India Cement & Construction Materials (vol 1 / issue 31) by CemWeek

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issue 31

Cement

july - august 2016

& construction Materials

CW RESEARCH Lower demand affects Indian cement prices feature New technologies in cement production

FEATURE

Indian cement: the road from commodity to brand 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.

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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

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FEATURES

DEPARTMENTS

Indian cement: the road from commodity to brand

Indian producers are now adding personality to the construction material, by building brands around it.

Global Cement Trade Price Report (GCTPR)

16 New technologies in cement production

Producers and regulators are more and more focused on two main objectives: a smaller carbon footprint and less energy consumption.

EDITORIAL LETTER

rOBERT MADEIRA

GABRIEL BURETE

NUMBERS IN BRIEF Performance of India’s Cement Sector

cemweek publisher head of cw group research

Content Editor & Online Coordinator

Liviu Dinu

research and analytics 22 Cement Volumes 24 Cement Energy 41 ANALYST RECOMMENDATIONS

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Latest Broker Recommendations

Raluca cercel PRASHANT SINGH STEFANA ABICULESEI CONTRIBUTING ANALYSTS

26 28

MARKET AND COMPETITION

DESIGNER

30 32

PROJECTS AND EXPANSIONS

34 35

PEOPLE

37 38

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cement

Cement

Back to the future: The cement industry is heading towards a low carbon footprint, low energy consumption era

Lower demand affects Indian cement prices

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M&A and FINANCE

VOLUME AND PRICING

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letter from editor

Back to the future The cement industry is heading towards a low carbon footprint, low energy consumption era.

hile cement production is one of the most polluting and energy intensive industrial processes, producers and regulators are more and more focused on two main objectives: a smaller carbon footprint and less energy consumption. The 31st issue of India Cement and Construction Materials journal covers innovative solutions, from hightech technologies to the ancient Roman way. Indian producers are starting to treat cement less like a commodity and more like a consumer product. They are now adding personality to the construction material, by building brands around it. And they are doing it by the rules of consumer marketing. The current issue also covers cement branding in the unique, Indian market.

ex-works prices decreased in all of the three regions: India North, India South, and India Pan. Read more about the situation in the region, in the 2Q2016 update to the CW Researchâ&#x20AC;&#x2122;s Global Cement Trade Price Report (GCTPR). And as usual, India Cement and 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. Donâ&#x20AC;&#x2122;t miss out the numbers and the trends laid out in the special sections.

White cement prices in the Asia-Pacific-Japan region are expected to decline by September. In India, gray cement

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INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

Gabriel Burete

Content Editor & Online Coordinator

numbersin brief CW Price Assessments:

Commodity prices fall impacts cement and clinker

Once divergent, export prices from Med Basin and Persian Gulf inching closer The export price of ordinary Portland cement and clinker has not gone unaffected by the global decrease in commodity prices. Our monthly price assessment study on the two regions, which closely tracks prompt delivery pricing for cement and clinker, highlights a period marked by a continuous decrease, with sporadic periods of stabilization. In the case of the Med Bain region, a persistent decrease in orders from Northern Africa, has led exporters to

re-examine their trade stance, and target more aggressively markets across the Atlantic. Algeria, a long-standing importer of bulk cement and clinker, is currently undergoing capacity expansions that will allow it to be self-sufficient in terms of both cement and clinker in about five years. Currently, Algerian importers buy bulk cement that they then bag with Algerian manufacturersâ&#x20AC;&#x2122; brand name.

CHART: FOB Ordinary Portland Cement Med Basin and Persian Gulf (USD/ton) Med Basin

Persian Gulf-Arabian Sea

Sep '15

Oct '15

Nov '15

Dec '15

Jan '16

Feb '16

In the Persian Gulf, Iranian exporters continue to enjoy a good run in terms of exported volumes, but are still troubled by remittances from the former international sanctions. As such, Letter of Credit payment is a perk few exporters enjoy, and only with a handful of export markets (India thought to be one soon).

Mar '16

Apr '16

May '16

Jun '16

Jul '16

Aug '16

Source: annual reports

In the Arabian Sea, UAE continues to confront with overcapacity and a limited export market, given that exports sourced from the Emirates are often not as competitive as the ones of Iranian players targeting East Africa.

CHART: FOB Ordinary Portland Clinker Med Basin and Persian Gulf (USD/ton) Med Basin

Persian Gulf-Arabian Sea

Sep '15

Oct '15

Nov '15

Dec '15

Jan '16

Feb '16

Mar '16

Apr '16

May '16

Jun '16

Jul '16

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

Aug '16

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Source: annual reports

feature

Indian cement:

the road from to brand Indian producers are starting to treat cement less like a commodity and more like a consumer product. They are now adding personality to the construction material, by building brands around it. And they are doing it by the rules of consumer marketing.

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INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

Source: google.com

m commodity

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

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feature

A commodity market with a twist

The Indian cement industry has nearly doubled its production capacity in the last 10 years, to more than 212 million tons, and newer players are becoming bigger

with manufacturing units across the country. Globally, the Indian cement industry is the second largest market in the world, second only to China with 8% of the total global production.

It is a marketing argument that may have as much to do with the way the particular cement is packaged, delivered and used as it does with its actual quality and characteristics. Whatever is involved, it is a task that the marketer must accept and be prepared to handle with a savvy sense of the differing needs and cost points of the relevant marketplace.

Therefore, as competition on the Indian cement market is becoming tougher, players are increasingly interested in making their brands stand out from the crowd. Furthermore, there is a growing need to brand the cement products, as home owners now account for a major part of the cement conWith the rise in competition in sumers. Over the last few years, companies are 65% of the delooking for a unique product pomand is from sitioning through the household strong brands and sector with The Indian cement industry are creating seponly 15-19% is the second largest market arate marketing accounting for in the world teams for their difthe infrastrucferent categories of tural demand for cement. In fact, most commercials fo- products. As a result, cement branding cus on company executives talking to indi- has borrowed some of the strategies used for more conventional consumer prodvidual home owners. ucts. One of the most notable approaches When it comes to commodity products, the seen in the marketing of cement over the burden of proof is almost always on the mar- past years has been the use of emotions keter to show why a sack of cement is better, to sell and market the product. In an in-

Chhattisgarh train, branded by ACC Cement

and worth more to the customer, than another one, produced by a rival company.

september JULY / AUGUST - october 2016 INDIA 2015 CEMENT INDIA CEMENT & CONSTRUCTION & CONSTRUCTION MATERIALS MATERIALS MAGAZINE MAGAZINE

Source: google.com

ement is a commodity as vital to fast-growing economies as oil or steel, but like all major commodities, it is known mostly as just that: cement. But as products are defined and valued but their market, the specificity and, some say, uniqueness of the Indian market has made cement producers act a lot like makers of consumer products. Market pressure and consumer structure have pushed major cement players in the country to start investing into more than just making their product strong and efficient. They are now adding personality to the construction material, by building brands around it. And they are doing it by the rules of consumer marketing. The outcome can only be interesting.

Source: google.com

Delhi school bus, branded by Lafarge India

dustry where the onus of the buying de- Ambuja Cements, which entered the indus- there was a problem. Cement has been tracision relies on the contractor or on the try in 1984 with a plan to set up a 700,000 ditionally treated as a commodity. Brandmiddle man, companies are trying to shift tons per annum plant in Western India. The ing was virtually non-existent. The only the customer's perception. Another way company went beyond focusing on strength differentiator between the manufacturers is to differentiate the company by creating and tried, with a certain degree of success, was the price. Ambuja Cements was faced a new category in the consumer's mind. to differentiate itself as an industry leader. with two choices. Sell as a commodity at the During a branding campaign, lowest price or create a brand and JSW Cements chose not to build loyalty. The company found speak of strength. That would itself suited to build a brand. It alhave been what every cement ready had a product deemed to be company usually did, and of higher quality than the markets Cement branding has borrowed some would have meant to compete were used to. They only needed to of the strategies used for more head on with other brands. create a distinct image. Ambuja To make itself stand out, the chose to create an identity around conventional consumer products company went ahead and difthe single most important attriferentiated itself by taking the bute people looked for in cement: conscious decision to talk about the speed strength. A visual symbol was built around at which the cement dries. However, a Right from the start, Ambuja Cements rec- this: the Ambuja Giant. comprehensive branding campaign con- ognized the uniqueness of the Indian market sists of several approaches, which operate and the need to build a brand rather than be Over the years, this core value of the brand at different levels to reach different seg- seen as a commodity. With a large segment has been continuously reinforced. Ambuments of the market. of the market being retail in nature, the com- ja has always focused on two goals â&#x20AC;&#x201C; crepany realized that any brand communication ating a world-class brand and delivering would need to be targeted at the end user â&#x20AC;&#x201C; in maximum efficiency from its plants. This A multidimensional this case the average Indian home owner. approach has helped raise standards not approach to branding just at Ambuja but also across the industry. One of the stories that highlight the imAmbuja Cements quickly realized that it Ambuja Cements was the first to grade its portance of making a difference on a commade sense to talk to them directly, but product. Before the arrival of Ambuja into modity market is the branding strategy of

INDIA CEMENT INDIA & CEMENT CONSTRUCTION & CONSTRUCTION MATERIALS MATERIALS MAGAZINE MAGAZINE september JULY - october / AUGUST 2015 2016

feature the sector, cement was just cement. As part of its branding efforts, Ambuja introduced 53-grade cement in the market and, by benchmarking quality standards for the industry, it became the first cement company to receive the ISO 9002 quality certification. To further boost customer confidence, the company also developed the technology the would allow it to produce cement of consistent quality from diverse raw materials available in the different regions where its factories are located.

Most wanted: celebrity endorsement

Over the past years, branding their product with the faces of celebrities seems to have become a rule for cement producers in India. The approach is a guaranteed-hit way to reach home consumers, much like consumer products advertise themselves. So this is how M S Dhoni, the Indian cricketer with a rock solid reputation, came to endorse Lafarge products, while Amitabh Bachchan, the movie industry icon, lent his name to Binani Cement. Another big player who jumped on the brandwagon was Jaypee Cement, who enrolled India’s most reliable batting maestro Sachin Tendulkar to endorse their products. Also, big cement companies such as Aditya Birla group company UltraTech, collaborated with Rajasthan Royals, while India Cements teamed with Chennai Super Kings, during the Indian Premier League.

Rajasthan Royals and Chennai Super Kings having cement companies as jersey sponsors part1

the destruction caused when the cricketer plays in his full swing. That solution is JK’s cement. Besides using celebrity endorsers to strengthen the brand, companies have also made strategic moves to consolidate the brand name. That was the case of ACC, which in 2006 switched from multiple product sub-brands to the mother brand after market research proved that consum-

In turn, JK Super Cement launched a campaign with Virender Sehwag, the smasher of the Indian Cement has been traditionally treated cricket team. The comas a commodity. Branding was mercial played by the rules of consumer advervirtually non-existent tising, featuring a celebrity, a story, a punch line and a bit of fun. The ad revolved around ers placed more trust on brand ACC. Sehwag’s cricket demeanor, being dis- One of the latest moves towards brand played in a village. A TV reporter present building in the cement industry took place at the venue catches a villager’s reaction, after the Reliance Cement takeover by Birwhile the natives try to find a solution to la Corporation. In March 2016, the latter

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INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

announced publicly that after the signing of the takeover agreement, it would start focusing on building a brand image for its cement range. Officials close to the development said that a lack of brand-building activity had resulted in the company owning a marginal market share in the northern part of the country. “Where we are losing out and need to focus on is on building a brand of our cement portfolio and sustain it in the long run,” said a Birla official. The company also restructured its marketing team. The lack of a brand presence in its portfolio had motivated the company to opt for the acquisition of Lafarge cement plants in Sonadih in Chhattisgarh and Jojobera in Jharkhand for Rs 5,000 crore. The deal facilitated Birla Corporation to completely acquire the Concreto brand and partially control the PSC brand. Regulatory approvals and considerations resulted in the deal being called off and the MP Birla group firm resorting to legal action against the France-based company.

A guide to cement branding

• Make your brand as unique as possible. • Treat your brand as an investment, not a cost. • Quickly globalize the brand and its products. • Reward customer involvement to make them become active promoters of your brand, not simple loyalists. • Encourage communities that share your values. • Donations to good causes to prove the brand is not insensitive to the world around it. • Sponsorship is a perceptible experience: visually associating the brand with an event, sporting team or the like. • The brand must provide more than products, it must provide real services. • Make an impact. Make people remember your brand.

Rajasthan Royals and Chennai Super Kings having cement companies as jersey sponsors part2

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

Source: google.com

It is clear that Indian cement makers have been caught in the game of branding. As more of the key industry players push to add personality to their products, there is no way back, since branded cement is likely to become a standard among first league producers.

• Make your first impression count. Don’t • Know your strengths. Outsource your let yourself down with a tatty business weaknesses. card, dodgy home made literature or a poorly designed advert. Top 10 approaches to • Don’t overload your customer with branding commodities too much technical data. Speak in a • Superior product or service consistency language the customer understands. (quality control) • The one who decides if your message is • Superior product/service customization clear is the customer, not you. • Superior responsiveness (order • Clear design can give room for the fulfillment, technical support, customer message to breathe. Don’t be scared service) of white space, it can work to draw • Unique bundling/unbundling of attention. products/services • Maintain consistent messaging to • Ingredient branding promote the feeling of solidity and security with customers. • Give your customer an Big cement companies collaborate invitation for interaction. with cricket teams such as Rajasthan • Make it easy for Royals or Chennai Super Kings, them and make during the Indian Premier League. the call to action obvious with your design. • Unique packaging • Ensure your brand is associated with • Unique distribution credible sources. • Emotional branding (‘brand as a badge,’ • Produce press releases or news articles superior purchase/usage experience) for your industry. • Identify your most important/profitable • Create relationships. They lead to customers – conduct conjoint analysis opportunities. to determine what they value the most • Maintain a consistent posting schedule.

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feature

New technologies in cement production While cement production is one of the most polluting and energy intensive industrial processes, producers and regulators are more and more focused on two main objectives: a smaller carbon footprint and less energy consumption.

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INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

Source: google.com

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

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feature

Gaurav Sant, UCLA

The world’s total output of Portland cement exceeds three-quarters of a ton for every person on Earth, every year

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here are few industrial production techniques that need a revamp as much as cement manufacturing does. Cement production is one of the most polluting and energy intensive processes, and the demand for a better way is only equaled by the demand for the product itself. There is extensive scientific research underway, and several solutions appear to emerge, as producers and regulators are more and more focused on two main objectives: a smaller carbon footprint and less energy consumption.

First aim: carbon neutral cement production

The world’s total output of Portland cement exceeds 5 billion tons every year. That's nearly three-quarters of a ton for every person on Earth. And for every ton of cement produced, the process creates approximately a ton of carbon dioxide, all of which accounts for roughly 7 percent of the world's carbon dioxide emissions. With demand increasing every year—especially in the developing world, which uses much more Portland cement than

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

advanced states, such as the U.S.—scientists are determined to lessen the growing environmental impact of Portland cement production. According to a study published in the Industrial and Engineering Chemistry Research journal, carbon dioxide released during cement manufacturing could be captured and reused. The study was published by UCLA scientists Gaurav Sant, Edward K. and Linda L. Rice. "The reason we have been able to sustain global development has been our ability to produce Portland cement at the volumes we have, and we will need to continue to do so," Sant said. "But the carbon dioxide released into the atmosphere creates significant environmental stress. So it raises the question of whether we can reuse that carbon dioxide to produce a building material." During cement manufacturing, there are two steps responsible for carbon emissions. One is calcination, when limestone, the raw material most used to produce cement, is heated to about 750 degrees

Celsius. That process separates limestone into a corrosive, unstable solid—calcium oxide, or lime—and carbon dioxide gas. When lime is combined with water, a process called slaking, it forms a more stable compound called calcium hydroxide. And the major compound in Portland cement is tricalcium silicate, which hardens like stone when it is combined with water. Tricalcium silicate is produced by combining lime with siliceous sand and heating the mixture to 1,500 degrees Celsius. Of the total carbon dioxide emitted in cement manufacturing, 65 percent is released when the limestone is calcined and 35 percent is given off by the fuel burned to heat the tricalcium silicate compound. But Sant and his team showed that the carbon dioxide given off during calcination can be captured and recombined with calcium hydroxide to recreate limestone— creating a cycle in which no carbon dioxide is released into the air. In addition, about 50 percent less heat is needed throughout the production cycle, since no additional heat is required to ensure the formation of tricalcium silicate.

Sant said the method is analogous to how limestone cementation occurs in nature, where limestone forms the tough exoskeletons of coral, mollusks and seashells, and when microbes form limestone that cements grains of sand together. Although scientists had examined this idea previously, Sant said it had never been demonstrated before with a view to carbon dioxide-neutral cement production—and that it actually worked faster than he and his colleagues expected. The cycle took just three hours to complete, compared with the more than 28 days needed for Portland cement to react with water to near completion and reach its final hardest consistency. The successful sample was very small, as required by laboratory conditions. But Sant said now that the process has been proven, it could, in time, be scaled up to production levels.

If manufacturers continue to operate as they currently do, cement production would be much more expensive than it is now If cement manufacturers continue to operate as they currently do, and if proposed carbon taxes in the U.S. and other nations are eventually enacted, cement production would be much more expensive than it is now. Were that to happen, a new method for producing cement with little or no environmental impact would be of even greater interest, Sant said.

Ancient Roman concrete is made with coarse chunks of volcanic tuff and brick, bound together by a volcanic ash-lime mortar

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feature The Swiss-knife approach to cleaner cement and concrete

The solution proposed by UCLA scientists is not the only idea put forth by specialists in attempts to curb carbon emissions. Last year, an EPFL-led consortium received backing from the Swiss Agency for Development and Cooperation to speed up the development and testing of a new blend of low-carbon cement. Elaborated with partners from the Indian Institutes of Technology and from universities in Cuba and Brazil, this new blend substitutes up to half of the usual Portland cement used to make concrete with highly abundant clay and limestone, promising to reduce cement-related CO2 emissions by up to 40%. Applied globally, it could help bring down future global CO2 emissions by several percentage points. Substituting a fraction of the Portland cement used to make concrete is a well-established way to cut emissions. However, alternative materials that allow substituting a large fraction of cement have been hard to find. Materials that are commonly used today â&#x20AC;&#x201C; slag from the steel industry or fly ash from coal power plants are two examples â&#x20AC;&#x201C; are not available in large enough quantities to keep up with demand. As Karen Scrivener, the principal investigator of the project, explained, the strength of the combination of calcined clay and ground limestone, which the researchers call LC3 for Limestone Calcined Clay Cement, lies in its chemistry. When used together, the aluminates from the calcined clay interact with the calcium carbonates from the limestone, leading to a less porous, and therefore stronger, cement paste. While in the past, these materials have been used individually to replace a small fraction of the cement, together, they can replace up to half without altering the performance of the final product. Thanks to partnerships with industrial and governmental partners, the researchers hope to see LC3 become the new gold

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LC3 is made from raw materials that are abundantly available across the globe

standard of low-carbon cement, produced by all major cement companies. Two industrial scale pilot projects in India and Cuba have already emphatically demonstrated the robustness of their method

With global demand for cement to double by 2050, the need for lowcarbon cement is becoming more and more pressing and the ease with which it can be integrated into existing cement production lines. In the next phase of the project, larger-scale production tests are scheduled with industrial partners.

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LC3 is designed to meet the needs of both industry and users. It was developed in close collaboration with industrial partners and designed to integrate into existing cement production lines. Clay and limestone are available in large amounts in quarries around the world. And consumers will be able to use it the same way they use ordinary Portland cement today. Time is of the essence, according to Karen Scrivener, who heads EPFL's Construction Materials Laboratory. With global demand for cement to double by 2050, driven by growing demand in emerging economies, such as India, China, and Brazil, the need for low-carbon cement is becoming more and more pressing. The just over 4 million Swiss francs in funding from the Swiss Agency for Development and Cooperation will enable EPFL and its partners to do the necessary research and testing for the introduction and standardization of LC3, so that it makes it to the market as quickly as possible.

for Drexel's cement by about 40 percent versus Portland cement and reduces energy consumption and carbon dioxide production by 97 percent. "Cement consumption is rapidly rising, especially in newly industrialized countries, and it's already responsible for 5 percent of human-made carbon dioxide. This is a unique way to limit the environmental consequences of meeting demand," Dr. Alex Moseson, one of the lead researchers on the project, said. While forms of alkali-activated cement have been used as far back as the 1950s and 1960s in several buildings in the former Soviet Union, much of the inspiration for this research came from the Pyramids in Egypt, as well as buildings in ancient Rome.

Back to the Roman cement

Making it to the market is the ultimate test of functionality for any new cement making technology. Such is the case of the solution proposed in 2012 by Drexel engineers, who announced the development of a cement with 97 percent smaller CO2 and energy footprint. Drexel engineers presented a way to improve upon ordinary Portland cement (OPC), the glue that's bonded much of the world's construction since the late 1800s. The group served up a recipe for cement that is more energy efficient and cost effective to produce than masonry's most prevalent bonding compound. Drexel's "green" variety is a form of alkali-activated cement that utilizes an industrial byproduct, called slag, and a common mineral, limestone, and does not require heating to produce. According to Dr. Michel W. Barsoum, A.W. Grosvenor professor in the Department of Materials Science and Engineering, this alternative production method and the ubiquity of the mix ingredients, lessens the cost of materials

"Our cement is more like ancient Roman cement than like modern Portland," Moseson said. "Although we won't know for 2,000 years if ours has the longevity of Roman buildings, it gives us an idea of the staying power of this material." In contrast to ordinary Portland cement, Drexel's cement is made of up to 68 percent unfired limestone, a plentiful, cheap, and low-carbon dioxide resource; American Society for Testing and Materials' standards for Portland cement limit the amount to 5 percent. To this base, a small amount of commercial alkali chemical is added along with the iron slag byproduct. In Portland cement the substitute for this mixture, called clinker, is produced by firing a number of ingredients in a kiln, thus requiring more energy and generating more carbon dioxide. During Moseson's work in India to commercialize the technology, he developed products that meet local standards, using entirely local materials and techniques. He also investigated how the availability of green cement could help make quality building materials more affordable and accessible to marginalized populations

This new blend substitutes up to half of the usual Portland cement used to make concrete with highly abundant clay and limestone, promising to reduce cement-related CO2 emissions by up to 40% living in slums, and create jobs by jump starting small-scale cement manufacturing in the country. "Our results and the literature confirm that it performs as well or better than OPC," Barsoum said. The company initiated the process of having the cement pass commercialization standards, with the aim of getting it to the market. To achieve that, the group founded a start-up called Greenstone Technologies, Inc. So far the company did not publicly confirm the market availability of the new cement. There is no lack of research projects seeking to find a cleaner, cheaper cement making technology. However, until a breakthrough solution is found, with proven environmental and cost benefits, any transition to a new manufacturing process will be slow. The main impediment is the cost versus benefit ratio: plant modifications are expensive, and expenses made so far need to return the investments before they ca be deemed obsolete. However, the race is on for a better way.

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Source:

feature

CW Research: Lower regional and global demand to c Indian cement price Cement prices are under a strong downward pressure in India, in the context of a slower world economy, according to CW Researchâ&#x20AC;&#x2122;s Global Cement Trade Price Report.

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d crush es Source: www.business-review.eu

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feature

White cement prices in the area are likely to decline

Cement bags loaded on pallets, for efficient handling minimized damage.

The World Bank forecasts a lower global economic growth, than previously expected

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ement prices are under a strong downward pressure in India and the entire Asia Pacific region, according to the 2Q2016 update of the Global Cement Trade Price Report, published by CW Research, the research desk of the global industry advisory and analysis boutique, CW Group. The report places the falling cement prices in the context of slower growth for the world economy, with cement demand and trade taking the toll. The pressure on demand is triggered by weak economic development in commodity exporting markets, which are struggling to adapt to lower prices for oil and other key commodities that shape their economies. Meanwhile, economic growth in commodity importers are seeing a slightly more resilient development. As a result, demand for cement remains subdued, gray

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cement trade being negatively impacted. Effects are expected to be seen in India and the countries in the Asia Pacific region. According to the GCTPR update, white cement prices in the area are likely to decline marginally by September, while clinker and slag export prices are projected to see higher declines. Asia-Pacific remains the largest exporter of clinker and slag in terms of volumes. The negative pricing development is supported by both the International Monetary Fund and the World Bank negatively revising their global economy growth projections made in April 2016 and January 2016, respectively. The World Bank, which expected global growth to stand at 2.9 percent for the current year, has downgraded its forecast to only 2.4 percent for 2016. Conversely, the IMF, though considerably more optimistic than the World Bank,

expects a 3.2 percent global economic growth, down 0.2 percentage points compared to their November 2015 forecast for 2016. With limited expectation of economic recovery this year, demand for cement is projected to decline this year at a global scale.

Lower volumes and prices for gray cement

The latest quarterly update of the GCTPR report shows that gray cement trade continues to be under pressure from weak economic development impacting demand for cement at a global scale, amid decreasing activity figures in construction. Global trade of gray cement has been on a declining path both volume-wise, as well as from a pricing perspective.

in the GCTPR fell by 6.7 percent monthon-month, while the price decline was even higher in April. Meanwhile, Indian export pricing for gray cement hovered around the USD 53 per ton mark in the first quarter of 2016, and are expected to fall to just above USD 51 per ton by September 2016. Eex-works prices in 1Q2016 in India decreased across the country. Average sale prices in the North of India in 1Q2016 were 17.4 percent lower than the average price in the previous quarter. Ex-works prices in the South of the country recorded a decrease by more than 6.3 percent on a

Ex-works prices decreased in the first quarter of this year, in all of Indiaâ&#x20AC;&#x2122;s regions

quarter-on-quarter basis. Pan-India, exworks prices declined by more than 9 percent year-on-year in the quarter. However, according to GCTPR estimates, cement demand is expected to grow across the country in the following country, as a result of heavy investments in infrastructure and housing.

In March 2016, the global average FOB prices for ordinary Portland cement for the complete set of reporting countries

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feature In Pakistan, average sale prices of cement recorded a decrease of almost 4 percent compared to the first quarter of 2015. Pakistani cement demand is expected to grow driven by high construction activity supported by the China-Pakistan Economic Corridor project, as well as the government’s long-term investments in infrastructure projects. However, the main challenges remain declining exports to Afghanistan and the country’s political instability. The declining trend for gray cement FOB prices continues to be observed in this update, as it was also noted in the 1Q 2016 update of the Global Cement Trade Price. Cement prices have been affected by lower global cement demand, oversupply in major markets and bad weather conditions in some regions. The global average for gray cement, aggregated for a reporting set of 16 countries, showed a year-on-year decline of almost 8 percent, and a quarter-on-quarter fall of almost 6 percent. Over the last twelve months leading to March 2016, global gray cement export prices peaked in June 2015, while the lowest price observed in the period was in February 2016. The decline in FOB prices for cement was also driven by low oil prices and a slow recovery from the global economic crisis. In terms of gray cement exports, volumes from Asia-Pacific-Japan rose by 4 percent quarter-on-quarter in the three months leading to March 2016 (considering the country set with complete data for the quarter). The region continued to be the largest global exporter in terms of gray cement volumes in 1Q2016. Average export prices for the area showed a year-on-year fall of almost 4 percent. The leader of cement exports in the region for the 1Q2016 was Thailand.

Cement bags handled by workers.

analysis projects average export prices to decrease less than half a point in September 2016 compared to August 2016. India is expected to see lower pricing rates in September 2016 as well, by more than the region’s average, compared to the USD 52.0 posted in June 2016.

In terms of median prices, white cement export rates are seeing a slight decline

GCTPR estimates for the second quarter of the year favors a slight decline in Asia-Pacific-Japan FOB prices for gray cement, compared to May 2016. In the third quarter of the year, the GCTPR

JULY / AUGUST 2016

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

The only sign of stability comes from import prices in the Asia-Pacific-Japan zone, as CW Group’s analysis places average prices below USD 55 per ton in March 2016, a price that is estimated to have remained relatively stable in June 2016. However, in the quarter leading to September 2016, CIF prices for the Asia-Pacific-Japan are projected to decline by more than 1 percent, as compared to June 2016. A similar decline is expected to occur in India as well, according to the GCTPR report.

White cement prices return to negative trends

During the first quarter of 2016, white cement export volumes increased by almost 8 percent year-on-year, for the set of reporting countries with complete data for the period. Average white cement export rates hovered around USD 130 per ton over the past twelve months. In terms of median prices, white cement export rates are seeing a slight decline. In

cement for the region will have declined by just above one percent month-on-month. In the following quarter, CW Research analysts expect white cement export prices to decline even further. As for the FOB prices in India, the GCTPR sees more pressure being exerted on India by June 2016, with white cement export prices declining by a narrow margin.

Slight declines in clinker and slag prices

At global level, in the first quarter of 2016, clinker trade volumes grew by 11 percent quarter-on-quarter. However, the average FOB prices fell by almost 10 percent quarter-on quarter, during the mentioned period.

March 2016, median prices were down more than 1.5 percent when compared to the previous month, while in 1Q2016, average white cement export prices were up more than 3 percent as compared to the previous quarter, and more than 4 percent higher than in the same quarter last year. White cement producers in Asia-Pacific-Japan exported 35,000 tons of the product in the first quarter of 2016, the latest complete quarter. However, this volume should be seen as indicative as some reporting countries in the region have yet to release data. For the exporters with complete data sets for the quarter, the export volume declined by more than half quarter-on-quarter, particularly due to lower export volume from Vietnam. Thailand, one of the largest exporters of white cement in the region in 1Q2016, shipped by 50 percent more product than in the previous quarter. Export prices were almost 13 percent higher on average than in the previous quarter and almost one percent above the average price in 1Q2015. The GCTPR report update estimates that by June 2016, average FOB prices for white

The price decline was even steeper for the Asia-Pacific-Japan - the largest region in terms of clinker export volumes - with a total of 4.9 million tons in the quarter ended March 2016. The drop in FOB prices amounted to almost one third in the first quarter of 2016, and volumes were also lower than in the same quarter of the previous year. The exception within the area was Japan, the regional leader in exports, which recorded a very strong increase in the volumes of clinker shipped abroad in the quarter to March 2016. The main export markets for Japan are Malaysia, Kenya, China, Peru, and India. The GCTPR report update estimates that FOB prices for the Asia-Pacific-Japan region will start decreasing, including a downward estimate for Indiaâ&#x20AC;&#x2122;s export prices until September. The overall average price for the region is expected to decrease mainly driven by negative pricing trends in China and Thailand. As far as the global slag export volumes are concerned, the GCTPR report highlights an over 5 percent decline in the quarter ended March 2016, when compared to the same period of the previous year. Asia-Pacific-Japan continues to be the leading region in terms of slag exports with a share of 71.0 percent of the global vol-

The average clinker FOB prices fell by almost 10 percent, quarter-on quarter

ume. Japan, the main slag exporter in the world, exported the product at an average of USD 8.5 per ton in February 2016, the highest point in the first quarter of 2016. The volume decrease was accompanied by a price decline, as FOB prices for slag in the Asia-Pacific-Japan area are estimated to have been 7 percent lower in June 2016 than in March 2016. The GCTPR report update estimates that the regionâ&#x20AC;&#x2122;s slag export prices will continue to decline, although at a much lower rate. India, however, will continue to see a noticeable drop, with FOB prices expected to lose more than 4 percent by September compared to June 2016. More detailed information and analyses down to country level are available in the latest update of the Global Cement Trade Price Report, a benchmark price assessment for monthly worldwide gray cement, white cement, clinker and slag trade, exworks and market prices. The Report is published by CW Research, the research desk of global industry advisory and analysis boutique CW Group, based in Greenwich, CT, USA.

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CEMENT MARKETS

CW Research

CEMENT VOLUMES The Chinese cement sector has been struggling with overcapacity amid weak economic output, environmental concerns and increasing competition in the international markets. As a result, the first half of the year brought about a decline in margins for Chinese cement producers due to weak pricing. In the first six months of the year, cement output rose 3.2 percent as compared to the same period last year, but the growth rate has deteriorated in March-June. In June alone, cement production fell 1.7 percent on a monthly basis. Despite low margins in the first half of the year, cement producers expect demand for cement to improve in the following months, while better results for companies are also anticipated on account of stronger cement pricing.

Saudi Arabian cement production fell 3.3 percent in the first half of the year as compared to the same period in 2016, while demand for cement fell 3.5 percent in the same period. Manufacturers of cement in Saudi Arabia are battling high clinker inventories and overcapacity. The cement sector could benefit if the ban on cement exports will be lifted as producers would be able to place the excess product in markets such as Qatar, Yemen, as well as markets in East Africa.

Indian cement production rose 6.2 percent in June 2016 as compared to the previous month and 10.3 percent as compared to June last year. The 25.4 million tons of cement produced in June 2016 brought the first half total to 149.4 million tons, 8.5 percent higher than in the same period last year. Despite the increase in cement output in the first half of 2016, demand for cement and implicitly production are expected to drop in the monsoon period as

The Argentinian cement market has been under pressure this year as the change in government in 2015 resulted in a delay in investments. As a result, demand for cement fell 14.6 percent in the first half of the year as compared to the same period last year. Production volumes saw similar declines, as the cumulative volume of cement output in January-June 2016 was 14.5 percent below the volume posted in the same period in 2015.

June 2016 cement demand â&#x20AC;&#x201C; YoY change (%)

June 2016 cement production â&#x20AC;&#x201C; YoY change (%)

30%

Source: CW Research

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Vietnam

India

Ukraine

Cyprus

China

Belarus

Peru

Colombia

Japan

-30%

Thailand

Spain

Cyprus

Pakistan

Indonesia

Peru

Colombia

Japan

Thailand

Brazil

-30%

Morocco

-10% Ecuador

-10% Argentina

10%

Saudi Arabia

10%

Russia

30%

Argentina

Indian cement production rose 6.2 percent in June 2016 as compared to the previous month and 10.3 percent as compared to June last year.

heavy rains affect construction development in the country. On the other hand, the second half of the 2016/17 fiscal year is expected to bring about increase in demand for cement as several infrastructure and housing investments are likely to boost consumption volumes.

CW Research

CEMENT PRODUCTION (million tons) Country

MoM (%)

CEMENT CONSUMPTION (million tons) YoY (%)

YTD

YTD (%)

Country

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

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 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

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CEMENT ENERGY MARKETS

CW Research

Energy Prices Update compared to May 2015’s price of $61.16 per ton. It increased by 9.5 percent when compared to May 2016’s price of $54.69 per ton.

COAL: The average coal price for June 2016 closed at $59.89 per ton, falling 2.1 percent YoY as Steam Coal Fob Average Prices (us$/ton) US exported

Colombia exported

Australia Newcastle

Indonesian HBA

South Africa Richards Bay

110

Global trading volumes for six major coal countries decreased to 74.44 million tons in June 2016, increasing 1.4 percent in comparison with the 7.43 million tons recorded in May 2016.

50 Jun Aug Oct Dec Feb Apr Jun Aug Oct Dec Feb Apr Jun Aug Oct Dec Feb Apr Jun Aug Oct Dec Feb Apr Jun ’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 6.0 percent to 3.32 million tons in May 2016 when compared to the previous month, and up by 26.6 percent as compared to May 2015. The US export price for petcoke for May 2016 closed at $39.12 per ton, increasing 8.4 percent as compared to April’s price of $36.09 per ton and down 38.8 percent when compared to May 2015’s price of $63.87 per ton.

COAL TRADING VOLUMES: Global trading volumes for six major coal countries decreased to 74.44 million tons in June 2016, increasing 1.4 percent in comparison with the 7.43 million tons recorded in May 2016. An increase in coal trading volumes occurred in Indonesia, Australia, South Africa, and the US. Whereas Russia and Colombia should volume declines in the month of June.

Steam Coal Fob Average Prices (us$/ton) monthly price 70

Rolling 12-month average 50

M ‘16

A ‘16

M ‘16

J ‘16

F ‘16

D ‘15

N ‘15

O ‘15

S ‘15

A ‘15

J ‘15

A ‘15

M ‘15

F ‘15

J ‘15

D ‘14

N ‘14

O ‘14

S ‘14

A‘14

J ‘14

Source: customs data

NATURAL GAS: The US Henry Hub spot price traded at $2.59 per MMBTU in June 2016, up steeply by 34.9 percent as compared to May 2016 and down

6.8 percent as compared to June 2015’s price of $2.78 per MMBTU. Price in Europe increased 2.5 percent MoM, reaching $4.10 per MMBTU in June 2016.

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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) Country

Apr 2016

MoM (%)

YoY (%)

YTD

YTD %

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.

PETCOKE - GLOBAL EXPORT PRICES (USD/ton) 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 (%)

Apr 2016

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

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cement market and competition

arket and competition

Indian cement sector expects strong results for 1Q2017

The Indian cement sector is expected to grow around 10 percent yearon-year, during the first quarter of fiscal year 2017. A sharp increase in prices will combine with lower power and fuel costs to help cement companies achieving strong earnings. Companies with more activity in the North like JK Lakshmi, JK Cement, Heidelberg, Prism Cement, and Shree Cement will benefit the most. Cement prices have increased sharply given the expectations of a favorable monsoon, especially in north regions, where prices hiked 10 percent quarter-on-quarter. In Mumbai prices went from INR 265-270 to INR 300 per bag, while in Gujarat they went from INR 260-270 to INR 280285 per bag. Across the country, prices for a cement bag went up by INR 14 per bag quarter-on-quarter. For nationallevel players, Ambuja Cement is expected to improve its realizations, increasing its position compared to its competitors ACC and Ultratech.

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Cement sector hopes for gov't investment

Dalmia Cement expects demand for cement to increase following federal investments on roads and affordable housing. India has the installed capacity to produce 360 million tons of cement but consumed only 270 million tons in the last fiscal year. Dalmia Cement hopes that government schemes like Swachh Bharat Mission will boost cement consumption in the country. During the first five months of 2016,

cement demand increased by 3.8 percent year-on-year. The real estate sector is not bringing real growth and the demand increase is being supported mainly by the state. About 60% of the country's cement consumption comes from housing, with infrastructure and new manufacturing facilities each contributing 20%. This year, Dalmia Bharat Group predicts a turnover of INR 8,000 crore, up from INR 6,700 in 2015, with cement accounting for over 80 percent of that.

Cement demand to grow in India during FY2017 Cement demand isforecasted to increase by 6 percent during fiscal year 201617, compared to 5 percent in 2015-16. Renewed demand from the infrastructure sector and predictions of a better monsoon season are the main reason behind the improved growth. Prices are also expected to go up, especially in the northern and eastern states. Prices in the north have already increased, from INR 225-240 per 50-kilogram bag in the first three months of 2016, to INR 305-335

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

per bag in April-June. In the east prices were around INR 315 per bag in the last quarter, while the west prices stayed in the INR 260-265 per bag range.

Cement makers to benefit from government contracts Base bids for cement sales to the Indian government are now closer to the market value. Cement has been sold to government projects at a bulk procurement discount, resulting in lower margins for cement makers.

Fly ash use, mandatory in India The state of Maharashtra has made it mandatory for all new buildings to be constructed using material containing fly ash. The authorities aim to dispose of the entire quantity produced across the state, without causing environment pollution or any health hazards. “We have made it compulsory for all new construction in the vicinity of 300 kilometers of any power plant in the

state to use building construction material having fly ash. Considering Maharashtra’s area and the location of power plants, this will cover the entire state,” said a senior official with the state public works department. He added that “The new decision will enable Maharashtra to become completely free of fly ash.” The state produces three million tons of fly ash every year, of which only about 60 percent is used.

The government also set fixed prices for new road projects for three years. Prices were now allowed to hike by 10 percent, approximating them to the market price. Large cement makers have committed 3 percent of the total capacity for state projects. UltraTech is reportedly the highest bidder in new road projects, but others like Shree, JK Lakshmi, JSW, Lafarge, and Century among some smaller players in the South are presenting more competitive bids.

Kerala cement dealers unhappy with market conditions In the Indian state of Kerala, cement dealers are protesting against manufacturers by failing to unload cement in the city of Kochi. Dealers accuse companies of not paying them the difference in the billing and selling price of the product. Losses by the dealer, when selling according to the market trend, are usually supported by cement manufacturers through letters of credit. According to the Kerala Cement

Dealers’ Association (KCDA), companies have not made these payments over the past 15 months. KCDA has 6,500 registered members, with an estimated 25,000 subdealers also taking part on the protest.

Positive outlook for Indian cement market

the first five months of 2016, as compared to the same period a year earlier. The cement sector recorded a growth of 4.4 percent in May 2015. The growth in the cement sector slowed due to lower oil and natural gas output, in 2016. Meanwhile, the production of cement fell by 2.4 percent in May 2016, as compared to the same period a earlier.

According to government data, the demand for cement is expected to reach 550-600 million tons a year, by 2025. Additionally, the cement companies are planning to invest in expanding their production capacity in a bid to improve profits. The allocation of government funds for several housing and infrastructure projects is expected to boost the demand for cement in the market. The country recorded a two percent decline in cement and other infrastructure sectors in

Kerala consumes around nine lakh ton of cement per month. The Ernakulam district, where Kochi is situated, consumes around 1.5 lakh ton per month.

Forecasts indicate that cement consumption will increase by 6 percent in the current fiscal year and by 7 percent during fiscal year 2018. Road and housing projects will

help growth to pick up. Perspectives of a good monsoon give hope for a recovery in the rural demand, during the second half of this fiscal year. Capacity utilization is expected to increase from 70 percent in FY2016, to 71 percent this year, and 75 percent in FY 2018. In the southern region, the cement sector can expect increased demand supported by the construction of a new capital for the Andhra Pradesh state and from several irrigation projects by the Telangana government. Capacity utilization is likely to remain at lower levels than in the North, West, and East states.

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cement M&A AND FINANCE

&A and finance

Birla acquisition of Reliance Cement assets completed by September

Indian company Birla Corp is planning to complete the acquisition of the entire cement business of Reliance Infrastructure. The regulatory clearances are expected to be completed by the second half of FY2016. “It is under implementation. Some (regulatory) compliance has to be done. We are in the process of addressing these. And once this compliance issues are resolved, then the closing can happen like any other deal,” said Harsh V. Lodha, Chairman of Birla Corp.

Jaiprakash Associates and UltraTech deal faces hurdles

India-based Jaipraskah Associates and UltraTech’s deal acquisition price has been revised after Jaiprakash’s Karnataka cement assets have been dropped from the deal, reports Hindustan Times.

under-construction capacities, which are part of the deal,” said an official from UltraTech Cement. The move is expected to help UltraTech Cement to explore the South Indian cement market.

Under the merger deal, UltraTech Cement has revised the price at which it will buy the cement division of Jaiprakash Associates to INR 15,900 crore from INR16,500 crore. “In addition to the INR 15,900 crore, UltraTech will pay INR 470 crore on the completion of Jaiprakash’s

India: Positive outlook for Birla Corp

The acquisition is expected to provide the company ownership of modern plants and take its total cement production capacity from 10 million tons per annum to 15.5 million tons per annum, strengthening its presence in the high growth central region of India. India-based Birla Corp expects cement sector to have a better demand in the current fiscal on the back of planned spending by the central government on various projects. "The demand for cement is expected to be better in financial year 2016-17 on the back of planned spending by the central government on various projects including highway

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infrastructure, railways, urban infrastructure, river-linking, increased government spending in Bihar and West Bengal post elections," said an official from the company. He added that “Over a five year period, cement demand is projected to increase 8-8.5 percent CAGR, led by continued growth in the housing and infrastructure sectors.”

Piramal Group and Nirma join the race for Lafarge India

India-based Piramal Group, Nirma and JSW Cement have joined the race to acquire Lafarge’s entire India cement assets.

Prism Cement to acquire stake in BLA Power India-based Prism Cement signed an agreement to acquire a stake of around 15.23 percent in BLA Power, for around INR 21 crore. The agreement covers for the purchase and consumption of 25 MW of round the clock power from BLA Power for its

cement plants at Satna, Madhya Pradesh under the Group Captive Arrangement under the Electricity Rules, 2005.

Other two companies including Mexico's Cemex and China's Anhui Conch Cement Company are the contenders for Lafarge's cement assets. In February 2016, LafargeHolcim had agreed to sell its 11 million tons per annum in India.

This agreement is expected to reduce the cost of cement production. Prism Cement is one of India’s leading integrated building materials companies, with a wide range of products from cement, ready-mixed concrete, tiles, bath products to kitchens.

Ambuja Cement posts increase in net profit

Ultratech expects to meet increasing demand in India

Ultratech expects cement demand in India to grow by around 7 percent during the fiscal year of 2017. Ultratech believes itself to be in a good position to meet the rise in demand coming from several governmental projects, including infrastructure development, housing, smart cities, and roads. For the quarter ending June 30, the company posted

Mumbai-based Ambuja Cement recorded a 77 percent increase in net profit, to INR 400 crore in the second quarter of 2016, as compared to the same period last year. The revenue increased slightly by two percent to INR 2,541.2 crore in the second quarter of 2016, as compared to the same period last year. Meanwhile, the EBITDA increased by 58 percent to INR

582 crore in the second quarter of 2016, as compared to the same period a year earlier. The company's cement sales volume fell 2 percent to 5.76 million tons in the June quarter. According to company officials, the energy cost was lower (down 27 percent) on account of low fuel prices and increased usage of petcoke at 60 percent aginst 40 percent last year.

a total income of INR 6,740.7 crore, compared to INR 6,440.9 crore in the same period last year. In the same quarter, Ultratech registered a 29-percent year-onyear increase on its net profit.

crore. The company also improved its sales by 4 percent, from INR 6,281 crore to INR 6,538 crore.

Ultratech Cement posts a net profit of INR 780 crore during the first quarter of the current fiscal year, ending June 30. Compared to the same quarter last year, Ultratech’s net profit has increased by 29 percent, from INR 604 crore to INR 780

In July 4, UltraTech amended its agreement with Jaiprakash Associates, agreeing to pay INR 16,189 crore for its 21.1 million tons per annum cement assets. This adjustments resulted on UltraTech paying an additional INR 289 crore for those assets.

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cement projects and expansions

rojects and expansions

Kesoram Industries to invest in cement business

West Bengal-based Kesoram Industries is investing around INR 6 billion in its cement and tire businesses. The company will invest around INR 2.5 billion to acquire the land near its cement plant Vasavdatte (Karnataka).

UltraTech Cement benefits from linkage auctions

Chhattisgarh. Both these locations are land locked and this helps the company in mitigating the impact of rising costs of petcoke/imported coal," said an official from the company.

The company also plans to participate in the future coal linkage auctions. "With these auctions, the company has secured in all, coal linkages for 409,500 tons for its plants located at Maharashtra and

The move is expected to have a positive impact on the company, as its cement plants are strategically located near the coal mines.

Indiaâ&#x20AC;&#x2122;s UltraTech Cement has secured 4.09 lakh tons of coal linkages for cement plant in Chattisgarh and Maharashtra regions.

The area will supply the raw materials required for cement production, reserves being expected to be sufficient for the next 20 years. The investment comes as the market analysts anticipated an increase in cement demand in the near future. The company will invest around INR 3.5 billion to develop its tire business, most of which being spent in the construction of a plant for radial passenger tires in Balasore (Orissa).

UltraTech Cement commissions new grinding unit in Bihar Iraq-based Qeshm Cement has exported around 160,000 tons of cement to several Asian and African countries. Meanwhile, the company has shipped a four thousandton cargo worth USD 160,000 to Somalia, which is likely to be reaching the destination by the next week. The company recorded a significant increase in production volumes of cement and clinker to 340,000 tons amounting to around USD 6 million. The cement company exported

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cement to several countries including Iraq, the UAE, Kuwait, Egypt, Tajikistan, Turkmenistan, Saudi Arabia.

Kerala High Court imposes restrictions on Malabar Cements

The Kerala High Court has restrained Malabar Cements cement unit in Cherthala to produce pozzolana cement (PPC) using ordinary portland cement (OPC).

Ambuja Cements concludes Sankrali project in West Bengal India-based Ambuja Cements announced the completion of its Sankrali project in West Bengal. The project, commissioned in 2001, has a capacity of 1.2 million tons per annum. The project included two ball mills of a 92 tons per hour capacity, two packers of a 180 tons per hour capacity, and a manual wagon loading system. The plant’s production capacity has increased steadily to 1.5 million tons per annum in 2010 and with the recent upgrade the capacity has reached 2.4 million tons. “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.

The company is not allowed to use BIS marks on their products as there was substantial variation in the production process approved by the BIS for PP cement. Meanwhile, the court has appointed an Advocate Commissioner to inspect the premises of the cement plant for the sealing the silo where the cements were stored.

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.

Dalmia Bharat may setup second cement plant in West Bengal Prism Cement signs an agreement with Eco Cement India-based Prism Cement has signed a supply agreement with Eco Cement. 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.

India-based Dalmia Bharat Cement may set up a second cement plant in the West Bengal region. The company has a cement plant in the Salboni region, West Bengal and also has taken a small cement grinding unit in Silliguri, on lease. The plant has a capacity of 0.3 million tons. The company carried out a debottlenecking exercise in the Salaboni cement plant, which has increased capacity from 1.35 million tons to 1.60 million tons.

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

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cement volume & pricing

olume and pricing

Higher cement prices worry builders Indian cement market witnessed a considerable increase in cement prices to over INR 400 per bag in the last few days. The hike in cement prices is worrying the builders who demand government interference to control the cement prices. According to a cement dealer in Kochi, the price had gone up because the companies had stopped giving the dealers any discount as had been the earlier practice. The companies had not raised the invoice price. An official from the Kochi branch of the Confederation of Real Estate Developersâ&#x20AC;&#x2122; Association of India said that the association had not met any government officials so far on the issue and was watching the price situation. The cement dealers also clarified that the cement companies have a free run, as there is no alternative, because the production at Malabar Cement is quite uncertain.

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Cement prices increase in Kerala The Government Contractors' Association (GCA) expressed concerns over the increase in cement prices, in the range of INR 420 to INR 430 for a 50 kg cement bag in the market. The same cement bags are supplied to large builders in Tamil Nadu in the price range of INR 120 to INR 140 per bag.

"Larger companies and state government of Tamil Nadu enter into 'annual contracts' with the cement manufacturers agreeing to purchase a stipulated quantity every year, which prompts manufacturers to offer better rates to these buyers," said Varghese Kannampally, state president of GCA. The Kerala government has not signed any agreement with cement manufacturers. The higher cost of construction may offset the profit earnings from the cement sales.

Pakistan records rise in cement exports to India

The Pakistani cement sector witnessed around 42.5 percent increase in cement exports to 992,631 tons in the fiscal year 2015-16, as compared to 696,417 tons in the same period last year. However, the cement export to Afghanistan fell by 15 percent and cement shipments fell by 32 percent in the reported period. The additional excise duty imposed in federal budget 2016-17 might dampen the construction activities. The industry circles opine that there is no need to increase the tax as cement is already the most heavily taxed commodity in Pakistan. They also fear that new rules may increase the quantity of Iranian cement imported illegally in the country.

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Sagar Cements to acquire cement grinding unit of Toshali Cement

Coal India to benefit from higher benchmark prices The price of FOB Kalimantan 4,200 kcal/kg GAR coal, a popular grade among both Indian and Chinese buyers, has increased by 11 percent since the beginning of 2016. In the same period, the price of FOB Newcastle 5,500 kcal/ kg NAR coal went up by 22.5 percent

and the FOB Richards Bay 5,500 kcal/kg NAR coal jumped by 26.6 percent. Given this higher benchmark price, Coal India expects to improve the realizations from its e-auctions, which normally follow the general global price trend. During this June, Coal India had a larger output and sales, with an yearon-year increase of 10 percent and 6.6 percent, respectively.

India-based Sagar Cements will acquire entire assets of the 181,500 tons per annum grinding unit, in Andhara Pradesh, from Toshali Cement for INR 60 crore. The transaction is subject to regulatory approval from authorities. The company plans to increase the capacity of the said unit to 300,000 tons per annum by optimizing the equipment already available with the company by infusion of funds to the extent of around INR 6 crore. The acquisition of assets will help in saving logistic costs and introduce slag cement to fulfill the demand of Visakhapatnam, Vizianagaram, Srikakulam and parts of Orissa makets.

Cement production increases in India in June Cement production in India increased by 10.3 percent during June. This monthly growth is the largest since March 2016, when output went up by 11.89 percent. In June last year, the sector grew by a mere 2.9 percent. Cement demand will likely

be affected by the incoming monsoon. Growth in the cement sector contributed to a 5.2-percent jump in the eight core sectors of the Indian economy, which are coal, cement, crude oil, natural gas, refinery products, fertilizers, and steel.

India needs large investment to reach FY2020 objective value accounts both for the investment need in the coal mining sector to increase production and for the coal-dependent sectors like power, steel, and cement to absorb the increased supply. The 1.5-billion

target also requires the government to take a series of measures including smoothing land acquisition, improve infrastructures and water availability, and developing new skill to enhance efficiency.

Coal production goes up in India

Coal production in India increased by 12 percent year-on-year during June. Coal is part of Indiaâ&#x20AC;&#x2122;s core sectors, an index that consists of coal, crude oil, natural gas, refinery products, fertilizers, steel, cement and electricity. The eight sectors grew yearon-year by 3.1 percent in June and by 5.4 percent during the first quarter of this fiscal year. During the first quarter of this fiscal year, coal production went up by 5 percent year-on-year. Among the eight core sectors, coal was the fourth fastergrowing industry, followed by cement (5.7 percent), refinery products (7.1 percent), and electricity (9 percent).

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cement PEOPLE

eople

Parth Jindal appointed MD of JSW Cement

Parth Jindal, son of the chairman of the JSW Group, has been appointed as managing director of JSW Cement. The Hindu reports that Mr. Jindal, who has worked as an economic analyst for JSW Steel, has already taken an interest in the cement business, persuading the group to invest INR8bn (US$120m) to build a grinding unit at a new integrated steel plant. JSW Cement Limited is a subsidiary of the 11 billion dollars JSW Group based in Mumbai. The company has three Cement production units, two grinding units in Vijayanagar, adjacent to JSW Steel plant near Bellary, Karnataka and Dolvi Maharashtra, as well as an integrated Cement plant in Nandyal Andhra Pradesh.The units have a combined capacity of 6 million tons per year.

Zuari Cement gets new MD as part of Italcementi acquisition

Jamshed Naval Cooper, formerly CEO and managing director of HeidelbergCement India Ltd (HCIL), is to become managing director of Zuari Cement and managing director of HCIL. Mr Cooper, who previously worked for ACC before joining HCIL in 2006, will now be responsible for managing the affairs of both companies. Zuari Cement is an Italcementi subsidiary and the appointment of an HCIL executive as managing director reflects the changes brought about by HeidelbergCement’s acquisition of its parent. Zuari Cement is

LafargeHolcim announces changes to the Executive Committee, with impact on Indian operations LafargeHolcim announced changes to its Executive Committee reflecting the evolution of the portfolio, following recent divestments and a transition to the next phase for the company, as it closes the integration phase. As such, Martin Kriegner, currently responsible for India, will join the Executive Committee and take additional responsibility for South East Asia. Oliver Osswald, currently responsible for operations in Argentina, will join the Executive Committee with responsibility for Central and South America. Pascal Casanova, currently responsible for the Latin America Region, will take

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one of the leading cement producers in South India. A fully owned subsidiary of the Italcementi Group, the company has grown from a 0.5 million ton capacity in 1995 to above 6MnT in 2013. Zuari entered the Cement business to operate the Texmaco Cement Plant in 1994. The company became a 100% subsidiary of Italcementi Group in 2006.

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

responsibility for North America including Mexico. Roland Köhler, currently responsible for the Europe Region will add Australia, New Zealand and Trading to his responsibilities. Furthermore, the company also announced that Alain Bourguignon and Ian Thackwray have decided to pursue new opportunities outside the group. “I am happy to welcome Martin and Oliver as new members of the Executive Committee. Together with Pascal and Roland they bring valuable combined experience in retail, commercial transformation and performance management. They will be key assets for the new team,” said Eric Olsen, Chief Executive Officer.

cementnews

egional news LafargeHolcim divests Lafarge Cement China

Nepal: Local cement companies to expand operations Nepal-based cement companies have begun to expand their activities in a bid to capture major market share. The proposed entry of foreign cement companies has led to capacity expansion activities amongst the local cement companies. Several cement companies including Dangote Cement, Hongshi and Huaxin Cement and Reliance cement have received approval for investment of around USD 1.45 billion together and proposed output of around 22,000 tons daily. “Almost all the local factories were on an expansion drive currently, and that one of the reasons behind the move was to benefit from economies of scale and be competitive amid the massive foreign investment

in the sector,” said Dhruba Thapa, President of Cement Manufacturers Association of Nepal. However, the local cement producers claim that they fulfill 80 percent of the demand of the country’s requirement with a capacity utilization of 50-60 percent. On the other hand, the foreign players claim that unexplored potential demand for cement in Nepal as infrastructure development is anticipated on a massive scale in the country.

LafargeHolcim completed the sale of Lafarge Cement China for CHF 208 million to Huaxin Cement. The company will continue to focus on streamlining its activities in China. Additionally, LarfargeCement owns a 41.8 percent interest in Huaxin Cement. The scope of sale includes four cement plants and 13 crushing units located in the provinces of Yunnan, Chongqing and Guizhou, with an annual capacity of 18 million tons of cement. The move is a part of the company’s divestment program of CHF 3.5 billion, which is expected to be closed by the end of this year.

Pakistan to raise duties on retail cement In Pakistan, the price of a 50-kilogram cement bag is expected to rise by PKR 34 per unit. The hike is a direct consequence of an increase on the excise duty. The duty is currently charged at a 5-percent rate of the retail price, but now the government wants to impose a fixed rate of PKR 1 per kilogram. Pakistani manufacturers are not happy with the

measure, fearing decreased demand and tougher competition from Iranian cement importers. The All-Pakistan Cement Manufacturers Association says that the sector is already dealing with falling exports: between July 2015 and May 2016, Pakistani cement exports fell by 17 percent year-on-year, to 5.48 million tons. The cement sector is now more dependent on domestic consumption, which actually

increased during those 11 months to 30.03 million tons, from 25.49 million tons in the same period 2014-15.

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

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cement news Anhui Conch Cement inaugurates Myanmar cement plant

Nepal: Bhairahawa’s expansion rests on new power lines Nepal’s Bhairahawa cement hub’s expansion plans are dependent on the installation of new power lines. Several cement plants in the region have halted production due to a crippling power crisis in the country as the plants are unable to utilize their installed capacity.As Bhairahawa lies near the ancient site of Lumbini,

government policy bans the operation of factories within a 15 km radius of the holy site. Meanwhile, the several cement companies have stalled their expansion plans as the environmental rules do not permit the expansion. However, the region is expected to get a power transmission line of 132 KVA and an additional 200 MW will be transmitted to the Lumbini Industrial Corridor in the near future. The new power lines are expected to minimize the power issues in the region.

Chinese cement manufacturer Anhui Conch Cement inaugurated its Myanmar cement plant this week. The cement plant has a production capacity of five thousand tons of cement and clinker. The company received permits for the cement plant November 13, 2014. The construction of a new cement plant was completed in 14 months. The new cement plant is expected to fulfill the local market demand for cement.

Pakistan expects decline in cement sales The Pakistani cement sector is likely to witness a four percent decline in cement sales to around 2.2 million in July 2016. The slower construction activities and fewer working days are likely to reduce the cement sales. On a month on month basis, the total sales are expected to decline by 35 percent. Local dispatches during July 2016 are expected to record a decline of around 3.0 percent YoY to 1.7 million tons. “Export demands for Afghanistan are likely to decline by around 21 percent, which accounts for around 32 percent of the total exports, while dispatches through sea (38

percent of total exports) are expected to fall by 31 percent YoY,” said Nabeel Khursheed, a market analyst. He added, “This is on the back of the presence of Iranian cement in Afghanistan and lower dispatches to South African markets.” As per Pakistan Bureau of Statistics (PBS), the retail cement prices were in the range of PKR 536-555 per bag in the north and PKR 566-580 per bag in the south region, with average of PKR 555 per bag across Pakistan, during July 2016. In June 2016, the cement producers raised cement prices by around seven percent (PKR 35 per bag) to pass on the Budget FY17 impact on consumers.

Pakistan may witness illegal cement imports from Iran The recent increase in federal excise duty in Pakistan is likely to illegal entry of Iranian cement into Pakistan through under-invoicing and smuggling. The increase in excise duty has caused the retail price of cement to rise as high as PKR 1000 per ton. The proposed change will encourage the illegal trade in the form of smuggling of cement. The impact of this increase calculates to PKR 34 per bag,” said spokesman of All Pakistan Cement Manufacturers Association (APCMA). The higher cement prices are expected to have a negative impact on the cement consumption of the region.

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INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

orders & equipment highlights

rders & equipment

Shree Cement wins coal linkage for cement plant

India’s Shree Cement has won coal linkages for its Chhattisgarh cement plant in a coal linkage auction. The company had participated in the auction for coal linkages from south eastern coalfields for the cement sector and won the linkage in the state of Chhattisgarh, India. Headquartered in Rajasthan, Shree Cement is recognized as one of the most efficient and environment friendly company in the global cement industry. It was founded in Beawar in the Ajmer district of Rajasthan in the year 1979 and, now headquartered in Kolkata, is one of the biggest cement makers in Northern India. The company has a production capacity of 25.6 million tons. Since 2006, it has more than quadrupled its production capacity both by expanding into new areas and increasing the capacities of the existing plants.

Loesche to supply Hindupur grinding plant Sri Balaha Chemicals has placed an order for a vertical roller mill designed by Loesche for their Hindupur grinding plant at Andhra Pradesh, India. The mill designed for grinding granulated blast furnace slag will produce at a capacity of 50 t/h and the material is ground to a fineness of 4,000 cm²/g Blaine. Additional equipment is included in the contract, such as a mill fan, dampers, expansion joints, a magnetic separator and a metal detector. The lead time for the main components of the mill is 10 months. The same mill type is operating successfully in the Indian cement plant at Bhavanipuram since 2001. Loesche India has sold over 100 vertical roller mills for the grinding of raw material, coal, and cement to various clients in the country.

Loesche is an owner-managed engineering company founded in Berlin in 1906 and currently based in Düsseldorf, Germany that designs, manufactures and services vertical roller mills for grinding of coal, cement raw materials, granulated slag, industrial minerals and ores. Currently, more than 400 people are working for Loesche in Germany and around 850 are employed worldwide. In addition to its new subsidiary in Indonesia, Loesche has operations in Brazil, China, India, Russia, South Africa, Nigeria, Spain, United Arab Emirates, United Kingdom and USA, and it is represented by agents in more than 30 countries.

Pakistan: Fauji Cement temporarily halts operations Pakistan-based Fauji Cement (FCCL) has temporarily halted the operations at their cement plant. The 25,000 tons capacity raw material silo collapsed and also damaged the coal mill building of the plant's 7200 tons per day clinker production Line 2, requiring the closure 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

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CONSTRUCTION BUILDING MATERIALS BY BMWEEK.COM

onstruction & building materials by bmweek.com

India: NTPC opens ash brick unit

In India, National Thermal Power Corporation Limited (NTPC) Ramagundam announced the opening of a mega ash brick unit. Executive Director Prasant Kumar Mohapatra said that this is part of the company's mission of achieving 100 percent utilization of ash of the power station, as well as meet the requirement in the construction sector.

Fly ash use, mandatory in India

In India, the state of Maharashtra has made it mandatory for all new buildings to be constructed using material containing fly ash. The authorities aim to dispose of the entire quantity produced across the state, without causing environment pollution or any health hazards. “We have made it compulsory for all new construction in the vicinity of 300

kilometres of any power plant in the state to use building construction material having fly ash. Considering Maharashtra’s area and the location of power plants, this will cover the entire state,” said a senior official with the state public works department. He added that “The new decision will enable Maharashtra to become completely free of fly ash.” The state produces three million tons of fly ash every year, of which only about 60 percent is used.

Currently, NTPC Ramagundam utilizes 89.22 percent of ash, figures relating to the last financial year. Mr. Mohapatra said that they had utilized 87.98 per cent of ash during this financial year till date.

Malaysia's CIDB to invest in India The Malaysian Construction Industry Development Board (CIDB) will invest Rs 10000 crore in the infrastructure sector in the Indian state of Telangana. IT and Industries Minister KT Rama Rao met CIDB, CEO Abdul Latif Hitam in Kuala Lumpur and discussed the opportunities in the infrastructure sector in Telangana. A delegation from the CIDB will tour the state of Telangana

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INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

in order to consider the projects start up in the state.

Fly ash units installed in Bokaro

In Bokaro, India, thermal power plants are installing fly ash units. Two of the four power plants in the district have already installed units that produce fly ash bricks, for the sustainable utilization of industrial waste.

Fly ash to be used for Indian highway In India, a 71km long National Highway-12, from Simga-KawardhaChilpi- linking Chhattisgarh and Madhya Pradesh- will use eco-friendly construction methods. "Total project cost is Rs 280 crore and about Rs 190 crore has already been

spent on construction of two-lane pavement. Very few trees have been cut for the construction of this road. Besides, the government will be planting three times more trees than those felled for the road to build a green cover," said NHDP chief engineer KK Pipri.

"We will supply bricks to BSL and use it for construction in our plant. We have not decided whether to sell the bricks in the open market," said a Bokaro Power Supply Company (BPSCL) employee. The largest power plant in the district, Chandrapura Thermal Power Plant (CTPS), also has a fly ash brick unit installed.

No river sand is being used for construction while another key ingredient used is fly ash.

Indian construction industry to increase use of steel In India, the construction industry is pressed to increase the use of local steel to accelerate the development of commercial and residential complexes, while retaining the indigenous cultural appearances. â&#x20AC;&#x153;A shift from the concrete-based conventional method of constructing

buildings to steel structures will half the completion time to two years,â&#x20AC;? said Jacob Jose, Director at Bengaluru-based Methods (India). Architect A R Saiju Mohamed added that "[we should] not harm the diversity of India. Let us preserve the culture."

Indian power plants to supply free fly-ash In India, the Maharashtra Pollution Control Board (MPCB) asked all power generation companies to supply fly-ash free of chargewithin 300 km radius of their plants, reports Nyoooz. All local generators were invited to file an affidavit in this regard and send it to MPCB head office.This follows the

directives of National Green Tribunal (NGT), Western Zone bench, according to regional officer Nagesh Lohalkar. NGT had apparently issued the directive on fly-ash because the disposal of the byproduct is becoming a major problem. The hearing on this issue is scheduled on July 13.

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

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PETCOKE PRODUCTION, SHIPPING AND PRICING BY PETCOKEWEEK.COM

etcoke production, shipping and pricing by petcokeweek.com

India to increase coking coal imports in 2016

India expects to import 50 million tons of coking coal during 2016. This figure represents a 14 percent increase compared to the 43.5 million imported during 2015. Two-thirds of steel production in India relies on imported coking coal.

Indian cement maker to stop using petcoke as fuel source

In a recent interview, a spokeswoman for Sanghi Industries talked about the companyâ&#x20AC;&#x2122;s debt and changes necessary to the company to pay it off, one of which will be switching their fuel source. According to Bina Engineer, director of Sanghi Industries, the company was able

to bring prices down by blending petcoke with other fuel sources, but once the stock runs out in September, the company will likely switch fuels entirely. "Clearly, the petroleum coke prices have gone up by almost 40-50 percent. So, we have not planned any petroleum coke purchase in immediate future," said Engineer. Sanghi Industries has a debt of INR 400 crore, which Engineer claims the company will be pay off in the next 3 to 4 years.

By 2025, India will have a crude steel production capacity of 300 million tons, up from the current 100 million tons. Dependency on foreign coking coal is expected to increase in order to support the ballooning steel production. India is already responsible for 15.8 percent of all the coking coal imported in the world. Coking coal have been falling since 2008, but are now experience an uptick given increasing demand and production cuts.

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HMEL to convert power plant to petcoke HMEL plans to undergo maintenance works at its Bathinda refinery located in northern Punjab, in India, seeking to convert its captive power plant to be fueled by petcoke. Currently, the refinery runs on diesel and gas. During the maintenance, scheduled to start mid-March 2017 and to last 40 days, secondary units such as the delayed coking and the fluid catalytic cracker will also be temporarily shut down. The works will also expand the current capacity of 180,000 barrels per day of the

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

refinery unit by a quarter, and increase the processing ability of several of its facilities, such as the crude distillation unit. The construction of a bitumen blowing unit is also scheduled for this period.

Higher petcoke prices likely to boost coal sales The increase in petcoke and international coal prices could benefit Coal India.

Shree Cement posts first quarter results India-based Shree Cement recorded an increase in standalone net profit to INR 269.2 crore in the first quarter of FY17, as compared to INR 508.14 crore in the same period last year. The sales volume increased by 19 percent to 5.17 million tons in first quarter of FY17, as compared to the same period last year. The revenue increased by 51 percent in the reported period. Meanwhile, the

EBITDA margin increased from 23.03 percent to 33.58 percent on a year on year basis. The EBITDA increased due to a sharp decline in power and fuel costs. Meanwhile, the company is focusing on increasing its capacities. It also plans to setup an integrated plant with clinker capacity of 2.4 million tons per annum and cement grinding unit of up to 4 million ton per annum in Karnataka and boosting clinker capacity of its plant at Baloda Bazar, Raipur, by 2.8 million tons per annum.

Petcoke prices increased by 73 percent since January, standing at USD 53 per ton at the beginning of the year and rising to USD 92 per ton by August. Imported coal prices of 6,000 GCV (gross calorific value) surged by 30 percent since the end of June, to USD 65 a ton presently. Coal India’s lower coal prices, at INR 3,000 (approx. USD 45) per ton, could boost domestic and international sales for the company. Some analysts suggest that the high petcoke prices could persuade some companies to switch back to high grade coal.

India plans environmental tax on petroleum coke Urged by state-owned Coal India, India’s coal ministry is asking the government to place an environmental tax on petcoke. According to Coal India, petcoke should be subject to the same federal taxes as coal, for which the environmental tax increased to INR 400 (approx. USD 6) per ton this year, boosting costs for companies and causing some to switch

to other, cheaper, fuel sources such as petcoke. Representatives of the company claimed this gave petcoke an unfair price advantage. Despite rising petcoke prices, the heatvalue basis for petcoke is still more competitive than that of coal. If taxed, petcoke demand could decline in favor of coal.

Petcoke gasification plant put on hold Essar Oils’ plans to build a petcoke gasification plant were put on hold after fuel prices lowered, reports the Economic Times. The gasification plant would develop the petcoke market in India by creating a new consumer, and also contribute to Syngas (synthetic gas) market development. Essar owns a delayed coker unit and produces

petcoke at its refinery. In the meantime, the company is planning to invest between USD 1 billion and USD 1.5 billion on a fluid catalytic cracker, with a capacity of up to 5 million tons a year. Essar produces mostly fuels such as gasoline and naphtha products, and plans on reducing its fuel exports to focus on the Indian domestic market.

Goa Carbon produced over 10,000 tons of petcoke in July

The two plants from Goa Carbon that produce calcined petroleum coke in India had an output of over 10,200 tons in the month of July, reports Live Mint. While the Bilaspur plant produced 200.5 metric tons of petcoke, the Paradeep plant produced little over 10,000 metric tons during the month of July. This number represents a decrease of just under 5,000 metric tons compared to the month June, when the company reported 15,000 metric tons of petroleum coke being produced.

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

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analyst recommendations India Cements Anand Rathi advises to hold on India Cements, with a target price of Rs 138.0. At the moment, the market price of India Cements Ltd. is 145.1. The analyst gave a time frame of one year, in which India Cements Ltd. price could

reach defined target. According to Mr. Anand Rathi Q1FY17 revenue slipped 2 percent year-on-year, while EBITDA rose 3 percent, when compared to the same period a year earlier, mainly due to a better performance. Mr. Rathi expects prices and volumes in the South to improve in H2.

UltraTech Cement, Heidelberg Cement Sudarshan Sukhani of s2analytics.com recommends buying Ultratech and Heidelberg stocks. “India Cements has already seen a very handsome rally including the one yesterday. It is possible to buy HeidelbergCement India and hold it. UltraTech Cement which is not in the smaller ones, but there also a long trade is possible,” said the investment analyst.

Sanghi Industries Mr. Mitesh Thacker of miteshthacker. com advises to buy Sanghi Industries stocks. “Sanghi has made a fresh 52week high, it has broken out of a good range of Rs 75 to about Rs 65 in the last three months and on a broader chart,

Reliance Securities Reliance Securities recommends buying JK Cement, with a target price of Rs 860.0. Currently, the market price of JK Cement Ltd. is 781.9. Time period given by analyst is year, when JK Cement Ltd. price can reach defined target.

bigger range of Rs 45 to Rs 75 has been broken. I would look at targets of around Rs 105-110 over here. Buy at current level, any dips to about Rs 78-77, add more and keep a stop loss below Rs 74,” said Mr. Thacker.

Reliance Infrastructure Rajat Bose of rajatkbose.com says that Reliance Infrastructure has shown uptrend, so far. “Put a stop loss below Rs 604 while Rs 615, Rs 619 and Rs 622 would be the targets. Normally, Reliance Infrastructure is a good momentum stock

Following the favorable demand and pricing scenario in Northern markets and also the expected pickup in demand, in the South, JKC's Grey Cement profitability will continue to remain strong, according to Reliance Securities.

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INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

but in a day like this, I don’t know whether that momentum will appear or not in the second half and especially when there is a possibility that Nifty may slide down rather than go up," said Mr. Bose.

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

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cw group 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 http://research.cwgrp.com/meetings

CW group meeting agenda include: September 28, 2016

Global Cement Outlook 2H2016

October 4-5, 2016

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

October 11, 2016

Global Cement Trade Prices 3Q 2016

October 19-20, 2016

Cement Business & Industry South Asia 2016

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Miami, USA

Cw research newest report:

Webinars

Conference

Webinars

Mumbai, India

Conference

World Oil Well Global Cement Cement & Outlook Trade Price Report 2Q2016 2016 Update

white cement Report 2016

May 2016

June 2016

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July 2016

BUZZ

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TOP BMWEEK STORIES activity 1. India: Maharastra looking to fine tune coal IRAN ash policy 2. 3.

India to make sand an 'essential' commodity Carmeuse starts calcium lime exports from Oman 4. Oman cement sector not struggling with oversupply 5. Fly ash use, mandatory in India 6. India: NTPC opens ash brick unit 7. BASF opens concrete admixtures plant in Sri Lanka 8. Researchers make bricks out of used cigarettes 9. Indian construction industry to increase use of steel 10. KPCL encourages the use of fly-ash in India

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