMENT CONSUMPTION (million tons) YoY (%)

YTD

YTD (%)

MoM (%)

YoY (%)

YTD

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.

WWW.CEMWEEK.COM/SUBSCRIBE

CEMENT PRODUCTION MOM (%)

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.

WWW.CEMWEEK.COM/SUBSCRIBE

YTD (%)

CEMENT CONSUMPTION MOM (%)

CEMENT EXPORTS (million tons) Country

Country

CEMENT IMPORTS (million tons) MoM (%)

YoY (%)

YTD

YTD (%)

Country

MoM (%)

YoY (%)

YTD

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.

WWW.CEMWEEK.COM/SUBSCRIBE

CEMENT EXPORTS MOM (%)

YTD (%)

CEMENT IMPORTS MOM (%)

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.

WWW.CEMWEEK.COM/SUBSCRIBE

Source: CW Group analysis estimates MoM: month vs previous month; YoY: month vs same month last year; YTD: year-to-date; YTD%: year-to-date vs previous year

To learn more, please contact the CW Research team at sales@cwgrp.com or +1-702-866-9474 INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

MAY / JUNE 2016

CEMENT MARKETS

Volume variation analysis for selected countries that are major consumers, producer, importers and exporters of cement. This is a selection of notable markets. Additional detail is available from CW Research as well as on-line at http://www.cemweek.com to the market data section.

CEMENT ENERGY MARKETS

CW Research

ENERGY PRICES UPDATE compared to May 2015’s price of $64.13 per ton. It increased slightly by 0.6 percent when compared to April 2016’s price of $52.79 per ton.

COAL: The average coal price for May 2016 closed at $53.08 per ton, falling 17.2 percent YoY as STEAM COAL FOB AVERAGE PRICES (US$/TON) US exported

Colombia exported

Australia Newcastle

Indonesian HBA

South Africa Richards Bay

110 100 90 80 70

Global trading volumes for six major coal countries decreased to 68.84 million tons in April 2016, decreasing 5.2 percent in comparison with the 72.61 million tons recorded in March 2016.

60 50 40

May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May ’12 ’12 ’12 ’12 ’13 ’13 ’13 ’13 ’13 ’13 ’14 ’14 ’14 ’14 ’14 ’14 ’15 ’15 ’15 ’15 ’15 ’15 ’16 ’16 ’16

Sources: EIA, Colombia Ministry of Mines and Energy, IMF, Indonesia Ministry of Energy and Mineral Resouces

PETCOKE: US petcoke exports increased by 6.3 percent to 3.13 million tons in April 2016 when compared to the previous month, and up by 13.8 percent as compared to April 2015. The US export price for petcoke for April 2016 closed at $36.09 per ton, decreasing 5.8 percent as compared to March’s price of $38.31 per ton and down 41.6 percent when compared to April 2015’s price of $61.80 per ton.

COAL TRADING VOLUMES: Global trading volumes for six major coal countries decreased to 68.84 million tons in April 2016, decreasing 5.2 percent in comparison with the 72.61 million tons recorded in March 2016. A decrease in coal trading volumes was seen in all the observed countries, which include Indonesia, Australia, South Africa, Russia, Colombia and the US.

STEAM COAL FOB AVERAGE PRICES (US$/TON) monthly price 90

Rolling 12-month average

A ‘16

M ‘16

J ‘16

F ‘16

D ‘15

N ‘15

S ‘15

O ‘15

A ‘15

J ‘15

A ‘15

M ‘15

F ‘15

J ‘15

D ‘14

N ‘14

O ‘14

A‘14

S ‘14

J ‘14

M ‘14

Source: customs data

NATURAL GAS: The US Henry Hub spot price traded at $1.92 per MMBTU in May 2016, unchanged as compared to April 2016 and down 32.6 percent

as compared to May 2015’s price of $2.85 per MMBTU. Price in Europe decreased 3.1 percent MoM, reaching $4.00 per MMBTU in May 2016.

To learn more, please contact the CW Research team at sales@cwgrp.com or +1-702-866-9474

MAY / JUNE 2016

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

Volume variation analysis for selected countries that are major importers and exporters of coal and petcoke. This is a selection of notable markets. Additional detail is available from CW Research as well as on-line at http://www.coalweek.com/ to the market data section. COAL - EXPORTS (million tons) - Apr 2016 Country

MoM (%)

PETCOKE - EXPORTS (million tons) - Apr 2016 YoY (%)

YTD

YTD %

Country

MoM (%)

YoY (%)

YTD

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.

WWW.CEMWEEK.COM/SUBSCRIBE

YTD %

CEMENT ENERGY MARKETS

CW Research

COAL EXPORTS MOM (%) US PETCOKE EXPORTS PRICES MOM (%)

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.

WWW.CEMWEEK.COM/SUBSCRIBE

COAL - IMPORTS (million tons) - Apr 2016 Country

MoM (%)

YoY (%)

YTD

YTD %

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.

PETCOKE - GLOBAL EXPORT PRICES (USD/ton) - Apr 2016 Country

COAL - GLOBAL EXPORT PRICES (USD/ton) - May 2016 LM

MoM (%)

YoY (%)

YTD

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION. WWW.CEMWEEK.COM/SUBSCRIBE COAL EXPORT PRICES MOM (%)

MoM (%)

YoY (%)

YTD

YTD %

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.

WWW.CEMWEEK.COM/SUBSCRIBE Country

WWW.CEMWEEK.COM/SUBSCRIBE

YTD %

NATURAL GAS PRICES (US$/mmBtu) - May 2016 Country

MoM (%)

YoY (%)

YTD

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.

YTD %

NATURAL GAS PRICES MOM (%)

WWW.CEMWEEK.COM/SUBSCRIBE

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.

WWW.CEMWEEK.COM/SUBSCRIBE

Source: CW Group analysis estimates LM: latest month Jan 2016 except where specified; MoM: month vs previous month; YoY: month vs same month last year; YTD: year-to-date; YTD%: year-to-date vs previous year

To learn more, please contact the CW Research team at sales@cwgrp.com or +1-702-866-9474 INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

MAY / JUNE 2016

CEMENT MARKET AND COMPETITION

arket and competition

INDIA: MAHAGENCO TO MANUFACTURE CEMENT Maharashtra-based Mahagenco, state-run power generation company, is planning to begin manufacturing cement by teaming up with other cement companies. The move is expected to provide huge revenue to the company and help in bringing down cost of power generation. Earlier, the company was losing hundreds of crore every year by giving away flyash for free. The company produced around 100 million tons of flyash every year. "This is provided to cement companies free-ofcost. About a third of the raw material used in cement production is flyash. If this is not enough we have to pay 50 percent of the cost of transporting flyash from our power plants to cement factories," said an official from Mahagenco. Therefore, Mahagenco has decided to set up a subsidiary company for cement production, by the name of Mahagenco Flyash Management Company (MFMCL). MFMCL will form joint ventures with private cement companies. The latter will be majority partners in the joint ventures. Mahagenco's contribution will be its land and flyash. Other investment will be done by the private partner.

MAY / JUNE 2016

INDIAN CEMENT COMPANIES EXPECT RECOVERY IN DEMAND

is driving growth. Pay commission disbursements would happened (and that) will also trigger housing growth.

Indian cement companies expect the cement demand to increase by six to eight percent in fiscal year 2016-17. The cement companies expect the proposed infrastructure projects by the government to boost the cement demand. "A significant component of infrastructure demand

Roads, metro projects, and low income housing projects in the infrastructure segment are doing good," said Atul Daga, chief financial officer, Ultratech Cement. However, the market analysts opine that the uptake in demand in the first quarter of the year is seasonal and not a trend.

SOUTH INDIA: CEMENT MAKERS HAVE POSITIVE OUTLOOK South Indian cement sector has a positive outlook as it expects a 15-20 percent increase in cement demand due to proposed infrastructure projects. “Our cement sales have risen in Telangana and we plan to increase the production capacity in the next two years anticipating a growth in demand in this region,” said Rahul Akkara, vice-president (strategy & branding) of JSW Cements. He added, “Most of the orders we are receiving now are from Hyderabad but we expect an

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

increase in demand from other parts of the state as well.” Meanwhile, the state government has proposed several house building projects, which are expected to boost the cement demand.

ACC EXPECTS STEADY GROWTH FOR INDIA'S CEMENT SECTOR

M&AS MADE EASIER IN INDIA Selling cement assets in India has now been made easier by changes in the Mines and Minerals (Development and Regulation) Act. Cement companies will be able to transfer captive mines when selling plants. However, the transfers will now be targeted by higher fees. Until now, every captive mine could only be transferred by open auction. The government is yet

to announce the formula to calculate transfer fees. Authorities in the sector are afraid this may become too high, putting additional burden to companies trying to buy new assets. The changes are predicted to make mergers and acquisitions easier, including some that are still underway like the merger of Holcim and Lafarge and the acquisition of Jaypee’s cement assets by UltraTech.

ACC, part of the LafargeHolcim Group, expects the cement sector in India to grow by around 6 to 7 percent. Last year, the cement industry grew by 1.5 to 2 percent, a modest ratio. ACC was hit by declining sales and profitability during 2015, but it now expects to benefit from falling inflation and a forecasted good monsoon. ACC is strongly present in rural regions where monsoons normally result in stalled projects. During 2016, ACC expects to commission two new plants in Jamul and Sindri, increasing its designed capacity to 33.42 million tons per annum. The company also hopes to increase its capacity utilization to values between 80 and 85 percent.

ANDHRA PRADESH LAYS DOWN CEMENT CONCRETE ROADS The State government of Andhra Pradesh seeks to finish the year with 5,000 kilometers of cement concrete roads built in and around villages. By now, the government was already able to construct 4,500 kilometers of this type of roads. This is considered a huge success given that, by the end of 2015, Andhra Pradesh had already built 4,000 kilometers of cement

concrete roads, while all the other states had only constructed 1,800 kilometers combined. For the next three years, the state hopes to lay internal roads in all its 13,000 panchayats, with a predicted annual cost of INR 2,000 crore. Other states are studying Andhra Pradesh’s success model, which includes laying underground drainage alongside the roads.

INDIA CEMENTS MAY LAUNCH NEW PRODUCTS

alumina, an aeration agent. The company also plans to extend technical support to its dealers of the new products. “This will go a long way in strengthening their bondage with the company besides increasing their commitment,’’ said an official from the company. In another move, India Cements has stated that it will continue to make the cement business its top priority.

India Cements is planning to introduce new products in the market to improve its business. The company plans to launch Coromandel SRC (sulphate-resistant cement), a specialty blended cement meant for construction in aggressive environments (like coastal areas), as well as Coromandel Duralite Autoclaved Aerated Concrete (AAC) blocks which are made from cement, fly ash, lime and

The company currently operates 10 cement plants and has a capex of INR 350 crore. It continues to be the largest

cement producer in southern India, where capacity utilization is currently lower than the northern figures. The company’s managing director, N Srinivasan, hopes that this situation will reverse itself during the current fiscal year. According to Srinivasan, the company will maintain cement as its core business, without concerning its presence in sugar, power, and financial services. He hopes that demand will finally pick up before the company embarks in new capacity expansion projects or acquisitions.

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

MAY / JUNE 2016

CEMENT M&A AND FINANCE

&A and finance

HIGH COURT CANCELS PLEAS AGAINST BIRLA CORP-RELIANCE DEAL The Indian High Court has cancelled all the pleas filed by a Birla faction seeking injunction in Birla Corp plan to acquire Reliance Infrastructure's cement business for an enterprise value of INR 4,800 crore. The petitions were dismissed as nonmaintainable. Earlier in February, Birla Corp had signed an agreement with Reliance Infrastructure to acquire its entire cement business. Meanwhile, the company approached the court to postpone the proposed acquisition. The order by the High Court also held that Birla Corp is a separate juristic entity and that its shareholders' have no right over the assets of the company. The decision taken by the board of directors could not be called into question by the Probate court.

DALMIA CEMENT RETRACTS PROPOSAL FOR LAFARGEHOLCIM MERGER The Competition Appellate Tribunal (Compat) accepted Dalmia Cementsâ&#x20AC;&#x2122; application for withdrawal of a challenge to the proposed merger of Lafarge and Holcim in India. The cement company had challenged an approval given by the Competition Comission of India (CCI) for the proposed merger. CCI had approved the merger between Lafarge and Holcim in February 2016, as long as Lafarge divested its assets in India. However, Lafarge could not complete the sale due to passage of

the Mines and Minerals (Development and Regulation) Amendment Act, 2015, which barred transfer of limestone mines attached with its cement plants. After CCI approved the merger for the second time, Lafarge and Holcim approached the CCI stating that Lafarge will sell its assets in the open market. Meanwhile, the re-approval was challenged in Compat by Dalmia Cement on the ground that CCI did not have the power to approve a merger for a second time when the terms of the first approval were not complied with. However, the cement company decided to withdraw its complaint after the amendment to the Mines and Mineral Act.

NEW MINING LAW TO FACILITATE MERGERS IN THE CEMENT SECTOR India is likely to witness a surge in mergers and acquisitions in the cement sector as the new law, The Mines and Minerals (Development and Regulation) Bill (amended) makes M&A easier. The legislation will also help alleviate a bad-loan crisis affecting commercial banks, many of which having a heavy

MAY / JUNE 2016

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

exposure to cement companies. The new law will facilitate UltraTech Cementâ&#x20AC;&#x2122;s deal with Jaiprakash Associates to acquire its 21.20 million-tons cement capacity for INR 15,900 crore. Also the integration of assets from the companies formerly owned by Lafarge and Holcim into the newly created group LafargeHolcim is also expected to become an easier task.

AMBUJA CEMENT CANCELS MERGER PROPOSAL OF DIRK INDIA Mumbai-based Ambuja Cement announced the withdrawal of Scheme of Amalgamation of Dirk India. The Board had previously approved the Scheme of Amalgamation of Dirk India Pvt. Ltd (a wholly owned subsidiary) with the Company. At its meeting held on April 28, 2016, the Board decided not to pursue further with the scheme of amalgamation.

JAIPRAKASH ASSOCIATES FINALIZES THE DEAL WITH ULTRATECH CEMENT India-based Jaiprakash Assciates announced the sale of part of its cement assets to UltraTech Cement. The deal was valued at around INR 15,900 crore. The transaction will see Ultra Tech become possibly the biggest cement player in the

country after gaining an overall capacity of 21.2 million tons per annum from Jaiprakash Associates’s cement plants in five states and a grinding unit in Uttar Pradesh. However, the value of the transaction has been reduced from INR 16,500 crore announced last month as Jaiprakash Associates (JAL) Karnataka plant with a capacity of 1.2 million tons per annum (MTPA) has been excluded.

perating for over 25 years, Ambuja played a key role in India’s efforts to become a green state with its environment friendly initiatives. The sustainable constructions and renewable energy projects undertaken by the company have an important contribution in creating a blueprint for sustainable development in India’s bright future.

NIRMA ENTERS RACE FOR LAFARGE INDIA Nirma joints Piramal Group, JSW Group, Conch Cement, and Cemex in the race to acquire Lafarge India’s assets. Lafarge India is looking for a buyer to its assets in India, which are capable of producing 11 million tons of cement per

LAFARGE DEAL REMAINS UNCERTAIN The merger between Lafarge and UltraTech might be delayed. In August 2015, LafargeHolcim agreed to sell these assets to Birla Corp. for INR 5,000 crore, along with the mining rights, to abide by the Competition Commission of India (CCI) rules. However, the world’s largest cement maker soon realized the mining rules in India did not allow for such

transfers in the case of allotted mines. The deal that started the debate and the amendment process continues to remain in limbo. LafargeHolcim chose not to wait for the amendments to go through and instead proposed an alternative deal structure to the CCI. On February 2nd, LafargeHolcim called off its deal with Birla Corp. citing regulatory limitations over the transfer of mines. LafargeHolcim’s haste to complete

annum. The company expects to receive INR 10,000 crore for the assets. Currently, the candidates list also includes Mexican company Cemex and Chinese Conch Cement. Piramal Group is also on the raced backed by Goldman Sachs, while the JSW Group is backed by CVC. the deal through a revision may push the finalization of the deal even further. It is highly likely that the LafargeHolcim would be required to run a fresh bid process to find a new buyer as it has called off its deal with Birla Corp.

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

MAY / JUNE 2016

CEMENT PROJECTS AND EXPANSIONS

rojects and expansions

PRISM CEMENT SIGNS AN AGREEMENT WITH ECO CEMENT India-based Prism Cement has signed a supply agreement with Eco Cements. Under the agreement, Eco Cement will manufacture and supply cement to Prism Cement as per its quality and other requirements. The arrangement with ECL is expected to help the company optimize its logistic costs as well as improve local availability in its strategic markets of Bihar. Eco Cements operates a cement grinding plant with a capacity of 0.6 million tons per annum at Bhabhua region of Bihar, India. Prism Cement is one of India’s leading integrated building materials company, with a wide range of products from cement, ready-mixed concrete, tiles, bath products to kitchen products.

MAY / JUNE 2016

BURNPUR CEMENT TO INCREASE CAPACITY India-based Burnpur Cement is planning to invest around INR 500 crore to increase its production capacity to 3 million tons over the next three-four years. The current production capacity of the company is 0.6 million tons per annum. The cement producer has two plants, one in Asansol in West Bengal and the other in Patratu district in Jharkhand. Each plant has an installed capacity of 0.3 million tons per annum. Meanwhile, the company aims to increase its sales volumes to INR 250 crore in the next fiscal year from INR 100 crore in the previous one. The cement producer plans to build a 2 million tons per annum greenfield plant in West Bengal. "In

addition, we plan to bag 5-6 limestone mines. We are planning to increase the capacity of our Jharkhand plant to 1 million tons per annum having raw materials reserve for minimum 50 years," said Ashok Gutgutia, vice chairman and managing director of the company.

AMBUJA CEMENT COMPLETES SANKRAIL PLANT EXPANSION Ambuja Cement completed the Sankrail expansion project. The augmented Sankrail Grinding Unit was inaugurated in Howrah, West Bengal. The plant was built originally in the year 2001 with the capacity to produce 1.2 million per annum, encompassing two ball mills and two packers. Higher demand from local projects led to its expansion in 2010, to accommodate 1.5 million tons per annum. The latest expansion increased capacity up to 2.4 million tons. The grinding unit will supply cement to the West Bengal market, and also to the states of Orissa and Jharkhand. Kriegner said that he

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

is “sure this expansion will address the expectations of customer in the eastern markets in India". The project cost INR 338 crore. “With the focus on increasing our market share in the competitive market of West Bengal and increasing supply to the nearby states of Orissa & Jharkhand by optimizing the overall regional logistics cost, a capacity addition of 0.90 million tons per annum of PPC cement at Sankrail was envisaged. I am sure this will meet the demand of the eastern markets in India,” said Martin Kriegner, Head of Lafarge Holcim-India Operations and Board of Director for Ambuja Cements.

GRASIM INDUSTRIES INVESTS TO BOOST CAPACITY

INDOCEMENT TO EXPAND SOUTH JAKARATA UNIT Indonesia-based Indocement plans to extend its unit in the South of Jakarta. The new unit will be connected to the existing concrete vertical crusher wall. The total soil height to be retained was approximately 14 meters. The area is characterized by high seismicity and horizontal accelerations of up to 0.23g. These challenges had to be considered in the design process, in addition to that of slope stability which is faced when modifying slope angles beyond their natural angle of repose. Addressing these project requirements, Maccaferri proposed a hybrid reinforced soil wall combining

the Terramesh System in conjunction with MacGrid® WG polymeric geogrids. The Terramesh would provide the fascia elements and secondary soil reinforcement, while MacGrid WG provides the primary soil reinforcement. These hybrid structures offer greater cost efficiency than traditional mono-product soil reinforcement systems when used in tall and / or high surcharge load structures. The solution was designed using the MacSTARS W 4.0 software, optimizing the geogrid strengths and spacing. Global and internal stability checks were performed.

Grasim Industries will spend up to INR 4,000 crore expanding its capacity in the upcoming fiscal years. The company operates mainly on cement, having a total turnover around INR 32,838 crore in the fiscal year 2014-15. The largest part of the investment, INR 3,800, will be applied on Ultratech, a cement manufacturing subsidiary from the company. Between April and December 2015, Ultratech had already invested INR 1,630 crore in expansion, upgrading and modernization of infrastructures. Grasim Industries presented good results, with a total income of INR 9,044 crore in the third quarter of fiscal year 2015-16, compared to INR 8,035 crore in the same period previous year, while net profit climbed from INR 334 crore to INR 650 crore.

ULTRATECH OPENS NEW GRINDING UNIT

INDIA’S JK CEMENTS RESUMES PRODUCTION AT KARNATAKA UNIT Kanpur-based JK Cements announced that it has resumed production at its 3 million tons per annum tons capacity facility in Karnataka. The operations were temporarily halted due to the caning in of the silo roof. "Production of clinker and cement has resumed with operation of the kiln by making an alternate arrangement using two RBC belts for feeding the clinker directly to the cement mill," said an official form the company. The halt in production would not have an impact on supply as the company’s outlets have sufficient cement and clinker stocks. The actual loss is being assessed by the company. The cement company had recorded a 2 percent increase in standalone net profit to INR 17.09 crore in the third quarter as compared to INR 16.73 crore in the same period a year earlier

UltraTech is opening a new grinding unit in Pataliputra, state of Bihar. The new unit will produce 1.6 million tons of cement per annum, helping to supply the East Indian market, which has grown above national average for the past two or three years. With this new plant, UltraTech now owns 15 units with the capacity to produce 69.30 million tons per annum. Since the beginning of the year, the company already added 6.1 million tons per annum to its designed output.

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

MAY / JUNE 2016

CEMENT VOLUME & PRICING

olume and pricing

ELECTRICITY PRICES MAY INCREASE IN INDIA The price of electricity in India may increase by INR 10 to INR 13 per unit, as Coal India raises the price of coal. Coal India decided to increase coal prices by 13.4 to 18.75 percent. This increase will affect coal grades between G8 and G13, which are normally consumed by coal-fired power plants. With this price change, Coal India hopes to increase revenue by INR 3,900 per annum. This is expected to cover at least part of the estimated INR 5,000 increase of labor costs that came after a wage review. The price revision will be applied to all Coal India subsidiaries. Coal India approved a differential price for Non-Regulated Sector at a reduced rate of 20 percent over the price of Regulated Sector, for G6 to G17 grades of coal. Coal India produces 80 percent of Indiaâ&#x20AC;&#x2122;s coal, and hopes to achieve 598 million tons during the current fiscal year.

MAY / JUNE 2016

COAL INDIA SELLS COAL THROUGH E-AUCTION Coal India sold 14 million tons of coal through e-auctions. The company offered 10 million tons to consumers in the power sector and 4 million tons to the remaining consumers. This comes as a measure to help to liquidate pit-head stock. In the last fiscal year, Coal India mined 385,61 million tons, below the set target of 405

million tons. From April to January in the present fiscal year, the company produced 337,01 million tons, again under the set target of 352,29 million tons. Currently, the company holds 36 million tons on stock, or the equivalent to 24 days of consumption. Coal in India was selling at INR 326 per ton, up INR 11,20 per ton. In the last 52 weeks the maximum price was INR 447,25 and the lowest was INR 286,90

THE CEMENT PRICES SLASHED AFTER THE GOVERNMENT INTERVENTION The cement producers in Himachal Pradesh region in India have slashed the prices by INR 10 per bag. The cement makers had announced a price hike in cement, forcing the government to intervene. The State Industries Minister, Mukesh Agnihotri called for a meeting with the cement producer this week. After the meeting, it was declared that the cement producers would cut the prices by INR 10 per bag, with an immediate effect. In the the meeting, it was agreed that rates of the cement in the bordering areas of Himachal Pradesh would be at par or lower than the rates in the neighboring states.

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

NEW RULES FOR COAL AUCTIONING, INDIA

INDIAN CEMENT SECTOR RECORDS UPWARDS TREND IN CEMENT PRICES Cement prices in northern India have picked up after stagnating for several months. According to the cement dealers, producers hiked prices suddenly by INR 10-15 per 50 kg bag in February and another INR 50-70 per bag in early March. The cement prices in the southern region have fallen slightly, after increasing for a few months. However, the cement markets in Western and Central region continue to be subdued. Meanwhile, dealers hope that higher budgetary support in fiscal year 2017 for infrastructure and housing will have a multiplier effect on cement demand. Big cement companies in India are likely to profit from an

upcoming rise in cement prices, fueled by government investment of INR 221 crore in infrastructures. Around 60 percent of cement demand currently comes from housing and construction activities. Cement consumption is predicted to reach 290 million tons during the fiscal year 2017, up from 253 million in fiscal year 2015. Goldman Sachs expects an increase of 9 percent during the period between fiscal year 2016-19. With an increase of demand, capacity use is likely to increase from the current 69 percent to 75.6 percent by fiscal year 2018. In the last five years, cement companies’ EBITDA did not growth, after increasing by 36 percent annually between fiscal years 2005-10. This is likely to change during fiscal years 2016-18 due to cheaper fuel, higher prices and enhance efficiency.

MANGALAM CEMENT POSTS FOURTH QUARTER RESULTS India-based Mangalam Cement recorded a 417.82 percent increase in standalone net profit to INR 14.1 crore in the fourth quarter as compared to the same period a year earlier. The company recorded a decline of 9.66 percent decline in standalone revenue on a year on year basis.

However, the company recorded a 1.43 percent increase in standalone revenue on a quarter on quarter basis. The company’s standalone core operating profit increased by a 72.69 percent on a year on year basis and by 240.44 percent increase on a quarter on quarter basis.

The Indian government legislated the conditions for coal auction by Coal India. According to the new rules, cement and steel makers will have to communicate to the state the quantities they need before making a bid for coal from Coal India. The majority of current contracts between Coal India and the cement and steel sector, which will not be affected by the new rules, will come to an end in 2017. The new coal auctions are expected to begin in the fiscal year 2017, with a batch of 24 million tons of coal being sold to unregulated sectors.

ORIENT CEMENT POSTS FOURTH QUARTER RESULTS Hyderabad-based Orient Cement recorded a 77 percent decrease in standalone net profit to INR 19.4 crore in the fourth quarter as compared to INR 85.5 crore in the same period a year earlier. The standalone income increased by 14 percent to INR 449.3 crore in the fourth quarter as compared to INR 394.3 crore in the same period a year earlier. “The March quarter has seen a good recovery in volumes across core areas, especially Andhra Pardesh and Telangana, which is reflected in the utilization levels in April-June 2016-17 quarter,” said Deepak Khetrapal, managing director and CEO of the company. The cement net sale realizations have been 3 per cent lower than the last quarter and more than 15 per cent lower than the same period last year.

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

MAY / JUNE 2016

CEMENT PEOPLE

eople

INDIA CEMENTS APPOINTS S. SRIDHARAN AS COMPANY SECRETARY India Cements has informed that consequent to the retirement of Mr. G. Balakrishnan as Senior President and Company Secretary of the company on March 31, 2016, Mr. S. Sridharan has assumed the office of the Company Secretary. The appointment will become effective on April 01, 2016. S. Sridharan will also act as Compliance Officer with immediate effect. Previously, S. Sridharan was company secretary with Trinetra Cement.

INDIA’S AMBUJA CEMENTS APPOINTS NEW CFO India-based Ambuja Cements has appointed Suresh Joshi as its Chief Financial Officer. The new appointee took the position since February 1, 2016. In September last year, Ambuja Cement’s

NEW HEAD OF INDIA FOR LAFARGEHOLCIM LafargeHolcim has announced that Martin Kriegner, currently Area Manager Central Europe, was appointed Head of India, effective as of March 1st, 2016. He will be succeeding Bernard Terver, who has chosen to retire, and will report to Eric Olsen, Group CEO. Martin joined LafargeHolcim in 1990, and has already held several senior leadership positions in the Group, including CFO and CEO of Group operations in Austria, as well as Head of Lafarge India and Regional President Cement for Asia. An Austrian national, Martin has a Doctorate in Law from Vienna University, and he obtained an MBA from the University of Economics CFO Sanjay Churiwala announced his resignation, which was accepted by the board on November 16, 2015. The company was looking for a suitable successor and until then, the company’s Joint President-Corporate Controlling, Sanjay Khajanchi was serving as an interim CFO.

INDIA’S GRASIM INDUSTRIES APPOINTS NEW MANAGING DIRECTOR Mumbai-based Grasim Industries has appointed Dilip Gaur as Managing Director of the company. Dilip Gaur took the position on April 1, 2016, replacing KK Maheswari. Mr. Maheswari took charge of a new position, as Managing Director of UltraTech Cement. However, he will remain on the company’s Board as a non-executive director. Dilip Gaur has held several managerial positions at several levels for 20 years prior to joining Aditya Birla’s Board as a non-executive director.

MAY / JUNE 2016

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

in Vienna. Bernard Terver joined the Group in 1994 and became a member of the Senior Management in 2012. He was appointed Head of India at LafargeHolcim following the merger. The Board of Directors and the Executive Committee of LafargeHolcim thank Bernard Terver for his valuable contribution to the success of the Group over more than 20 years including the successful positioning of Ambuja Cements and ACC.

BURNPUR CEMENT APPOINTS SAURABH GANGULY AS BRAND AMBASSADOR Burnpur Cement Ltd has announced the signing of an agreement with Saurabh Ganguly, Former Captain of Indian Cricket Team, to act as the Brand Ambassador for a period of three (3) years, starting from March 11, 2016. As part of the agreement, Mr. Ganguly as the Brand Ambassador of the Company will endorse the product and brand of Burnpur Cement which may help in increase of sales of the Company.

CEMENTNEWS

egional news

BANGLADESH CEMENT SECTOR RECORDS LOSSES IN H1 2015

LARGE LIMESTONE DEPOSIT FOUND IN BANGLADESH

Bangladesh’s cement sector recorded heavy losses in the first half of 2015. The top market capitalization companies incurred a 1.7 percent loss, while two companies managed to earn positive results, reports The Financial Express. Out of the seven cement companies, four companies recorded profits and three companies recorded loss in the first half of 2015. Aramit Cement’s profit increased by 45 percent to BDT 15.25 million during the first half of 2015.

Bangladesh discovered a large limestone deposit. The new discovery was made in a 50-square kilometer area in Tajpur. The first assessment predicts that the deposit may contain between 50-100 billion tons of limestone. This would make the Bangladeshi cement sector much less dependent on imports, with a potential save annual save of BDT 1,000 crore.

HeidelbergCement's profit stood at BDT 846.13 million in the first half of 2015 as compared to BDT 817.07 million in the same period of 2014. Premier Cement's consolidated net profit was BDT 122.62

million as compared to BDT 289.94 million in the same period of the previous year. Confidence Cement's profit declined by 3.42 per cent to BDT 152.09 million in first half of 2015 as compared to BDT 157.48 million in first half of 2014. Lafarge Surma Cement's profit stood at BDT 1,347.19 million in the first six months of 2015 as compared to BDT 1,405.26 million the same period of 2014. MI Cement reported BDT 500.73 million net profits the nine months period (July14 to March 15) as compared to BDT 471.19 million in the same period of the previous year.

Production is set to begin in two years. Bangladesh is currently forced to import 18 lakh tons of limestone every year, mostly used for cement production.

PAKISTAN: CEMENT CAPACITY EXPECTED TO INCREASE Pakistan’s cement capacity is expected to exceed 51 million tons by 2018. The cement sector has benefited from privatization of the cement sector, as its capacity has increased from 8.9 million tons in early 1991-92 to over 46 million tons in the recent years. Additionally, the capacities doubled a decade after privatization to 16.32 million ton in 2002-03. Meanwhile, Maple Leaf and DG Khan’s cement units

were privatized and its investors made them the largest cement producers in the country. Several cement companies have also expanded their production capacities due to rise in investors and privatization of the sector. At the same time, the domestic cement consumption increased steadily during the tenure of the present government from 4.33 percent in 2013-14, to 7.89 percent in 2014-15 and

17.31 in 2015-16 which depicts growing construction activities.

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

MAY / JUNE 2016

CEMENT NEWS PAKISTANI CEMENT COMPANIES RECORD BOOST IN PROFIT

VIETNAM'S CEMENT EXPORTS DECREASE SLIGHTLY

destination for Vietnamese cement, with 2.17 million tons imported or 30 percent of Vietnamese exports.

Vietnamese cement exports decreased during the first four months of 2016, compared to the same period last year. During that period, Vietnam exported 5.99 million tons of cement worth USD 218.08 million, going down by 1.7 percent in volume and 17 percent in value. Bangladesh continues to be the largest

The Philippines were second with 1.3 million tons imported, followed by Mozambique with 351,000 tons. In the meantime, domestic cement consumption skyrocketed by 117.4 percent to 18.85 million tons, with VICEM alone selling 7.52 million tons, 131.5 percent up from 2015 figures.

PAKISTAN: CEMENT COMPANIES SEEK TAX RELIEF Pakistan cement makers have requested the government to cut taxes in the FY17 federal budget. The move comes as an unit to eradicate smuggling of the product. The country has a cement production of over 30 million ton annually of which 70 lakh tons is exported. “The government increased duty on coal from one per cent to five per cent and then to six per cent,” said Muhammad Ali Tabba, president of the Cement Manufacturers Association. He added that “[The] cement's production cost for the manufacturers remains unchanged despite revised coal prices due to imposition of different taxes.” According to the manufacturers, cheaper cement is

MAY / JUNE 2016

The profit increased due to higher sales and local demand. The boost was also supported by an uptake in gross margins due to declining energy and power costs. The domestic demand remained strong because of an increase in the number of private housing projects and intense construction activities under the China-Pakistan Economic Corridor (CPEC) program.

MYANMAR: MCL FACES OPPOSITION FOR ITS GREENFIELD CEMENT PLANT smuggled from the neighboring country, which damages sales in local market. The current price of a cement bag stands at INR 525, compared to the previous INR 500, after addition of taxes despite reduced coal price.

BEIJING WANTS TO CUT CEMENT PRODUCTION CAPACITY The Chinese State Council says that China must cut 500 million tons of cement production capacity over the next three years. Chinese authorities are trying to tackle cement oversupply by scaling-back production, as they are already doing in coal and steel. Currently, the country has the capacity to produce 3.2 billion tons of cement per

Several cement companies in Pakistan recorded a 26 percent boost in profit in the third quarter. In the same period of the previous year, the companies had recorded a profit of 14 percent. During the third quarter, earnings of cement companies grew to PKR 16.3 billion compared to PKR 12.9 billion in the corresponding quarter a year ago.

annum, but it only uses 67 percent of it. Last year, production fell by 5.7 percent on the fourth quarter of 2015. Cement manufacturers still hope that China’s economy will get back to double-digit pace of growth, and they continue to build new cement plants. In the last three months of 2015, 31 new cement plants were put into operation.

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

Myanmar-based Mawlamyine Cement (MCL) faces opposition from locals against its greenfield cement plant. The locals are opposing the use of coal to power a cement factory owned by MCL in the PyarTaung area of Kyaikmaraw Township, Mon State. There is a concern over the side-effects of a coal-fired cement plant and the coal reserves in the region. The company began constructing the cement factory in 2014 and it is set to begin cement production in July of this year, but local residents only found out that it would be coal powered in 2015. The MCL cement plant is likely to consume 49 megawatts per day, 40 megawatts of which will be produced by burning coal and the remaining 9 megawatts will come from a generator burning bio-waste.

ORDERS & EQUIPMENT HIGHLIGHTS

rders & equipment

BEUMER SUPPLIES WORLD'S HIGHEST BUCKET ELEVATOR TO ACC

PAKISTAN: FAUJI CEMENT TEMPORARILY HALTS OPERATIONS

Beumer Group has supplied a HGBW-HC 1250 x 175.3m belt bucket elevator to the ACC cement plant in Wadi. Beumer says it is the highest such bucket elevator in the world with a distance of 175.3m between the centres. The size of this system enables a flow rate of around 600t/hour to be achieved, supported by high-strength steel wire belts. Previously Beumer has supplied bucket elevators with a height of 174m and 171m to ACC. Currently there are three common bucket elevator designs seen in bulk material handling facilities worldwide: the centrifugal discharge elevator, which is used in grain handling facilities, the continuous discharge elevator, which is used to discharge sluggish and non free flowing product, and the positive discharge elevator, a design where the buckets are used to elevate commodities.

Pakistan-based Fauji Cement (FCCL) has temporarily halted the operations at their cement plant, reports Daily Times. The 25,000 tons capacity raw material silo collapsed damaging the coal mill building of the plant's 7200 tons per day clinker production Line 2. This required the shutdown of the line for up to six months until the damage is repaired. However, the cement mills remain unaffected and cement dispatches will continue as normal. “The plant's 3700 tons per day clinker Line 1, which is currently undergoing

planned maintenance, will soon resume operations,” said an official from the company. The collapsed production line was commissioned in 2011 and has a capacity to produce 7,560 tons per day, 2.268 million tons per annum. Line 2 amounts for 66 percent of the total 11,445 tons per day total production capacity and contributes a significant chunk towards profitability of the company.

DALMIA CEMENT RECEIVES CERTIFICATION Equipment upgrades which led to higher production efficiency has helped Dalmia Cement in securing a Green Pro certification offered by the Confederation of Indian Industry (CII). The company is the first Indian cement manufacturer to receive the prestigious certification. Mahendra Singhi, the group’s CEO, has already expressed its satisfaction with the recognition. The certification was given to Dalmia’s Pozzolana Cement. The company emits an average of 530 kilograms of CO2 per

ton of cement produced, compared to the global average of 660 kilograms and to the Indian average of 586 kilograms of CO2/ per cement ton. Last year, the company produced 24 million tons of cement.

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

MAY / JUNE 2016

INFRASTRUCTURE & PROJECTS

nfrastructure & projects

CEMENT BENEFITS FROM CHINA-PAKISTAN ECONOMIC CORRIDOR The China-Pakistan Economic Corridor is expected to boost cement production in Pakistan. The joint project between China and Pakistan brings hope for an investment wave in Pakistan that will aid the country’s entire industrial sector, especially the cement and steel ones. Pakistan is already a large cement producer, taking advantage from large limestone and gypsum deposits. It currently exports cement to several countries including Iran, India, and the UAE. Traditionally, Pakistan is also a large supplier of cement to Afghanistan – having exported 2.5 million tons of cement into the country – and is currently selling large amounts to Iraq, helping with the reconstruction works. Other potential buyers include Yemen, Sudan, Ethiopia, and Algeria.

DIFFICULT MONTH FOR U.K. CONSTRUCTION SECTOR In the U.K. output growth in construction sector reached its weakest level for almost three years. "The sector appeared to have taken residence in a waiting room of non-activity, as continuing poor global economic conditions and uncertainty

UK: AMEC FORESTER WHEELER SIGNS AN AGREEMENT WITH DELTAWAVE UK-based Amec Forester Wheeler has signed an agreement with DeltaWave to supply SYDECTM delayed coking units. Amec Forster will also incorporate the center feed technology into upgraded delayed coking units. “DeltaValve’s innovative center feed device addresses the issues of uneven thermal distribution

MAY / JUNE 2016

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

around the EU referendum impacted growth and new orders,” according to David Noble, group CEO at the Chartered Institute of Procurement & Supply. The construction Purchasing Managers’ Index fell to 51.2 in May from 52.0 in April. It was forecast to remain unchanged at 52. This signals the weakest overall rise in business activity for almost three years.

and severe thermal transients by simply returning feed streams to the center of the coke drum, resulting in more consistent operation and longer coke drum life,” said Steve Beeston, Vice President, Global Technology Business Development, Amec Foster Wheeler. He added, “Coupled with Amec Foster Wheeler’s SYDECSM delayed coking technology, process experience, engineering, integration and execution capabilities, DeltaValve’s center feed device allows our joint customers to maximize the safety, throughput, reliability and profitability of their coking operations.”

THIRD COAL PRICE HIKE IN SIX MONTHS, IN INDIA

LAFARGEHOLCIM SUPPLIES MATERIALS FOR THE GOTTHARD TUNNEL, SWITZERLAND LafargeHolcim plays important role in the construction of the Gotthard tunnel, in Switzerland. The new tunnel is the largest in the world, measuring 57 kilometers. Trains could cross the Alps through the tunnel, reducing the travel time between Zurich and Milan

by one hour. LafargeHolcim supplied construction materials and expertise during the tunnel’s construction. In the meantime, the company used a third of the 28.2 million tons of heavy rock extracted to produce concrete. Cement used in the tunnel has been tested on LafargeHolcim’s laboratories. The group actually built a cement plant in Switzerland and operated several trains that transported concrete mix directly to the tunnel.

RESEARCHERS DEVELOP NEW GLASS AGGREGATES In Canada, researchers from University of British Columbia found a way of combining a water-based rubber polymer, fly ash and glass powder, in order to control alkali-silica reactions that were limiting the potential of glass-derived aggregate in concrete. “Every year, millions of tons of glass bypass recycling centers and end up in North American landfills,” said professor Shahria Alam. Researcher Anant Parghi added that "By partially replacing cement with polymer, fly ash and glass powder, we were able to produce concrete that was more than 60

In India, coal prices just increased for the third time in six months. First, there was an increase in royalties from 14 to 18.5 percent on December 2015. This hike was intended to add funding for the District Mineral Fund and the National Mineral Exploration Trust. Then, in March, the government doubled the clean energy cess from INR 200 per ton to INR 400 per ton. Now, Coal India itself decided to increase prices across several grades, on average, by 6.2 percent. While prices for G-1 to G-5 grades have actually gone down by 2 to 29 percent, prices for grades between G-6 to G-17 went up by 13 to 19 percent. This is expected to add INR 3,900 crore per annum to the company’s revenue.

percent stronger than what was previously believed possible”. Although the product still requires additional testing, the researchers are confindent that they could replace up to 25 percent of aggregate materials with glass.

CHINESE SHIPPED COAL PRICE TO INCREASE Chinese coal producers will increased the delivery price of coal shipped by port. Shenhua Group, China Coal Energy Group, Datong Coal Mine Group, and Inner Mongolia Yitai Group decided to raise the price of shipped coal by CNY 1.5 per ton, this June. Citibank China says that this increase is part of

a governmental effort to reduce coal production and bring prices up by as much 20 percent by the end of the year. Beijing hopes that thermal coal being shipped from the Qinhuangdao Port may rise from CNY 376 to CNY 450 per ton. By May 27, Chinese ports like Qinhuangdao, Caofeidian, and Tianjin

had increased their stockpile year-onyear by 1.81 million to 14.87 million tons. The government has set a target of reducing domestic production capacity by 16 percent by the end of this year, and reducing the number of operational annual working days at mines from 330 to 276 days.

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

MAY / JUNE 2016

ANALYST RECOMMENDATIONS COAL INDIA Though traders remained busy buying shares of Coal India, analysts say that it is not enough to offset potential wage increases. The government-run company has announced a price hike of 6.29 percent, which may fetch an additional Rs 3230 crore in sales in FY17. It also cut the price differential for the non-regulated sector to 20 percent from 35 percent above the regulated sector.

Goldman Sachs says that the Rs 3230 crore additional sales from price hike is lower than what will be needed to offset effect of five yearly wage negotiations due in FY17. Therefore, the price hike would imply a 13 percent wage increase in FY17 but wage hikes are likely to be higher going by past negotiations. Goldman Sachs factors Rs 8400 crore (30 percent) in incremental wage costs in FY17.

JK CEMENT J.K. Cement’s 3QFY16 operating performance was ahead of expectation as EBITDA came in at Rs1.25bn (+28% year on year) as compared to the expected Rs1.12bn. Reliance Securities believes that possible improvement in utilizations in Southern plants and likely price recovery in Northern markets are key catalysts in improving grey cement operating performance. Furthermore, possible deleveraging of balance sheet from FY17E will aid it to gain further traction in profitability. The investment adviser revises EBITDA estimates downwards by 6%/24% for FY16E/FY17E, maintaining the BUY recommendation on the stock with a revised Target Price of Rs630.

ULTRATECH CEMENT “UltraTech Cement had a correction which seems to be getting over”, says Sudarshan Sukhani of s2analytics. com. According to the investment analyst, prices are coming out of a small trading range, so it is a buying opportunity. There will be some stocks that will go up even in a choppy market. A similar recommendation comes from Ashwani Gujral of ashwanigujral.com, who says that “One can buy UltraTech Cement with a target of Rs 3275 keeping a stop loss at Rs 3200”.

AMBUJA CEMENTS Sameet Chavan of Angel Broking recommends investors to buy Ambuja Cements stocks. “If you look at the daily chart structure, the stock has now formed a pattern around its very strong support zone of daily 89 exponential

moving average (EMA) which is placed at around Rs 210-212. Thus looking at the daily chart structure, we expect an immediate bounce. That bounce could be toward Rs 227 and it can be bought by keeping a strict stop loss at Rs 205,” said Chavan.

ACC Rajat Bose of rajatkbose.com believes that ACC still has some tailwind left. “It is on a momentum and is on an uptrend. So, we are buying strength and putting a stop loss below Rs 1,535, buying at the last closing levels or so and keeping a target of Rs 1,590 but at Rs 1,590, I suggest booking profits on all long positions," said the investment analyst.

MAY / JUNE 2016

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

CEMWEEK AD

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

MAY / JUNE 2016

CW GROUP MEETING AGENDA 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.

CONFERENCES WHERE THE CW GROUP WILL BE PRESENTING

2016

ASHTRADE INDIA 2016

BUSINESS, LOGISTICS AND TECHNICAL COAL COMBUSTION BY-PRODUCTS MEETING

CW Groupâ&#x20AC;&#x2122;s Cement Finance, Strategy & Trade Summit Americas 2016

October 4-5, 2016

Miami, United States

Cement Business & Industry India 2016

October 19-20, 2016

Mumbai, India

AshTrade India 2016

December New Delhi, 6, 2016 India

FOR QUESTIONS OR INQUIRIES PLEASE CONTACT Liviu Dinu, Market Services & Marketing Consultant at the CW Group at ld@cwgrp.com

FOR MORE INFORMATION PLEASE VISIT INDIA

MAY / JUNE 2016

Solid Fuels Summit India 2016

December New Delhi, 7-8, 2016 India

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

http://www.cwgrp.com/research/ webinars-and-meetings

FLASHBACK NEWS FLOW IN CEMWEEK.COM LAST TWO MONTHS (darker red shows higher news volume)

MOST POPULAR ON CEMWEEK.COM The most-read stories on CemWeek over the past two months reflects the industryâ&#x20AC;&#x2122;s mixed outlook. The India column shows the 10 most popular stories from CemWeek featuring India-related coverage, and the Global column shows the global events that gathered the most attention worldwide during this period. Visit CemWeek.com to access the full stories.

INDIA

GLOBAL

1. India: ACC cement plant in Mumbai to cease operations

1. Buzzi Unicem increases EBITDA, net profit

2. India: Ambuja Cement cancels merger proposal of Dirk India

2. Study on fly-ash disposal

3. India: Prism Cement signs an agreement with Eco Cement

3. Morocco: Lafarge and Holcim to undergo a merger

4. India: Amendments to the mining law approved

4. Lafarge Morocco records surge in net income

5. CRH linked to Lafarge India assets

5. Irish Cement to review plans to use alternative fuels

6. Lafarge India begins sale process of assets

6. Poland cement market has a positive outlook

7. India: JP Associates likely to sign cement deal with UltraTech

7. CRH, LafargeHolcim contest final price of 2015 deal

8. India: Shree Cement ramps up for expansion

8. New technology favors energy saving in cement kilns

9. India: ACC cement plant in Mumbai to cease operations

9. Vietnam: Cement prices increase in March

10. India: Cement production increases in January

10. A greenfield cement plant to be set up in Cambodia

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

MAY / JUNE 2016

A CEMENT AND LIME INDUSTRY CONFERENCE AND EXHIBITION BY

LOCAL CONTACT

OCTOBER 19 - 20, 2016 â&#x20AC;¢ MUMBAI, INDIA

INCLUDES SESSIONS FROM:

AND

CemWeek

SUPPORTED BY:

SRIRAM GANAPATHI Sr. Conference and Events Executive (India) sg@gmiforum.com P: +91 22 66072700 M: +91 9969297536

CemWeek

GLOBAL CONTACT BEATRICE ENE Client Development & Marketing Director be@gmiforum.com M: +40 722 764 802