India Cement and Construction Materials journal (ICCM) 37

india A CemWeek Publication

issue 35

Cement

August / september 2017

& construction Materials

Leaders Q&A:

Vinita Singhania Managing Director of JK Lakshmi Cement CW Research

Trends in global cement and clinker pricing White Cement

The rise of a premium commodity Kuwaiti cement market

A public affair

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The information you need to make the right decisions.

The “Cement and Clinker Price Assessment� product series is a monthly price marker which offers prompt cargo (next 30-60 day deliveries) pricing insights, monthly updates for prices, cement market news and an overview of key developments that are crucial for those involved in the cement and clinker trade.

The monthly updates cover distinct price markers: Mediterranean Basin

Med Basin bulk Portland clinker and cement FOB

Persian Gulf & East Africa Arabian Sea and East Africa: Persian Gulf - Arabian Sea bulk Portland clinker and cement FOB East Africa bulk Portland cement CFR

PO Box 5263, Greenwich, CT 06831, USA sales@cwgrp.com

Cement and clinker price assessments

4

Leaders Q&A - Vinita Singhania, Managing Director of JK Lakshmi Cement

In an interview with the CEO Magazine, she talks about the company, what they have achieved so far, and perspectives for the future and innovation

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india

DEPARTMENTS

FEATURES

C W Research: Worldwide cement rates to increase in the third quarter

Trends in the pricing of cement and clinker (FOB and Ex-work) for the next quarter

2

& construction Materials

www.cemweek.com/india

Editorial Letter

rOBERT MADEIRA

Reborn from the ashes

Cement

cemweek publisher head of cw group research

3 numbers in brief

Prices and demand flounder in the eve of Supreme Court ruling

Luísa Azevedo

Research and Analytics 26 Cement Volumes 28 Cement Energy 46 Analysts Recommendations

Liviu Dinu Ana Margarida Meira

Latest Broker Recommendations

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10 CW Research: White cement growth to accelerate in the next five years

Editorial Coordinator

Raluca Cercel Ana Catarina Almeida Tea Vukicevic Sara Ruas Paulo Cruz Filipe Gouveia Margarida Cunha

A broad trend analysis of the white cement market in between 2012 and 2022

CONTRIBUTING WRITERS & RESEARCHERS

16 Feature: Fly ash: India’s great underused resource

DESIGN

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

India is one of the countries with the highest number of operating coal or lignite-based thermal power plants in the world

22 Country Snapshot: Kuwait cement market Supported by a solid amount of governmentsponsored projects, Kuwait’s cement consumption has increased continuously

24 Insight Analysis: India Petcoke CFR The Rise and fall The Indian petcoke market sets its hopes on future infrastructure projects, as environmental challenges keep pushing prices down

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cement

30 32 34 36 38 40 41 42 44

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letter from editor

Reborn from the ashes

art of the appeal of keeping up with the construction industry is to witness how slow but sure winds of change help shape it. Once vilified for its hazardousness, fly ash is gaining momentum in India. As public institutions acknowledge its strength and durability, by promoting its usage in several industries, ICCM traces the evolution of a material whose utilization rate rose from under 10% to 60% in just two decades.

Concurrently, the rising preference for white cement is not unneglectable. The popularity of the premium building material among developed economies’ has proven to be linked to its specialized applications and an increasing consumer purchasing power, a trend that is further illustrated in this 37th issue. By analyzing all the relevant figures concerning capacity, production, trade and consumption, CW Research unfolds this steadily growing correlation.

Meanwhile, gray cement continues to display conflicting trends concerning trade and prices around the world. This ICCM edition features a thorough assessment of cement and clinker FOB and ex-works prices in the past half year and a forecast for the coming quarter. Besides observing how rates have evolved across regional and domestic

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August/September 2017

markets, CW Research decodes demand and trade movements that influence those trends, along with external factors that help frame prices on a macroeconomic level.

Still generating heat, both in manufacturing plants and in the media, petcoke keeps roaming a winding road in India.

With a plausible environmental tax on the way, the anxiety felt in the domestic market is already reflecting on CFR prices, as examined further along in the magazine.

Regardless of the hindrances that may come along, the construction sector is known for its capability (or necessity) of reinventing itself. Whether the future is built with white or gray cement, and even if the golden days of petcoke seem to be burning out, the industry will slowly but surely find a way to rise again.

ROBERT MADEIRA

CEMWEEK PUBLISHER HEAD OF CW GROUP RESEARCH

India Cement and Construction Materials Journal

LuĂ­sa Azevedo

Editorial Coordinator

numbersin brief Green petcoke Prices and demand flounder in imports: the eve of Supreme Court ruling Monsoon, regulatory uncertainty pressure green petcoke volumes and pricing, yet discount to coal remains significant.

In July 2017, prices for imported green petcoke with a sulfur content above 5% were with 5% lower than those of May 2016. During the same month, green petcoke with a sulfur content lower than 5% underwent a 4.5% month-on-month price contraction.

India West Coast CFR coal-to-coke comparison (USD/ Btu)

$3

Richards Bay coal 5,500 kcal/kg NAR >5% petcoke

G8 grade domestic coal <5,200 kcal/kg <5% petcoke

Bhavnagar Lignite 4,500 kcal/kg

Source: CW Research

$2

$1

Mar '17

Apr '17

May '17

Jun '17

Jul '17

Compared to the average cost of burning Bhavnagar lignite, the cost of burning petcoke with a sulfur content above 5% is at a discount of 191%. On average, the cost of burning high sulfur petcoke is at a premium of 24.4 percent compared to burning coal, while the average cost of burning low sulfur petcoke is at a premium of 16.5 percent on a per unit of caloric value.

Monthly uncalcined petcoke imports by cement company (metric tons ) UltraTech Cement ACC

Dalmia Cement Ramco Cement

Shree Cement Ambuja

India Cements Other

Zuari Cement

Jun ‘17

Apr ‘17 Mar ‘17 10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Source: CW Research

May ‘17

Demand for petcoke remains subdued due to the monsoon season and due to companies still awaiting the final NGT ruling on the implications of petcoke burning. For the time being, industry players expect petcoke to be allowed in the cement and power industries, bar a few restrictions or compliance measures. As such, in June 2017 large cement manufacturers such as UltraTech, Dalmia Cement and Shree Cement significantly increased their share of imported petcoke, stocking ahead of the months when shipping will be burdened by the exporters’ unfavorable weather conditions.

India Cement and Construction Materials Journal

August/September 2017

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Leaders Q&A

Vice-Chairman and Managing Director

Vinita Singhania JK Lakshmi Cement For over ten years, Vinita Singhania has been leading JK Lakshmi Cement, proving her long experience in management within the cement business. In an interview with CEO Magazine, she talks about the company, what it has achieved so far, and perspectives for the future and innovation.

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India Cement and Construction Materials Journal

India Cement and Construction Materials Journal

August/September 2017

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Leaders Q&A

V

inita Singhania has been at the helm of the JK Lakshmi Cement since 2006 and has subsequently been known in the industry for her efforts to increase recognition of her company and for tripling the capacity of JK Lakshmi Cement (JKLC) in just three years. In addition, she is the first woman president of the Cement Manufacturers Association.

Growth of JK Lakshmi Cement

JK Lakshmi Cement launched in 1982 and is now operating state-of-the-art production facilities scattered across India, with locations including Durg, Chhattisgarh; Kalol, Gujarat; Jharli, Haryana; and the newly reopened Udaipur plant, Rajasthan – a relaunch after 14 years of closure.

The annual production capacity and annual turnover of the company have grown hugely since Singhania took over.

government projects and the demand for housing. For this reason, Vinita Singhania believes that JKLC should become a service provider and not just be a cement manufacturer. During her several years in the industry, Singhania has seen several changes in terms of cement grades available, use of RMC, technological advances and building standards. As she explains to CEO Magazine: "the cement industry has undergone a sea of changes in terms of building standards, consumer tastes and, ultimately, cement requirement in different varieties. Consumers today are more experienced, sometimes even more producers and their expectations combine with international standards”.

"

Currently, JKLC’s production is expected to reach 13 million tons

"

Cement industry is unstable and is often dependent on factors such as the economy,

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August/September 2017

India Cement and Construction Materials Journal

Currently, JKLC’s production is expected to reach 13 million tons, an impressive achievement that the Vice Chairman and Managing Director attributes to her constant concern with customer satisfaction. "That is our top priority at JK Lakshmi. We like our customers to feel proud and know that our brand is top notch. However, we have managed to keep so many of them with us since our inception 35 years ago. Us all these years because of the very strong core values we practice throughout our organization”.

Innovation is a priority

According to Vinita Singhania, one of the hallmarks of JK Lakshmi Cement is that it is constantly looking for innovative solutions, trying to outperform its competitors and at the same time strengthen its relationship with suppliers.

“We try to innovate and constantly outpace the competition, and our strong relationships with suppliers support that.

We encourage a one-on-one relationship with our suppliers and give them all the support we can. They are integrated into

our system, from when a project starts right to the very end".

With the increase in demand, the company, according to its Managing Director, is seeking to achieve a higher growth than in previous years. Vinita Singhania also expects production results to be bigger, especially in valueadded products such as ready-made concrete and autoclaved aerated.

JKLC committed to corporate social responsibility and sustainability One of JKLC's major concerns has always been the environment and social responsibility. The company has therefore committed itself to a number of local organizations and neighboring villages to provide help where necessary.

"

In 2016, JK Lakshmi produced about JKLC has always 7 million tons of cement and, with a maintained a strong stake in the Udaipur plant, the company corporate social was able to increase its total capacity to 13 million tons. The company is a responsibility to the pioneer in innovation, being the first community manufacturer of cement in North India to produce color bags. In addition, Vinita Singhania's company was one of the first Together with these commitments, JKLC cement companies to sell products over has several responsibilities, among which, the Internet and to have a presence on social networks.

"

transforming Sirohi's Industrial Training Institute into a center of excellence, which has contributed to placing more qualified people and students in companies that operate in the most diverse industrial areas.With JKLC behind some of Indiaâ&#x20AC;&#x2122;s most impressive structures, including Indira Gandhi Nahar Pariyojna, Sardar Sarovar Project, Golden Quadrilateral, Mundra and Kandla Ports, the company is continuing to make its mark on housing projects, roads and bridges, airports and factories.

Committed to keeping the company's standards high, JK Lakshmi Cement is setting new benchmarks in the cement industry in India and will be focused on the development of sustainable cement, equipment and technologies that enable the reduction of CO2 emissions.

India Cement and Construction Materials Journal

August/September 2017

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feature

CW Research

Worldwide Cement Rates to Increase in the Third Quarter ...

Trends in the pricing of cement and clinker (FOB and Ex-works) for the next quarter.

8

August/September 2017

India Cement and Construction Materials Journal

India Cement and Construction Materials Journal

August/September 2017

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feature

T

his article, based on CW Researchâ&#x20AC;&#x2122;s assessment of cement and clinker prices in the past half year and on its forecast for the coming quarter, explores the evolution of those prices across regional and domestic markets, including demand and trade movements that influence those trends. Although prices have been following a global trend of decline, their outlook changes widely from region to region, ranging from a significant increase in the Middle East to a fall in Western Europe.

Demand and trade movements

Last year, worldwide cement demand increased by two percent. CW Research considers that the cement market will remain stable and, in that way, grow at the same rate during 2017.

China, the largest consumer of cement in the world, is witnessing a slight growth in demand, as the domestic economy recovers and leads to higher spending in infrastructure and residential housing. Spain is also having its own recovery, with a yearto-date growth of nine percent, as the sector also benefits from housing infrastructure demand Other major markets growing in the first three to four months of 2017 include Pakistan, Argentina, Mexico, Canada, Japan, and the United States.

On the negative side, Brazil continues to suffer the impact of an unstable government, which results in low investment in infrastructure projects and uncertainty for the other segments. In the first quarter of 2017, demand in the country dropped by 10 percent year-on-year, leading the local association of cement producers to downgrade their forecast for the full year.

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Regional gray cement export prices (USD/ton) Asia Pacific Japan

Eastern Europe

Mediterranean Basin

North America & Caribbean

Scandinavia & Baltics

Western Europe

Middle East

120

90

60

30 Sep-16

Oct-16

Nov-16

Dec-16

Jan-17

Feb-17

Mar-17

Apr-17

May-17 Jun-17

Jul-17

Aug-17

Source: CW Research

In Saudi Arabia, the cement market has been under pressure from low oil pressures, responsible for lower government investment in infrastructure, which in turn leads to stiffer competition and accumulation of clinker stockpiles. This context will likely continue to push demand down in the country. Other markets with negative growth in demand include India, Turkey, and Colombia.

"In China, ex-works prices recovered by as much as 20 percent year-on-year in 1Q2017" In the second quarter of 2017, Turkey was the largest exporter of cement in the world, with a share of 16 percent of the global market (down by two percentage points

India Cement and Construction Materials Journal

year-on-year).

Thailandâ&#x20AC;&#x2122;s share, the second-largest exporter in the world, fell sharply by 27 percent yearon-year to 14 percent. Greece was the third-largest exporter with a market share of eight percent, followed by Taiwan, with a market share of six percent.

FOB Pricing in 1H2017 Globally, the FOB price of gray cement fell by three percent, or USD 2 per ton, year-on-year during the first quarter of this year, continuing its long-term falling trend. However, that trend shows signs of slowing down.

Sep-17

A rebound took place in the last two months of the first quarter, as the average price rose from USD 60 in March 2016 to USD 63 per ton in March 2017; while the top price fell from USD 170 to USD 152 per ton during that same period. In the same quarter, clinker FOB rates fell by seven percent, both quarter-on-quarter and year-on-year, and the global slag export price jumped 18 percent on a quarterly basis.

In the Mediterranean Basin, FOB prices for ordinary Portland cement bulk rose by 1.8 percent between April and July 2017, while falling by 4.2 percent on a yearly basis. Prices are growing slower because North African countries like Algeria are becoming more self-sufficient. Also, Turkey is increasing exports, compared to Portugal and Spain, thus having a greater impact on the index, whereas their FOB prices are lower. The country is focusing in new markets like the United States, Russia, and Latin America, while Spanish producers remain pressured by production costs, namely electricity tariffs.

On the other hand, FOB prices for ordinary grade clinker bulk improved by 13.4 percent in the same period. Demand is being sustained by West African economies, where integrated factories are absent and many new building grinding units are still under construction. Compared to July 2016, clinker prices in the region improved by 4.4 percent.

In the Persian Gulf, cement and clinker prices rose by just 0.3 percent and 1.6 percent, r e s p e c t i v e l y, in the period

Year to Date Cement demand growth (%) YTD (Mar-17)

YTD (Apr-17)

Pakistan Spain Argentina Mexico Canada China* Japan United States Colombia Turkey India* Brazil Saudi Arabia -20%

-15%

-10%

-5%

0%

5%

10%

15%

Note: *Cement demand estimated based on production volumes Source: CW Research

"Globally, the FOB price of gray cement fell by three percent" between April and July 2017. Year-on-year, those same prices decreased by 10.4 percent and 5.5 percent, respectively. Demand continues to fall in major regional markets, like Saudi Arabia, and producers are willing to undersell to keep utilization rates. In Iran, traders are still unable to sell cement in markets that demand letters of credit due to international sanctions, and expect the situation to continue that way for quarters to come. Many traders export just to keep their lines operating, which brings prices down.

In another major regional exporter, Pakistan, manufacturers were until now limited to shipping bagged cement. The opening of Port Muhammad Bin Qasim will allow them to access markets that demand larger volumes in bulk. However, the domestic market remains very healthy and producers tend to disregard exports to focus on internal buyers.

Going forward, CW Research believes that FOB gray cement prices will improve in most regions during the third quarter of this year, with the largest growth projected to be seen in the Middle East and North American & Caribbean.

By September this year, prices in the AsiaPacific-Japan region are expected to improve

by USD 0.7 per ton compared to June, to around USD 50 per ton. In the Middle East, prices will increase by USD 1.3 per ton; while in North America & Caribbean they will increase by 2 percent during the quarter to USD 90 per ton. In West Europe, the price of cement will fall by two percent between June and September, or USD 1.7 per ton.

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feature Ex-Works Pricing

In China, ex-work prices recovered by as much as 20 percent year-on-year in 1Q2017, thanks to improvements in the countryâ&#x20AC;&#x2122;s overall economy and demand for cement, and are now in the USD 3638 per ton range. In Brazil, the recover was slower, with an increase of four percent; while in Indonesia ex-work prices decreased by 18 percent.

In Europe, there is a clear east-west divide when it comes to ex-work cement prices. In the west, there was small recovery in quarter-on-quarter terms, while the year-on-year comparison shows more disappointing results. Italy may be an exception in the region, as cement manufacturers are seeing a fair

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increase in both demand and prices, with the latter scoring around USD 65 per ton. To the east, an increase

"In Europe, there is a clear east-west divide when it comes to exworks cement prices" in demand in Russia, Ukraine, and Kazakhstan supported a substantial hike in ex-work prices. In Russia, prices grew

India Cement and Construction Materials Journal

by eight percent quarter-on-quarter, and increases in other countries, like Poland and Ukraine, have already been announced.

In Egypt, different scenarios can be considered, whether one chooses to observe the market from inside or outside. Domestically, the devaluation of the Egyptian pound and the resulting inflation translate into an increase in ex-work prices. However, due to that same devaluation, prices in US dollars have continued to fall, as they have been doing since the first quarter of 2016.

Going forward, volatility will likely be lower, as Egyptâ&#x20AC;&#x2122;s currency stabilizes, with producers still dependent on the cost of fuel.

Both FOB and Ex-work cement prices have shown signs of recovery at the global level. Nevertheless, trends are very different from region to region, and even between singular domestic markets. As an example, muted demand from the infrastructure sector is a significant burden on Brazil and Saudi Arabia, while India and Spain benefit from an increase in expenditure in that sector.

Taking into consideration each of those peculiar markets, CW Research expects an improvement in prices across most of the worldâ&#x20AC;&#x2122;s regions, with more emphasis on the Middle East and North America & Caribbean, while forecasting price decreases only in Western Europe and the Mediterranean Basin.

About the report The Global Cement Trade Price Report (GCTPR) is CW Researchâ&#x20AC;&#x2122;s benchmark price assessment for monthly gray cement, white cement, clinker and granulated blast furnace slag prices and volumes. The 150+ page report, published on a quarterly basis, serves as the industry go to source for monthly price data for about 60 individual markets worldwide, including multiple cornerstone data series: import, export, ex-works and market prices. Additionally, the GCTPR includes extensive discussion of key playersâ&#x20AC;&#x2122; price strategies as well as trade price forecast and select trade volumes for each country.

The report also provides regional price indices as well as a quick review of trading dynamics and drivers in the different regions.

More information about the report can be found here: http://www.cwgrp. com/research/research-products/ product/1-global-cement-trade-pricereport

For more information and placing an order, please contact Liviu Dinu, Market Services & Marketing Consultant, CW Group (Europe), by phone at +40-744-67-44-11, or e-mail at ld@cwgrp.com.

India Cement and Construction Materials Journal

August/September 2017

13

Insight Analysis CW RESEARCH

White cement growth to accelerate in the next five years W Research has prepared an analysis on this commodity, which includes an extensive look into installed capacity, production, trade, and consumption trends across all global regions in the past, present, and future (2012-2022).

W Research has prepared an analysis on this commodity, which includes an extensive look into installed capacity, production, trade, and consumption trends across all global regions in the past, present, and future (2012-2022).

Capacity and Production The global average utilization rate in the white cement industry is currently at around 64 percent. Between 2012 and 2017, global white cement capacity grew by a CAGR of two percent, with Eastern Europe and CIS showing the largest increment.

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China remains the country with the largest worldwide capacity for white cement production, with a share of 25 percent of the total, followed by the Middle East, with eighteen percent. Actual production percentages differ slightly, with China achieving 27 percent while the Middle East stays at seventeen percent.

Western Europe is the leading exporting region in the world

India Cement and Construction Materials Journal

Since 2014, key mergers and acquisitions in the cement sector have been consolidating the international white cement market.

International Trade White cement tends to be produced in places that provide good access to raw materials and offer low production costs.

The main importing region is North America, with the United States absorbing large quantities of white cement from Canada and Mexico, and smaller quantities from China, Europe, Turkey, and Egypt.

At the global level, white cement is overwhelmingly traded via sea routes, which account for 93 percent of all internationally freighted volume. The remaining seven percent is carried through land.

World white cement production - 2017E (mn tons)

North America Latin America

Consumption

E Europe & CIS

Between 2012 and 2017, worldwide white cement consumption increased by a CAGR of 1.2 percent.

Western Europe Africa Asia ex-China Middle East China 5%

10%

15%

20%

25%

In the Middle East, demand is expected to recover by 2022

30%

Figure 1 Source: CW Research

In the Middle East, most of the trade is done within the region. New additions in capacity are expected to turn the flow of imports towards a more interregional pattern; however, those are still dependent on a recovery in oil prices, a main driver for investments in the region. Turkey is the main exporter in the Middle East and is expected to consolidate its position, with additional capacity planned for the near future.

Meanwhile, in Brazil, the construction of new production lines will provide for self-sufficiency, thus reducing the need for imports from countries like Mexico. This will return Latin America to its traditional status of net exporter.

Western Europe is the leading exporting region in the world, with Eastern Europe and CIS trailing ever closer. Spain and Denmark command a large part of the exports from inside Western Europe, with their destination being mainly other European countries and the United States, and, to a less extent, Africa and Latin America.

During that period, consumption of white cement rose faster in North America, where demand escalated by eight percent in the United States alone, and in Latin America, with Mexicoâ&#x20AC;&#x2122;s intake jumping thirteen percent.

In Saudi Arabia alone, white cement demand decreased by five percent over the last five years, while in Egypt it came down by four percent.

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Insight Analysis About the report

Regional growth between 2017-2022 (mn tons)

2022F

North America Latin America E Europe & CIS

2017E

Western Europe Africa Asia ex-China Middle East

2012

China Figure 2 Source: CW Research

In 2017, China will continue to be the largest consumer of white cement, with a total global market share of 27 percent.

It is followed by the Middle East with 19 percent, and Asia excepting China with thirteen percent, Western Europe with eleven percent, Africa with ten percent, North America with nine percent, Latin America with seven percent, and Eastern Europe and CIS countries with six percent.

In 2017, CW Research projects masonry will continue to absorb the largest amount of white cement, with a share of 62 percent, followed by architectural precast, with 31 percent, and pool coating, with just three percent.

White cement use in masonry is more prevalent in Africa, where the segment represents around 80 percent of total demand. Western Europe and North America are the only two regions where architectural precast dominates over masonry in terms of white cement use.

For the period between 2017 and 2022, CW Research forecasts a worldwide CAGR growth of three percent on

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white cement consumption. The Asia except China region will be the fastest growing consumer, with India alone contributing with a CAGR of eight percent. China’s booming construction will also contribute with a steady rise on demand, notwithstanding the risk of a new deceleration in that sector, similar to that of 2016.

In the Middle East, demand is expected to recover by 2022. However, its CAGR will be slower than the global average, as geopolitical conditions will continue to be a burden on local markets. Eastern Europe will likely show the poorest regional performance, given that local economies have reached their maturity and GDPs are now growing much slower.

White cement demand will accelerate in the next five years, with Asia except China leading growth. Although both additional capacity and consumption will be unevenly distributed among regions, their relative position in the white cement market will likely remain the same, with China leading by far on both fields, followed by the Middle East.

India Cement and Construction Materials Journal

CW Research’s Global White Cement Market and Trade Report (2017 update) examines the worldwide white cement industry and presents the latest market data which cover the 2007 – 2017 period, with a medium-term forecast until 2022.

The comprehensive report includes cement consumption and production figures, import and export data, as well as pricing trends and white cement capacity developments. Additionally, this datarich research product provides extensive quantitative information on consumption, usage segments, production, local prices, trade prices, type of handling, trading facilities and trade-flows, by region and major countries.

Furthermore, the report analyzes region specific user segments by white cement type and their main consumption drivers as well as perspective for 2022.

More information about the report can be found here: http://www.cwgrp. com/research/research-products/ product/200-Global-White-CementMarket-and-Trade-Report-2017update For more information and placing an order, please contact Liviu Dinu, Market Services & Marketing Consultant, CW Group (Europe), by phone at +40-744-67-44-11, or e-mail at ld@cwgrp.com.

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cement market forecast report and outlook

GLOBAL CEMENT VOLUME FORECAST REPORT The Global Cement Volume Forecast Report (GCVFR) is a twice-yearly, data-oriented forecast report, providing extensive details on the global outlook as well as key cement markets worldwide.

The benchmark report provides a five-year outlook on cement consumption, production, net-trade, cement production capacity and other key cement metrics that decision makers cannot live without. The GCVFR is built with investment-grade analytical rigor, informing industry professionals about what is expected around the corner for world cement markets. visit: http://goo.gl/eib8fE Our global presence: Greenwich (US) • Mumbai (IN) • Porto (PT) • Bucharest (RO) • Sao Paulo (BR)

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feature

Fly ash: Indiaâ&#x20AC;&#x2122;s great underused resource

The coal burning byproduct, once seen as a dangerous waste, could greatly benefit the building materials industry in India, as its use in cement and brick manufacture could not only bring production costs down, but also improve its carbon footprint.

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India Cement and Construction Materials Journal

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19

feature ndia is one of the countries with the highest number of operating coal or lignite-based thermal power plants in the world. Most of these plants use domestically sourced coal, which has a high content of ash (roughly 30 to 45 percent), leading to a high production of fly ash.

This ash was once considered hazardous and hard to manage, but in the last twenty years, India has done great strides in order to promote its usage across several industries. Despite these efforts, fly ash use remains suboptimal.

utilization in the country.

The concerted efforts have transformed fly ash, a byproduct created from the burning of coal, into a somewhat coveted asset used in the manufacture of several industrial materials, particularly in the construction industry, as well as in agriculture. In 1996-97, fly ash utilization reached 6.6 million tons, under 10 percent of the total production, but by 2015-16 it rose to a utilization rate of 60.9 percent, at 107.8 million tons.

Indiaâ&#x20AC;&#x2122;s fly ash generation should reach 300-400 million tons per year in the current fiscal

From waste to commodity In 1994, India created the Fly Ash Mission/Fly Ash Unit under the Central Governmentâ&#x20AC;&#x2122;s Ministry of Science and Technology, with the aim of developing new technologies for the gainful utilization and safe management of the ash. Just two years later, in 1996, the Central Electricity Authority started monitoring the use of its generation and

At the end of 20th century, fly ash was seen as a great threat to the communities surrounding the plants producing it, and it posed a problem to the utilities as well, as its disposal and containment were costly and had to comply with a set of environmental

Progressive Utilization of Fly Ash in Cement Manufacturing & concrete during the period 1998-99 to 2015-16

Total Fly Ash Utilization

120 100 80 60 40

Figure 1 Source: Central Electricity Authority

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2015-16

2014-15

2013-14

2012-13

2011-12

2010-11

2009-10

2008-09

2007-09

2006-07

2005-06

2004-05

2003-04

2002-03

2001-02

2000-01

1999-00

20

1998-99

Flyash Utilization (million tonne)

Utilization in cement industry & Concrete

Thermal Power Plant

rulings. In an effort to promote its disposal, the Indian government commissioned a Fly Ash Mission under the guard of the Department of Science and Technology, in 1994.

The Fly Ash Mission, now named Fly Ash Unit, was commissioned as a joint activity from the Department of Science and Technology, the Ministry of Power, and the Ministry of Environment and Forests in 1994. In March 2002, it was renamed the “Fly Ash Utilization Program” (FAUP), and has been known as the “Fly Ash Unit” since May 2007.

Most of the work that the Fly Ash Unit has undertaken is around the development and demonstration of technology, the dissemination of information, raising awareness, facilitation of multiplier effects, providing inputs for policy interventions, among others.

Through this work, the Fly Ash Unit has achieved a greater utilization rate of the resource, transforming it from a “hazardous waste material” to a precious resource whose trade is as valued as a commodity. Through the promotion of

fly ash as an asset to several industries, annual CO2 generation was reduced by 55 million tons, as was the use of several mineral resources.

Fly ash utilization rates were over 60 percent on 2015-16

The Fly Ash Unit has even served as a model to other countries, with Russia and India entering a bilateral agreement for the exchange of expertise and technology regarding fly ash management.

The government wants to ensure a rate of 100 percent utilization for all of the fly ash produced in India, having amended that

in 2009, from a previous notification first issued in 1999. This utilization rate is to be achieved in a phased manner throughout the country, but the government wants to ensure it by 31st December 2017.

Fly ash in cement, brick and concrete The use of fly ash in the manufacture of construction materials has been promoted from early on, particularly in the cement industry. Construction agencies within a prescribed radius of any thermal power station also have to guarantee its shipment and usage in building activities carried out in that area.

The government has also promoted the manufacture of Portland pozzolana cement with fly ash, which substitutes the costlier and limestone-based clinker. The use of fly ash reduces production costs, as well as CO2 emissions.

Fly ash is also used in the production of special bricks, as well as the construction of roads, highways and overpasses. During the production process for concrete, fly ash is sometimes utilized as a cement substitute.

India Cement and Construction Materials Journal

August/September 2017

21

feature When the Indian government started to compile information regarding fly ash production and consumption in the whole country at the end of the 1990â&#x20AC;&#x2122;s (1996-97), India produced around 68.9 million tons of fly ash, and consumed only 9.6 percent of its production, roughly 6.6 million tons.

14.5 percent in 2016-16. This corresponds to 15.6 million tons, and despite the rising trend, it has declined in the recent years, having peaked in 2012-13.

Use of fly ash in cement manufacturing reduces production costs and CO2 emissions

By 2009-10, the country achieved its highest fly ash utilization rate, at 62.6 percent. In that year, India generated 123.5 million tons of fly ash, and consumed 77.3 million tons.

In 2015-16, fly ash production declined from 184.1 million tons in 2014-15, reaching 176.7 million tons. This year recorded the largest volume of utilized petcoke since, at 107.8 million tons, or 60.9 percent of the total production.

In 1998-99, the cement industry utilized roughly 2.5 million tons of the total fly ash produced, a number that rose to 43.4 million tons during 2015-16. This number is stable when compared to the previous four years, with the exception of a small downturn in 2013-14.

Use of fly ash in the construction of roads, embankments and fly overs, as well as the raising of ash dykes has also risen from 1998-99, reaching a total utilization rate of

Fly ash is also a premium material for the manufacture of bricks, blocks, and tiles, absorbing around 13.7 percent of the total produced in 2015-16. Since 1998-99, volumes grew from 0.7 million tons to 14.8 million tons in 2015-16.

Fly ash use in 2015-16 At present, India has 151 coal or lignitebased thermal power stations that report their fly ash output. In fiscal year 2015-

16, these utilities produced around 176.7 million tons of fly ash from the consumed 536.6 tons of coal.

During this year, the Indian state of Talangana only consumed about 29.1 percent of its produced fly ash, about 2.9 million tons. On the other hand, the states of Delhi, Haryana, and Punjab achieved utilization rates above 100 percent. Delhi used 130.6 percent from its production of 0.5 million tons, while Haryana used 113.9 percent of it produced 5.0 million tons. In Punjab, 1.9 million tons of fly ash were produced, which were used at a rate of 108.9 percent.

The cement industry was the top consumer of fly ash, absorbing 24.5 percent (43.4 million tons) of the total production during the year of 201516. Roughly 39.0 percent of the total produced fly ash remained unused.

8.4 percent of the produced fly ash, equivalent to 14.8 million tons, was used to produce bricks and tiles, while 0.8 million tons (0.4 percent) were used in concrete production, and 5.0 million tons, or 2.8 percent, were utilized in the construction of roads and flyovers.

Evolution of Fly ash use since 1990's Cement Roads & flyovers

Mine Filling Agriculture

Bricks & Tiles Concrete

Reclamation of low lying area Hydro Power Sector Others

Figure 2 Source: Central Electricity Authority

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India Cement and Construction Materials Journal

Ash Dyke Raising Unutilized Fly Ash

Power Station

During this year, fly ash was also used to fill mines (5.9 percent), in agriculture (1.3 percent), and other uses, such as reclaiming low lying areas (7.1 percent)

a consumption of 1,050 tons of fly ash per day. Others are following suit, developing on-site production plants in order to minimize costs.

The road ahead

The cement industry is set to have a great contribution in the utilization of fly ash, with forecasts projecting an annual consumption of 177.5 million tons per year by 2050. Other considerations and studies about its feasibility in other areas, such as the polymer industry, are also underway.

It is expected that India will produce around 300 to 400 million tons of fly ash per year starting in 2016-17, which would difficult the achievement of the coveted 100 percent utilization rate.

However, recent efforts from power utilities in partnership with construction companies have been driving demand up and ensuring a safe, clean, and useful disposal of fly ash.

In 2012-13, Jindal Steel Power initiated production at its plants in Angul, Raigarh and Patratu, which together produce around 530,000 bricks per day, equating to

As India moves further into a market economy, its necessity for electrification of both industries and communities grows with it. Being one of the main producers of coal and lignite in the world, these commodities are the cheapest and most practical for utilities to generate power from.

With the increasing number of power plants relying on these fuels, India is set to become one of the largest producers of fly ash. But it is also an expanding economy with a set of industries that can absorb the consumption of the byproduct and turn it into added value tradable resources.

Although the fly ash utilization goal may be a challenge, some of the key industries which demand more fly ash, particularly cement, are still in expansion within the country. This, coupled with Indiaâ&#x20AC;&#x2122;s location and size, as well as its number of ports, could turn fly ash into an important export asset.

Not only that, but Indiaâ&#x20AC;&#x2122;s efforts on research toward a greener future through the reuse of fly ash make it so that the countryâ&#x20AC;&#x2122;s utilization rate may grow along with its output.

India Cement and Construction Materials Journal

August/September 2017

23

Country Snapshot: Kuwait CW RESEARCH

A Public Affair Over the last few years, the cement industry in Kuwait has registered a stable growth supported by government investment. upported by a solid amount of government-sponsored projects, Kuwait’s cement consumption has increased continuously. Notwithstanding domestic production limitations and external threats, public infrastructure programs and homeownership affordability point to a conservatively promising future.

The big leap The Kuwait Cement Market Report indicates the Kuwaiti cement industry has recorded a solid growth over the past few years. CW Research reports a robust rise of 18% CAGR between 2010 and 2016, an increment achieved through a combination of both domestic and international factors.

24

August/September 2017

Such a remarkable increase in cement consumption is mainly attributable to a strong pipeline of governmental infrastructure projects, founded through capital sourced from oil revenue.

Accounting for a significant portion of the government’s revenue, the oil sector is intimately intertwined with the cement market. After all, cement demand is highly correlated to government-sponsored infrastructure programs, which in turn are affected by oil price fluctuations.

The oil sector is intimately intertwined with the cement market

India Cement and Construction Materials Journal

The oil price decline registered in 2014 clearly illustrates this connection, having taken a toll on Kuwaiti government’s public investments. That, in turn, led to a 1.2% decrease in cement consumption in 2016. Even though consumption almost tripled from 2010 to 2016, domestic suppliers were not able to keep up with the surge. The domestic supplydemand dynamics is, thus, imbalanced, rendering the Kuwaiti cement market reliant on imports. After all, national production is limited to only two domestic manufacturers, Kuwait Cement Company and ACICO, with a significant share of cement in the market being imported in bags, either directly or as clinker for grinding through dedicated cement import terminals. A short domestic supply, coupled with lack of natural resources and a quickly rising demand, has fostered a market reliant on cement importers.

About the report

APPARENT CEMENT DEMAND AND PRODUCTION 2010-2021E (mn tons) 10

Apparent consumption

Cement production

5

2010

2011

2012

2013

2014

2015

2016E

2017E

2018E

2019E

2020E

2021E

Figure 1 Source: CW Research

The road ahead Despite the solid increase registered in cement consumption in Kuwait between 2010 and 2016, the cautious optimism currently surrounding the future international crude oil prices in OPEC countries prevents overly enthusiastic outlooks. Between 2017 and 2021, CW Research forecasts a cement demand increase of 2%.

A short domestic supply has fostered a market reliant on imports

The infrastructure sector outlook is moderately positive over the next few years, driven by Kuwaiti government’s numerous planned projects and increasing homeownership affordability.

Nevertheless, threats subsist, as the country’s undiversified GDP structure poses challenges to the capital necessary to invest in infrastructure expansion.

Overall, the future remains conservatively promising, as the slim forecast consumption growth is encouraging enough for cement manufacturers to add new capacity to the market. As a result, CW Research projects Kuwait will become less dependent on foreign-sourced cement.

The CW Group Research’s Cement Industry Country Report series meet the country-level cement market research needs of small and large businesses, analysts and governments.

The reports cover cement volume trends in detail, analyzing trade flows, cement demand and production (historical and outlook), per capita consumption, and the competitive landscape, including company profiles, cement production facility details, including past and announced brownfield production increases and greenfield projects. Cement Industry Country Reports also cover demand drivers, including macro-economic and construction sector dynamics, for the specific country. Industry reports are presented in an objective, easy to understand format, providing hard-to-find answers to top market research questions.

The comprehensive CW Research’s Kuwait Cement Market Report provides an in-depth and data-oriented analysis of the cement market in Kuwait. This cement industry report provides a detailed review of the cement market in Kuwait, with regional perspectives, discussion of demand drivers, as well as cement tonnage volume and price trends in the country, which provides a national five-year demand forecast.

More information about the report can be found at http://www.cwgrp.com/ research/research-products/countryreports/product/205-kuwait-cementcountry-report For more information and placing an order, please contact Liviu Dinu, Market Services & Marketing Consultant, CW Group (Europe), by phone at +40-74467-44-11, or e-mail at ld@cwgrp.com.

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25

Insight Analysis CW RESEARCH

The Rise and Fall

he Indian petcoke market sets its hopes on future infrastructure projects, as environmental challenges keep pushing prices down.

The green threat High-sulfur and low-sulfur petcoke CFR prices have declined in India West Coast, between May and July 2017. According to CW Researchâ&#x20AC;&#x2122;s India Petcoke CFR Price Assessment, high-sulfur petcoke prices dropped ten percent. CFR prices for low-sulfur petcoke suffered a quarterly decrease of over eight percent up to July, after a continuous rise since the start of the year that led them to surpass the USD 100 mark per ton by the end of May. In July, high-sulfur CFR prices for petcoke traded at a premium of over 24 percent when compared to Richards Bay coal prices in a price per mmBTU

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August/September 2017

The anxiety felt in the domestic petcoke market follows the National Green Tribunal ban on unlicensed petcoke use

India Cement and Construction Materials Journal

perspective. Low-sulfur prices stood at a premium of 17 percent against the same benchmark. Coal prices rose, boosted by an increasing demand, whereas petcoke prices contracted.

The anxiety felt in the domestic petcoke market follows the National Green Tribunal ban on unlicensed petcoke use.

Discussed for several months due to its environmental implications, the ban is still being deliberated on by the Supreme Court. An environmental tax on petcoke is also plausible in the near future, which could prove harmful for petcoke exporters and local producers, as it would render the fuel less competitive against both domestic and imported coal.

About the report CW Researchâ&#x20AC;&#x2122;s India Petcoke CFR Price Assessments are petcoke price markers for India East and West coast, providing prompt, end-user centric CFR prices for high and medium sulfur grades.

CW

Researchâ&#x20AC;&#x2122;s

bi-monthly

price

assessment and monthly price index for fuel-grade petcoke reflects the transactable value for both 4.5% and 6.5% sulfur petcoke with minimum 40 and maximum 70 Hardgrove Grindability Index (HGI), delivered on 30- 60 day forward period on a cost and freight (CFR) basis India (East and West coast).

The

report

provides

market-moving

news, cutting-edge and jargon-free insights and market commentaries to better understand key pricing drivers.

A reliant future Meanwhile, the monsoon period is hampering petcoke demand in the second quarter of the current fiscal year, as keyindustries, such as cement manufacturing, decrease their production. The resulting pressure on demand could be further exacerbated by the companies that anticipated the monsoon season, and pre-emptively stocked up on the fuel. As demand subsides, prices will be pressured down, especially if consumption falls in other key markets as well.

Nevertheless, the petcoke long-term demand outlook remains positive, partly due to future infrastructure projects.

Reliance, a major domestic petcoke producer, is set to start the first of its petcoke gasifier units in December, thus holding the potential to propel both demand and prices up. The project was supposed to have been commissioned at the end of the first quarter, but was

The petcoke longterm demand outlook remains positive, partly due to future infrastructure projects

More information about India petcoke CFR price assessments can be found here: http://www.cwgrp.com/ research/research-products/priceassessments/product/51-priceassessment-india-petcoke-cfr For more information and placing an order, please contact Liviu Dinu, Market Services & Marketing Consultant, CW Group (Europe), by phone at +40-74467-44-11, or e-mail at ld@cwgrp.com.

affected by delays. As soon as they are set into motion, the coke gasification units can impact petcoke trade dynamics in India. As domestic production will likely be veered towards this project, end-users will become more reliant on imports, thus leading to a possible price hike.

India Cement and Construction Materials Journal

August/September 2017

27

CEMENT MARKETS

CW Research

CEMENT VOLUMES Peru and Colombia continued to underperform, due to a dimmed construction sector driven by a slowdown in housing and infrastructure investments. Year to date cement production in Peru reached 4.8 million tons, while Colombiaâ&#x20AC;&#x2122;s reached over six million tons.

In Saudi Arabia, cement production and cement demand reached 2.1 million tons, a record low in the last five years, emphasizing the declining trend observed since the start of the year.

In Asia, Japan and Vietnam were the top performers, with cement production increasing 6.1 and 7.8 percent respectively. Indonesia stood out from these economies, with their cement demand dropping 27.0 percent on a yearly basis, as Ramadam has a strong impact on cement consumption in the country.

In Pakistan, year-to-date consumption remained positive, standing 2.7 percent higher than in the previous year, despite demand declining 44.2 percent on a monthly basis to 1.9 million tons.

Latin America on the other hand showed mixed trends in 2017, with Argentinian demand rampant at a 16.4 percent increase on a yearly basis, and Brazilian demand falling 9.1 percent.

Argentina continued to benefit from public investment in construction, driving cement production to one million tons in June 2017.

Year-to-date cement production in Argentina was up 8.5 percent for the first six months of the year.

In India, cement production fell to 24.6 million tons in the sixth month of the year, falling month-on-month and year-on-year. Year-todate cement production in India is currently standing at 142.9 million tons, 7.1 percent lower than in the previous year.

Source: CW Research

Source: CW Research

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

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Argentina

Japan

Colombia

Thailand

Peru

Brazil

Argentina

Vietnam

Japan

Peru

China

Colombia

-10% -20% -30% -40% -50%

India

-10% -20% -30% -40% -50%

Thailand

20% 10%

Saudi Arabia

20% 10%

Indonesia

Cement demand June 2017 YoY %

Pakistan

Cement production June 2017 YoY %

In China, cement production fell both MoM and YoY, reaching 220.8 million tons in June 2017.

Year-to-date cement production is currently standing 0.3 percent higher than in the previous year for the first six months of the year.

Saudi Arabia

In Asia, Japan and Vietnam were the top performers, with cement production increasing 6.1 and 7.8 percent respectively.

In June 2017, the countries in the Middle East region saw a slowdown in cement demand, with Pakistan and Saudi Arabia recording YoY declines over 35 percent. Demand in these economies was affected by Ramadan, which led to a slowdown in economic activity.

CW Research

CEMENT PRODUCTION (million tons) Country

LM

MoM (%)

CEMENT CONSUMPTION (million tons) YoY (%)

YTD

YTD (%)

Country

LM

MoM (%)

YoY (%)

YTD

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.

WWW.CEMWEEK.COM/SUBSCRIBE

WWW.CEMWEEK.COM/SUBSCRIBE

CEMENT PRODUCTION MOM (%)

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.

WWW.CEMWEEK.COM/SUBSCRIBE

WWW.CEMWEEK.COM/SUBSCRIBE

LM

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.

CEMENT IMPORTS (million tons) MoM (%)

YoY (%)

YTD

YTD (%)

Country

LM

MoM (%)

YoY (%)

YTD

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.

WWW.CEMWEEK.COM/SUBSCRIBE

WWW.CEMWEEK.COM/SUBSCRIBE

CEMENT EXPORTS MOM (%)

YTD (%)

CEMENT IMPORTS MOM (%)

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.

WWW.CEMWEEK.COM/SUBSCRIBE

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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29

CEMENT ENERGY MARKETS

CW Research

Energy Prices Update COAL: The average coal price for June 2017 closed at USD 76.20 per ton, increasing 28.5 percent YoY

as compared to June 2016’s price of USD 59.29 per ton. It expanded by 3.5 percent when compared to May 2017’s price of USD 73.66 per ton.

Steam Coal Fob Average Prices (us$/ton) 120

US exported

Colombia exported

Australia Newcastle

Indonesian HBA

South Africa Richards Bay

110 100 90 80 70

Volumes in Colombia and South Africa decreased by 9.7 percent and 60.1 percent, respectively, while in Australia volumes remained relatively flat, at 0.4 percent.

60 50 40

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 ’13 ’13 ’13 ’13 ’14 ’14 ’14 ’14 ’14 ’14 ’15 ’15 ’15 ’15 ’15 ’15 ’16 ’16 ’16 ’16 ’16 ’16 ’17 ’17 ’17

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

COAL TRADING VOLUMES: Global trading volumes for the five major coal countries totaled 37.62 million tons in June 2017, decreasing by 17.3 percent in comparison with the 45.51 million tons recorded in May. Volumes in Colombia and South Africa decreased by 9.7 percent and 60.1 percent, respectively, while in Australia volumes remained relatively flat, at 0.4 percent. In the United States, volumes rose 1.0 percent from May to June, while in Canada they increased by 7.0 percent in the same period.

PETCOKE: US petcoke exports surged by 7.8 percent to 3.3 million tons in June 2017 when compared to the previous month, although they declined 4.1 percent when compared to May 2016.

The US export price for petcoke in June 2017 averaged at USD 72.92 per ton, decreasing by 5.3 percent as compared to May’s price of USD 77.03 per ton, and up by 78.2 percent when compared to June 2016’s price of USD 40.91 per ton.

Steam Coal Fob Average Prices (us$/ton) monthly price 80

Rolling 12-month average

70 60 50 40 30 20

J ‘17

M ‘17

A ‘17

M ‘17

J ‘17

F ‘17

D ‘16

O ‘16

N ‘16

S ‘16

A ‘16

J ‘16

J ‘16

M ‘16

A ‘16

M ‘16

J ‘16

F ‘16

D ‘15

N ‘15

S ‘15

O ‘15

A ‘15

J ‘15

J ‘15

10

Source: customs data

NATURAL GAS: The US Henry Hub spot price traded at USD 2.97 per MMBTU in June 2017, a 5.7 percent decrease when compared to May 2017, and

growing 14.7 percent as compared to June 2016’s price of USD 2.59 per MMBTU. Prices in Europe expanded 1.1 percent MoM, reaching USD 5.41 per MMBTU in June 2017.

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

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India Cement and Construction Materials Journal

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.

COAL - EXPORTS (million tons) - May 2017 Country

LM

MoM (%)

PETCOKE - EXPORTS (million tons) - Jun 2017 YoY (%)

YTD

YTD %

Country

MoM (%)

YoY (%)

YTD

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.

WWW.CEMWEEK.COM/SUBSCRIBE

WWW.CEMWEEK.COM/SUBSCRIBE

COAL EXPORTS MOM (%)

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.

WWW.CEMWEEK.COM/SUBSCRIBE

WWW.CEMWEEK.COM/SUBSCRIBE

PETCOKE - GLOBAL EXPORT PRICES (USD/ton) Country

WWW.CEMWEEK.COM/SUBSCRIBE MoM (%) YoY (%)

YTD

LM

MoM (%)

Jun 2017

YoY (%)

YTD

YTD %

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.

COAL - GLOBAL EXPORT PRICES (USD/ton) - May 2017 LM

YTD %

US PETCOKE EXPORTS PRICES MOM (%)

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION. Country

LM

CEMENT ENERGY MARKETS

CW Research

YTD %

WWW.CEMWEEK.COM/SUBSCRIBE

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

NATURAL GAS PRICES (US$/mmBtu) - Jun 2017 Country

LM

MoM (%)

YoY (%)

YTD

YTD %

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION. NATURAL GAS PRICES MOM (%)

WWW.CEMWEEK.COM/SUBSCRIBE

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.

WWW.CEMWEEK.COM/SUBSCRIBE

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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31

cement market and competition

M

arket and competition

Ultratech aims to become market leader in Andhra Pradesh After the acquisition of Jaypee Cement, UltraTech Cement now has a foot in Andhra Pradesh, and the company assumed that its objective is to now become the new market leader in the state.

India Cements focusing on brand recognition India Cements wants to bet on brand recognition, after observing that retail demand constitutes an important portion of its sales in Tamil Nadu and Kerala.

The company announced therefore that it will focus on building grassroots, longterm brand loyalty.

Between 50 and 55 percent of The India Cements’ sales come from Tamil Nadu and Kerala. There, between 75 and 80 percent of sales are performed through retail.

One of the company’s marketing campaigns will be the sponsorship of the Tamil Nadu Premier League. According to Rakesh Singh, executive president of India Cements, this will give a sound edge over competitors in terms of brand recall and loyalty.

“Andhra Pradesh is a strategic market with huge potential for growth. With this, we will further strengthen our presence in the southern region”, said K K Maheshwari, managing director of UltraTech Cement.

“Being a national player, we aim to become the market leader in new territory too. The market sale of cement in coastal Andhra Pradesh is about 10 million tons every month, and we aim to have a major share in it. Across the country, we have 20% market share and with the acquisition of Jaypee it goes up to 24 percent, strengthening our presence,” he added.

JSW Cement mulls expansion JSW Cement is considering further expansion, said company officials at the inauguration of a new plant in West Bengal.

"JSW Cement is now one of the fastest growing cement companies in India.

We have a strong presence across the Southern Market, Maharashtra Goa and Odisha”, Parth Jindal, managing director of the company, said in

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the occasion of the inauguration of its new plant. ”With East as a new addition to our map, we are looking further to increase our network and reach out to new customers. We hope to expand our horizons in the industry and take JSW Cement to greater heights in the region.”

The cement manufacturer inaugurated a new cement plant in Salboni, West Bengal, which will have the capacity to produce 2.4 million tons of premium Portland Slag Cement per year.

Coal India to offer linkages to the cement sector

ACC is investing in fly ash In India, ACC is heavily investing in the fly ash brick segment under its “Green Building Centers” (GBC) model. The company aims to have one GBC in every district, and plans to have around 650 of these centers across the country by 2025.

The company is operating the GBC through a franchise-based model, tying up with entrepreneurs around India.

So far, there are 24 running centers, with a further 23 to be added by the end of the year. The initial investment in a GBC is land, which is bought at a price of around INR 2 or INR 2.5 crore.

However, ACC is now looking towards entrepreneurs who already own lands in order to reduce the initial capex. The upcoming GBCs in Chandrapur and Azamgarh are based on this model.

According to Danish Rashid, Head of Business for the Green Building Center initiative, “it takes around one to one and half year for a GBC to become selfsustaining”. The center in Karnal, for instance, was opened in May 2015 but only became profitable in January 2017.

ACC’s revenue will be added from the two percent royalty fees that the company will charge in the net sales from each GBC. “However, in order to promote the model as of now we have not charged any royalty fees from any GBC but will start to do so soon,” says Rashid. ACC decided to invest in the fly ash bricks due to pushes from the central government and local authorities to limit the use of red bricks.

“Red Bricks heavily impact fertility of the soil. It takes around 200 years for a land, used for making Red Bricks, to become fertile again. Add to this the ever increasing cost of coal. I agree that even today around 99 percent of construction uses Red Bricks, but fly ash brick is the only way forward,” says Rashid.

The use of these bricks is yet to pick up due to conventional use of red brick by both homeowners and construction companies. Another reason is that the cost of fly ash bricks is around 10 percent higher than normal bricks. “It is very difficult to make home buyers and especially the local contractors and masons understand the benefits of fly ash bricks,” says Pawas Dhawan, owner of Karnal GBC. “We have carried out around 58 workshops at such centers in first half of 2017 in order to educate contractors, masons and buyers. While the cost of fly ash bricks is high, if you look at the total cost, it will eventually be lower,” adds Rashid.

The company claims that use of fly ash bricks can help buyers save around 32 percent on plaster and around 25-26 percent on mortar.

Eventually ACC wants to move from product selling to providing the complete solution. “We are tying up with microfinance companies such as Mahindra Finance, AU Finance which will provide finance to the home buyers. We will also have kiosks for hardware, electrical, paint and other solutions at these GBCs displayed for the buyers,” says Rashid.

Coal India is offering coal auction linkages to the cement and steel sectors. The government-owned mining company conducted a new auction for the non-regulated sectors, including steel and cement, on July 10.

This auction was approved by the Union Government in February 2016.

Maximum bid quantity by a particular bidder did not exceed the normative requirement of the end-use plant, as per government requirements.

Cement units ordered to close in Telangana Three cement units in the state of Telangana received a closure notice from the Central Pollution Control Board (CPCB).

The CPCB ordered the closure of three cement units, including Kakatiya Cements, in Nalgonda, Mancherial Cements, in Mancherial, and Cement Corporation of India at Tandur. An additional 11 showcause notices have been issued to other units, including Zuari Cements, Keerthi Industries, Deccan Cements, Amareshwari Cements, Bheema Cements, and Grey Gold Cements, all in Nalgonda.

The closure notices were part of a major crack-down by the CPCB, which led to 240 closure or show-cause notices to be sent to cement units across India. Those units were found to be in violation of pollution regulations. This was after the CPCB demanded cement factories to install online pollution monitoring systems connected to their servers and to the State Pollution Control Board as well.

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cement M&A AND FINANCE

M

&A and finance

UltraTech and Jaiprakash Associates complete acquisition deal The largest cement manufacturer in India, UltraTech Cement, successfully concluded the takeover of six integrated cement plants and five grinding units from Jaiprakash Associates at the end of June. This completes the deal between the two companies, valued at INR 16,189 crore.

The plant and units are spread across the states of Himachal Pradesh, Uttar Pradesh, Uttrakhand, Madhya Pradesh and Andhra Pradesh, and have a total production capacity of 21.2 million tons of cement per year.

UltraTech now operates 18 integrated plants, one clinkerization unit, 25 grinding units and seven bulk terminals. Its total capacity now stands at 93 million tons per year, making it the fourth-largest cement manufacturer in the world.

Grasim and Aditya Birla Nuvo’s merger gets the green light The National Company Law Tribunal has approved the merger between the Aditya Birla Group and Grasim Industries.

The companies had first announced the intention of merging in August of 2016, and now expect to finish the process by the beginning of the third quarter.

August/September 2017

The merger was approved by the shareholders of both companies in April. Combined, Grasim and Aditya Birla had a net profit of INR 4,076 crore and a revenue of INR 54,842 crore during the last fiscal year.

“We expect to complete the merger process of Grasim and Nuvo and the separate listing of Aditya Birla Financial Services by

Shree Cement posts lower net profit in June quarter

Between April and June 2017, the standalone net profit of India-based Shree Cement declined by 13.3 percent year-on-year, from INR 507.7 crore to INR 440.1 crore.

Revenue from the actually increased by INR 2,261.7 crore to Those results were

34

the end of the current quarter or latest by the beginning of next quarter” said Sushil Agarwal, chief financial officer of the Aditya Birla group, in an interview.

cement business 22.4 percent, from INR 2,768.8 crore. partially displaced

India Cement and Construction Materials Journal

by lower revenue in the power business, which fell by 11.3 percent from INR 400.9 crore to INR 355.7 crore.

Shree’s total income rose by 16.7 percent from INR 2,565.7 crore to INR 2,995.2 crore. However, its expenses outgrew revenue, by 27.6 percent year-on-year, standing at INR 2,448.6 crore.

UltraTech raising capital to reduce debt UltraTech Cement is looking into raising capital to fund expenditure and reduce debt. The manufacturer has plans to raise INR 9,000 crore through the issue of non-convertible debentures, recurring to private placement.

India Cements’ revenue increases while net profit drops In the first quarter of fiscal year 201718, the company achieved a net profit of INR 26 crore, a decline of 40.9 percent compared to the same period last year.

The result fell short of the consensus estimate of analysts tracked by Bloomberg of INR 52.6 crore.

During the same period, India Cements’

had a revenue of INR 1,462 crore, an increase of 22 percent compared to the same period last year. However, that increase was displaced by a 26 percent growth in expenses. Power and fuel costs alone rose by 42 percent year-on-year.

The EBITDA of the company was also affected by the increase in expenses, falling 7.5 percent year-on-year to INR 186 crore, while its margin shrank by 400 basis points to 12.7 percent. Analysts were expecting an EBITDA of INR 232 crore.

JSW Cement preparing IPO in 2019 JSW Cement is preparing its initial public offer for 2019, and will be looking into a valuation of INR 25,000 crore to INR 30,000 crore.

By that time, JSW Cement expects to have the capacity to produce 20 million tons of cement per year, and to explore limestone reserves in two to three different states.

During the first phase of the offer, JSW Cement, a subsidiary of JSW Steel, wants to secure INR 2,500-3,000 crore from a 10 percent dilution. The initial public offer will be proposed after the 2019 general elections.

Currently, the company runs with a capacity of 10.3 million tons, having recently invested INR 1,850 crore in capacity expansion, and in the acquisition of stakes at Shiva Cement.

The additional raised capital will be used to refinance high cost debt and ongoing expansion projects. UltraTech took over the heavily-indebted cement business of Jaiprakash Associates in June for INR 16,189 crore. Going forward, UltraTech will invest INR 2,200 crore on de-bottlenecking projects, regulatory requirements, plant infrastructure, and routine maintenance, as announced during the 17th annual general meeting of the company, on July 18.

In terms of capacity expansion, plans for the future include a new integrated cement plant in the district of Dhar, Madhya Pradesh, with the capacity to produce 3.5 million tons of cement per year. The new factory will represent an investment of INR 2,600 crore and is expected to enter operation in the fourth quarter of fiscal-year 2019.

HeidelbergCement India’s net profit lowers in second quarter HeidelbergCement India declared a lower net profit in the second quarter of 2017.

The manufacturer posted a standalone net profit of INR 16.0 crore during the June 2017 quarter, against INR 26.26 crore in the equivalent quarter of the previous year.

This represents a decrease of 38.9 percent compared to the same period in 2016.

HeidelbergCement India’s sales reached INR 431.4 crore, down from INR 461.8 crore a decline of 6.6 percent year-on-year.

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cement projects and expansions

P

rojects and expansions

Birla Corporation setting up new plant in Maharashtra Birla Corporation wants to set up a new cement plant in Makutban, in the Indian state of Maharashtra.

The cement maker is preparing an investment of INR 2,400 crore to build a new cement plant with the capacity to produce around four million tons per year. The project, Birla Corporation says, will be financed through debt and internal accruals. “We are planning to invest around INR 2,400 crore for a four million tons per annum greenfield cement plant at Mukutban. We will now go to the board for approval”, said chairman of Birla Corporation Harsh V Lodha.

Recently, Birla Corporation acquired Reliance Cement, ramping up its production capacity to 15.5 million tons per year. The company is also currently building a waste heat recovery system, with a cost of INR 125 crore, to power the newly-acquired plants. When finished, the recovery system is expected to cover a substantial part of the total electricity demand of the plants – around 45 megawatts.

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August/September 2017

UltraTech setting up new cement plant in Madhya Pradesh UltraTech announced it will set up a new integrated cement plant with the capacity to produce 3.5 million tons per year in the state of Madhya Pradesh by fiscal year 2019.

"The board has approved a greenfield integrated cement plant at Dhar in Madhya Pradesh with a capacity of 3.5 million tons per year. The plant will involve an investment of INR 2,600 crore and is

likely to begin commercial production by the fourth quarter of FY19," UltraTech chairman Kumar Mangalam Birla told the 17th annual general meeting.

The new plant will increase UltraTech's overall capacity to 96.5 million tons per year.

"We also have an additional capex plan of about INR 2,200 crore for the current fiscal, which will mainly be utilized for capacity de-bottlenecking projects, regulatory requirements, plant infrastructure and routine maintenance," Birla said.

Steel company to set up cement project Rashtriya Ispat Nigam, who owns the Visakhapatnam steel plant, wants to set up a cement unit, having signed a memorandum of understanding with Cement Corporation of India to set up a cement factory nearby.

The investment will be around INR 150 crore, and the project will occupy an area of 35 acres of land to produce two million tons per year of cement

India Cement and Construction Materials Journal

based on fly ash and blast furnace slag.

Completion of the project is expected within 15 months.

Cement Corporation of India promises to equip the plant with state-of-the-art technology. Chairman and Managing Director, Manoj Misra, from the cement manufacturer and P.C. Mohapatra, from Rashtriya Ispat Nigam, were responsible for signing the memorandum.

Andhra Pradesh to be home to two new cement plants Two companies have proposed to build a new cement plant each in the state of Andhra Pradesh.

JSW Cement’s plant enters commercial operation The first batch of cement was shipped from JSW Cement’s unit in Salboni, West Bengal, with a ceremony presided

by Mamata Banerjee, Chief Minister of West Bengal. At full capacity, the plant is expected to produce 2.4 million tons per year.

Construction of the plant took 18 months. According to Biswadip Gupta, director of JSW Cement, this was one

of the fastest greenfield plants to be set up in India. "We have not lost a single man-day during the construction of the project," he added.

However, some in the region resent the loss of land for the factory. The secretary of JSW Landlosers' Welfare Association, Pariskar Mahato, said that they had not received any invitation to the inauguration of the project. "There is resentment among land losers. We should get jobs in the project, but the management is recruiting people from outside.”

Telangana approves new cement project The Indian state of Telangana approved a new cement project to be set up in the Adilabad District. Telangana’s state government has already permitted mining on an area of 1,572 acres in the outskirts of Ramai and Yapalguda villages, for a period of 20 years.

Zenith will be the company responsible for the project. According to the state

government, 2,000 direct and 3,000 indirect jobs will be created thanks to the new cement plant.

Adilabad is home to a cement unit from Cement Corporation of India.

The plant has been closed for nearly two decades, but the state government is preparing a budget to support the reopening of the plant.

Chettinad Cement, based in the state of Tamil Nadu, plans to invest INR 1,350 crore in a new cement grinding unit in the Vizag district, as well as a new manufacturing plant on the Guntur district. Commissioning of the project is scheduled for March 2019.

Meanwhile, KCP will invest a more modest INR 531 crore to build a new unit in the Krishna district, expected to enter production within one year.

The state investment promotion board, headed by Andhra Pradesh chief minister N. Chandrababu Naidu, has already cleared both investments.

The new units will put additional pressure on the South India cement market, already facing a huge overcapacity. Local units have an installed capacity of 150 million tons, with 60 million tons consumed in the region and other 20 million tons shipped to neighboring states in eastern and western India.

The region is especially attractive to cement producers because of its large limestone reserves, which represent 30 percent of India’s total.

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37

cement volume & pricing

V

olume and pricing

Himachal Pradesh fixes cement prices for public works The Indian state of Himachal Pradesh has fixed the price of cement sales to government infrastructures works.

The price of cement has been set at INR 215 per 50 kilogram bag, following a decision taken at a meeting between the Industry Department, Civil Supplies and excise officials.

New GST regulations reduce cement prices Cement has been put in the highest tax level of the new regime, the Goods and Services Tax (GST), designed to consolidate other Union and state taxes. Under that level, cement will have a taxation rate of 28 percent, still down compared to 29-31 percent in the period before the introduction of the new tax, say experts.

Tax rates vary across states, since tax is levied depending on whether the sale

is made for retail or bulk use. With consolidation of the tax regime, companies will be able to streamline their warehouses.

Until now, manufacturers selling to other states had to maintain a warehouse in the state where they sell cement, because by transporting cement within the branches they were able to avoid the central sales tax.

However, cement manufacturers will still be subject to a clean energy cess on coal and to paying royalties for their exploitation of limestone quarries.

Before the introduction of the new Goods and Service Tax (GST), cement was being supplied for INR 198.5 per bag directly to the state government, or at INR 215.0 per bag to various boards and corporations of the state.

Following the introduction of the new tax regime, a delay in fixing cement prices led to a halt in all deliveries to public projects, which can now be resumed.

Cement sector to improve in second half of the year The Indian Cement Manufacturersâ&#x20AC;&#x2122; Association believes that the sector will benefit from lower taxes under the new Goods and Services Taxes regime, higher governmental expenditure on infrastructure, and a 30 percent cost cut in logistics, as blockage time between states are eliminated under the new tax regime.

"The abolition of borders in the wake of the new tax regime has reduced the blockage time at check posts and thereby

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expediting the movement of the goods and the reducing turnaround time of the trucks," said Cement Manufacturers Association (CMA) President Shailendra Chouksey.

"The government has taken infrastructure projects which are cement incentive, be it highway or affordable housing, and all have potential to raise consumption, and GST will help in availability of the required funds," Chouksey added.

Cement manufacturers against price caps Cement manufacturers have been criticized for rising prices and alleged cartelization. On June 9, they spoke out against the government and construction companies, saying that they do not want them to interfere with pricing.

UltraTech cuts cement prices Taking into consideration the new tax regime, introduced in India on July 1, UltraTech decided to pass the benefits of lower taxation on to customers, by slashing the price of its products by two to three percent.

“There will be somewhere 2 to 3 percent reduction in cement prices because of reduction in tax rates due to GST. We are

extending our tax benefits to dealers who would then forward it to the end consumers,” UltraTech Cement chief financial officer Atul Daga said.

Under the new tax regime, cement is taxed at 28 percent, compared to 30 to 31 percent in the previous system of taxation. According to Daga, the reduction in prices will vary across states, affirming that “the difference in rates according to each market has been computed and the impact has been given in the new prices”.

Cement prices decrease in June The price of a 50 kilogram cement bag in India fell by INR 6 to INR 343 per unit during the last month of the first quarter of the current fiscal year, after two straight months of gains.

Prices decreased in North, Central, and South India. The fall was steeper in the South and more modest in the North and Central regions. On a quarterly basis, the West will see the maximum improvement

in cement prices, followed by South and trailed by North and Central.

"We do not want interference in pricing. We cannot be asked to cap the price... Our plea is that the price be decided by the market as we ourselves do not have control over it," India Cements executive director Rakesh Singh said.

In the state of Hyderabad, the price of a 50 kilogram cement bag ranges between INR 270 to INR 330 per unit, while companies say that INR 330350 per unit would be the ideal range.

Singh refuses the argument that manufacturers are making large profits with high prices, revealing that industry margins are just seven to eight percent and that the increase in prices has been the consequence of rising costs with coal and limestone.

In North and Central India prices came down by INR 10 to INR 320 per bag. In the West, prices actually improved by INR 2 to INR 335 per bag. In the South, prices tumbled by INR 12 to INR 368 per bag. Finally, in the East, prices rose by INR 3 per bag.

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39

cement news

R

egional news

Cement exports in Pakistan declined Cement exports in Pakistan dropped significantly during the first 11 months of the currency fiscal year.

According to the All Pakistan Cement Manufacturers Association (APCMA), between July 2016 and May 2017, the country exported 4.32 million tons; compared to 5.49 million tons in the same period a year before, a decline of 21.27 percent year-on-year.

Cement exports have been declining since 2008-09. At the time, they peaked at 10.8 million tons. In May alone, exports to Afghanistan went Burnpur appoints down from Cement 206,000 to 97,000 tons.

Saurabh Ganguly asslipped Exports to India have also brand ambassador from 135,000 to 114,000 tons.

Burnpur Cement Ltd announced that they signed an agreement with partly Saurabh A spokesperson from APCMA Ganguly, Former Captain of Indian blames the Pakistani government for Cricket Team, to act as the Brand this decrease, criticizing additional Ambassador for a period of three (3) taxes on cement. years, effective from March 11, 2016.

Under the agreement, Mr. Ganguly as the Brand Ambassador of the Company will endorse the product and brand of Burnpur Cement which may help in increase of sales of the Company.

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August/September 2017

Lucky Cement improves profit in 2016-17 Lucky Cement achieved an increase in its net profit during the fiscal year ending June 30, 2017.

The Pakistani manufacturer scored a net profit of PKR 13.69 billion, an increase of 5.8 percent compared to fiscal year 2015-16.

In the same period, the net sales revenue of Lucky Cement grew by 1.2 percent yearon-year, from PKR 45.14 billion to PKR 45.69 billion, mainly thanks to a higher volume of sales.

Lucky Cement sold a total of 6.07 million tons to the domestic market, up by 13.9 percent from 2015-16, while exports declined by 32.7 percent, from 1.61 million to 1.08 million tons.

Kohat Cement to build new production unit Pakistani manufacturer Kohat Cement will set up a new cement unit. The company wants to build a new production unit for grey cement near its existing plant, elevating its capacity by 7,800 tons per day.

Additionally, Kohat will also build a waste heat recovery power plant.

Last year, Kohat Cement posted earnings of PKR 4.4 billion, an increase of 33 percent compared to PKR 3.32 billion in the year before. The strong profit resulted from a higher sales , a reduction in power costs,

India Cement and Construction Materials Journal

and improved efficiency with its furnace oilbased captive power plant.

Lower profit for Heidelbergcement Bangladesh in 2Q2017

Between April and June this year, the manufacturer achieved an operating profit of BDT 436.29 million, down from BDT 564.07 million in the same quarter last year.

Pakistani builders worried with cement prices Since July last year, the price of a cement bag has already increased

by PKR 50. That includes PKR 36 in taxes added by the budget of 201617, broken down to PKR 30 of federal excise duty and PKR 6 of general sales tax and a further hike of PKR 17.50 per bag from the 2017-18 budget, including PKR 12.50 from federal

excise duty, PKR 2.50 from sales tax, and PKR 2.50 of withholding tax.

Mohsin Sheikhani, chairman of the Association of Builders and Developers, believes that this increase will likely be passed on to the final consumer, who will be paying an additional PKR 40 per square foot of construction. A 50-kilogram bag of cement currently sells for PKR 535-545 in the country’s northern region and PKR 565-610 in the southern region.

During the same quarter, HeidelbergCement Bangladesh’s sales dropped to BDT 2.79 billion, down from BDT 3.11 billion in the same period last year. The cost of sales have also come down from BDT 2.31 billion to BDT 2.12 billion.

The EBIT of the company fell sharply, from BDT 700.35 million to BDT 493.29 million, while its gross profit stood at BDT 676.14 million, compared to BDT 801.03 million in the same period last year.

New cement project in Punjab, Pakistan The Punjab Chief Minister Shahbaz Sharif and the Chinese firm Yantai Baoqiao Jinhong signed a memorandum of understanding for the construction of a new cement plant in the Salt Range.

“China is investing billions of dollars in Pakistan under the historic China Pakistan Economic Corridor (CPEC).

Mega projects are being established in energy, infrastructure and industry under the CPEC”, said Sharif.

According to the chairman of Yantai Baoqiao Jinhing, the new plant will have state-of-the-art technology that is both modern and environment-friendly.

New cement plant to be set up in Nepal

Rawat, director of the company. “We will be importing raw materials from India.”

Annapurna Cement begins trial production of cement. The new plant, an investment of NPR 600 million, will produce around 1,200 sacks of cement per day and is expected to enter commercial production by the end of June. For now, trial production has been initiated.

Demand for cement is expected to remain strong in Nepal during the next quarters, as reconstruction efforts continue following the devastating 2015 earthquake. Total consumption of cement in the country is around five to 5.5 million tons per annum, with domestic production covering 80 percent of that and the remaining coming from India.

“We have adopted advanced technologies and modern equipment,” said Rajendra

DG Khan builds new cement plant The Pakistani manufacturer is investing USD 300 million in the construction of a new cement plant in Hub, Balochistan.

According to the company, the new plant will enter operation in December this year.

Shajar Capital expects additional production from the factory to be absorbed by mega projects related to Gwadar and housing schemes under development in Balochistan and Sindh. Thus, the new factory is not expected to lower prices or dent the market share of other competitors.

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41

cement PEOPLE

P

eople

Prism Cement appoints new director Prism Cement has designated a new director. Raveendra Chittoor has been assigned the position of nonexecutive independent director to the board of Prism Cement.

The appointment has taken effect from July 3.

Burnpur Cement appoints Saurabh Ganguly as brand ambassador

LafargeHolcim appoints new Head of Research & Development

Under the agreement, Mr. Ganguly as the Brand Ambassador of the Company will endorse the product and brand of Burnpur Cement which may help in increase of sales of the Company.

Heike Faulhammer joins LafargeHolcim from Arkema, one of Franceâ&#x20AC;&#x2122;s leading chemicals producer, where she has spent 20 years in research, production, product innovation-related functions and sustainable development. In particular, she acted as a Director at Arkemaâ&#x20AC;&#x2122;s global R&D center in Lacq, South-West France.

Heike Faulhammer graduated from the University of Freiburg (Germany) and holds a PhD in Chemistry.

Burnpur Cement Ltd announced that they signed an agreement with Saurabh Ganguly, Former Captain of Indian Cricket Team, to act as the Brand Ambassador for a period of three (3) years, effective from March 11, 2016.

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India Cement and Construction Materials Journal

As Head of R&D, Heike Faulhammer will be based at the global R&D center near Lyon, France. With 200 engineers and technicians from more than 20 nationalities, the center creates innovative solutions to address the needs of the construction industry.

Most recently, LafargeHolcim announced the launch of Airium, which was developed and patented by the global R&D center in Lyon. Airium is a mineral insulating foam that improves energy efficiency for buildings, from floor to ceiling.

orders & equipment highlights

O

rders & equipment

Ramco Cements orders new classifier

Loesche supplying new mill to Attock Cement

Ramco Cements ordered a new classifier from Fives Group. The manufacturer placed an order for a new FCB TSVâ&#x201E;˘ Classifier 4500 THF, capable of feeding the production line either from the top or the bottom, according to Ramcoâ&#x20AC;&#x2122;s requirements.

The new classifier will be installed on the R R Nagar cement plant, located in the state of Tamil Nadu, India.

Ramco Cements has already installed similar classifiers from Fives Group in its Kolagat, Salem, and Chengalpattu plants, making this the fourth time both companies engage in such order.

Loesche will provide a vertical roller mill of type LM 56.3+3 CS for grinding cement clinker to its end customer Attock Cement Pakistan Limited (ACPL). The new mill will be used in the new line 3 of the cement plant in Hub Chowki in Pakistan, in the Lasbela/Baluchistan district, 20 km north of Karachi.

The mills will grind OPC cement with a fineness of 3,300 Blaine with a capacity of 200 t/h or 2,800 Blaine with a capacity of 240 t/h. ACPL sells the cement under its own brand "Falcon".

The ordinary Portland cement produced complies with Pakistani standards and also the European Standard EN 197-1. Alongside the delivery of the mills, the Loesche mandate also includes the monitoring and assembly, as well as the commissioning,

which is due to take place in mid-2017. The Chinese company Hefei Cement Research & Design Institute, to whom Loesche has successfully delivered mills on a regular basis, will act as Loesche's contractor and will assume overall responsibility for the new cement line in Pakistan.

With the new line, Attock Cement Pakistan intends to further increase the production capacity of its existing cement plant in Hub Chowki from the previous level of 1,710,000 t/a. The use of advanced technology forms part of ACPL's strategy for maintaining the viability of its production facilities into the future by means of constant modernisation. This is also intended to cover the increased local and regional demand. With this strategy, ACPL has managed to get to the top of the industry in Pakistan.

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CONSTRUCTION BUILDING MATERIALS BY BMWEEK.COM

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onstruction & building materials by bmweek.com

ACG Materials acquires Diamond Gypsum ACG Materials has announced its acquisition of Diamond Gypsum.

“We are excited to further strengthen our position as the leading industrial mineral and aggregate producer in the Midwest,” said Paul Harrington, CEO of ACG Materials.

“Diamond Gypsum helps expand our presence in the STACK shale basin, one of the fastest growing energy markets in the U.S. We look forward to partnering with Diamond Gypsum’s strong employee base and building upon their reputation for unmatched product quality and customer service.”

Diamond Gypsum is located in Watonga, Oklahoma, and is a miner of gypsum products sold into various oil and gas, infrastructure and agricultural applications.

Sandvik sells conveyor businesses to Australian company Nepean Conveyors has finalized negotiations to acquire Sandvik’s International Conveyor Components businesses and Sandvik’s Specialist Conveyor Systems business.

According to Nepean Chief Executive Officer, Miles Fuller, the acquisition is a great fit for the organization’s existing conveyor businesses. “NEPEAN will gain significant facilities in Europe, Scandinavia, Brazil and Western Australia, in addition to our existing operations on the east and west coast of Australia and Africa. We will also gain a broad range of advanced technology, leading products and associated IP,” said Fuller.

The acquisition includes 195,000 square meters of manufacturing operations located across Germany, Brazil, Australia and

The company owns and operates a quarry in central Oklahoma and serves a diverse set of blue chip customers with aggregate and processed gypsum products.

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Finland. Through the acquisition, Nepean’s customers will have access to the significant IP developed via Sandvik’s engineering and manufacturing capabilities. New product lines, including market-leading composite roller technologies, will be brought to market as a priority.

With the acquisition of Sandvik Conveyor Components, the combined capacity will position Nepean as one of the largest specialists in conveyor components globally. The move will render the company capable of producing many thousands of large engineered pulleys and millions of conveyor rollers annually to service customers in 66 countries.

Nepean’s conveyor expertise in Australia includes fully integrated bulk materials handling solutions, from the mine to the train or truck load station. With the integration of Sandvik’s assets, Nepean will be positioned to provide an integrated set of solutions for the industry.

United States lime & minerals improves revenue in Q2

Fletcher Building’s Chief Executive is resigning

United States Lime & Minerals reported its second quarter 2017 results on July 26, announcing an increase of 11.1 percent in revenues, from USD 32.9 million in 2Q2016 to USD 36.5 million in 2Q2017.

The company, based and listed in New Zealand, revised down its operating earnings during the full year ended June, from NZD 610-650 million to around NZD 525 million. The revision was due to further losses in the building and interiors division, delays with major projects, and a likely write down of value of about NZD 220 million on two Australian business units, Iplex Australia and Tradelink.

The company’s lime and limestone operations in the second quarter of 2017 increased by 11.1 percent, reaching USD 36.0 million, after recording a revenue of USD 32.4 million in the equivalent quarter of 2016. In the meantime, revenue from the company’s natural gas interests rose 9.7 percent, reaching USD 0.6 million in the quarter ended June 2017, from USD 0.5 million in the second quarter of the previous year.

"We are pleased that our second quarter 2017 revenues and operating results improved over last year's second quarter as our lime and limestone operations continued to see a rebound in demand from our oil and gas services customers, as well as increased demand from our construction customers," said Timothy W. Byrne, President and Chief Executive Officer.

In the first six months of 2017, total revenues reached USD 72.7 million, compared to USD 66.5 million in the equivalent 2016 period, a rise of 9.3 percent. Revenues from the company’s lime and limestone operations in the first six months of 2017 increased 9.1 percent, to USD 71.5 million, after recoding a revenue of USD 65.5 million in the first half of 2016.

The increases in lime and limestone revenues in the second quarter and first six months of 2017, as compared to the same period last year, resulted primarily from increased sales volumes of the company's lime and limestone

products due to increased demand, mainly from its construction customers and oil and gas services customers.

Demand from construction customers was adversely impacted in the second quarter 2016 due to numerous days of rainfall during this period. Prices realized for the Company's lime and limestone products in the 2017 periods were slightly higher compared to the comparable 2016 periods.

The Company's gross profit was USD 8.8 million in the second quarter of 2017, compared to USD 7.2 million in the equivalent quarter of 2016, an increase of 22.1 percent. Gross profit in the first six months 2017 rose 13.2 percent from USD 15.1 million in the first six months 2016 to USD 17.1 million in 2017.

Included in gross profit in the second quarter and first six months of 2017 were USD 8.7 million and USD 16.7 million, respectively, from the Company's lime and limestone operations, compared to USD 7.2 million and USD 15.2 million, respectively, in the comparable 2016 periods.

"I am disappointed to finish my tenure on the back of a challenging result in the Construction Division, however I am proud of what has been achieved in the last five years," Adamson said.

Fletcher Building chairman, Sir Ralph Norris, said that the board believed it was the right time for Adamson to leave the company he had been the chief executive of since 2012.

Francisco Irazusta was appointed interim chief executive and will take on Adamson’s role when he leaves the company. Irazusta has worked at Fletcher Building since March 2015, as head of the company’s international division.

The Company reported a net income of USD 5.3 million in the second quarter of 2017, compared to a net income of USD 3.7 million in the second quarter of 2016, an increase of or 43.2 percent.

In the first six months 2017, net income increased by 27.7 percent, reaching USD 9.9 million, compared to USD 7.8 million in the first six months 2016.

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PETCOKE PRODUCTION, SHIPPING AND PRICING BY PETCOKEWEEK.COM

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etcoke production, shipping and pricing by petcokeweek.com

Petcoke burning to be allowed in India The state of Madhya Pradesh, India, has approved the use of petcoke as a fuel for the cement, textile and other industries in the state.

The proposal was approved at a state Pollution Control Board meeting on July 26. The state government had already approved the use of petcoke as a fuel in the industry, which was brought forward at the meeting as well.

However, the industries will have to meet the necessary criteria in order to be granted the permission to burn petcoke for fuel.

Port in the UK to receive petcoke shipment Petroleum coke is a by-product of the oil refining process; it has a variety of uses in the manufacturing process of steel, aluminium, cement and an important component in the production of manufactured smokeless fuels. The petcoke that the Port of Tyne is handling is fuel grade, producing virtually no ash when burned. From its manufacturing facility near Durham, briquette manufacturer Oxbow now produces circa 100,000 tons of high quality briquettes for use on stoves, cookers and open fires, across the UK and Ireland.

Alasdair Kerr, Commercial Director of Port Services Port of Tyne, said: "The

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Port of Tyne has diversified its bulk cargo operations to handle a wide range of commodities for customers, from energy producers to recycling companies.

"This is the start of regular shipments for Oxbow and we are delighted that we have been able to work with them to add value to their business."

Mike Cusick, Managing Director of Oxbow, stated: "We have a global reputation for sourcing quality fuels throughout the world, and now that we are working with the Port of Tyne we can continue to get our products to market quickly, further increase efficiencies, and we have reduced road miles. It is a great solution for us. The Port of Tyne has an important role to play in our future success and growth."

Petcoke consumption dives in June India’s total fuel consumption rose 0.4 percent in June 2017 when compared to June 2016, reaching 16.5 million tons.

Petcoke volumes stood at 2.0 million tons in June 2017, a decrease of 18.6 percent when compared to the equivalent month of 2016, while sales of LPG rose 15.9 percent, to 1.9 million tons, and diesel increased 6.5 percent to 6.8 million tons.

Reliance’s petcoke project is at advanced stage The project is hailed as one of the largest petcoke gasification initiatives in the world, meant to convert lowvalue petroleum coke into high-value fuels and hydrogen, in order to ensure energy self-sufficiency. Speaking of the project, Chairman Mukesh Ambani said: "The benefits of the project will be immediately visible in lower energy cost and higher gross refining margin.”

In the week ended July 21st, Reliance’s standalone net profit rose nine percent for the first quarter of the current fiscal year, ending June at INR 8,196 crore, due to higher margins from its petrochemicals business and a one-time gain from the sale of stake in Gulf Africa Petro. In the first quarter of 2017, the company recorded a net profit of INR 7,548 crore.

The gross refining margin (GRM), derived from conversion of a barrel of crude oil to refined products, was USD 11.9 in the quarter under consideration, compared to USD 11.5 in the same period a year ago.

Commenting on the results, Ambani said: "Industry leading portfolio of

assets in the refining and petrochemicals business contributed to considerable improvement in earnings for the quarter." Recently, the company has also signed a deal with BP in a joint venture worth around USD 6 billion across the entire energy value chain in India. The company also started commercial gas production from coal bed methane (CBM) blocks in Madhya Pradesh over the previous year.

"RIL and BP have recently approved an investment plan to monetize over 3 trillion cubic feet of gas from new fields in the KG (Krishna Godavari basin) D6 block," Ambani said while addressing the company's 40th annual general meeting. The created joint venture will work across the entire value chain, investing the equivalent to INR 40,000 crore. This project would also develop Reliance’s existing deep water gas fields in India’s eastern offshore, resulting in the production of 1 billion cubic feet per day of natural gas available by 2022.

"We have commenced commercial gas production from the CBM Blocks in Madhya Pradesh. CBM development, spread over 1000 square kilometers with hundreds of wells, makes it among the largest surface footprint projects in India," Ambani said.

Consumption of petrol hiked 11.9 percent to 2.1 million tons, and ATF sales rose 9.2 percent to 0.6 million tons.

Year-on-year sales for kerosene dipped 33.0 percent, reaching 0.4 million tons, while fuel oil declined 12.9 percent, to 0.6 million tons in June 2017, while lubes and greases fell 23.5 percent, standing at 0.3 million tons.

Consumption of naphtha fell 4.3 percent from June 2016 to June 2017, reaching 1.1 million tons in the sixth month of the year, while bitumen sales dropped 5.3 percent, to 0.5 million tons, diesel oil declined 5.7 percent, to 0.03 million tons, and others slipped 5.3 percent year-onyear, reaching 0.5 million tons in June 2017. Between April and June 2017, petcoke sales increased 1.1 percent when compared to the same period in 2016, while diesel consumption rose 5.8 percent, petrol and LPG both expanded by 10.6 percent, and ATF sales increased 9.9 percent, while others rose 2.1 percent.

Total consumption of fuels for the country increased 3.0 percent yearto-date, totalling 51.1 metric tons, despite a 34.1 percent decline in kerosene consumption, a 9.9 percent drop in bitumen, 7.7 percent in fuel oil, 3.4 percent in naphtha, and with lubes and greases contracting by 10.7 percent in the same period, while LDO fell 1.2 percent.

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analyst recommendations India Cements Investment analysts advise that India Cements will outperform the market as of August 4. This has been the consensus forecast since the sentiment of investment analysts improved on Jan 31, 2017. The previous consensus forecast advised investors to hold their position in India Cements.

Ambuja Cement As of August 4, 2017, the consensus forecast amongst 38 investment analysts advises investors to hold their position in Ambuja Cements. This has been the consensus forecast since

UltraTech Cement As of August 4, 2017, the consensus forecast amongst 43 polled investment analysts advises investors to hold their position in the company, according to the

the sentiment of investment analysts deteriorated on Apr 13, 2016. The previous consensus forecast advised that Ambuja Cements Ltd would outperform the market, according to the Financial Times.

Financial Times. This consensus forecast since the sentiment of investment analysts deteriorated on May 3, 2017. The previous consensus forecast advised that UltraTech Cement would outperform the market.

Ramco Cements The consensus forecast amongst 24 polled investment analysts covering Ramco Cements advises that the company will outperform the market, ss of August 4. This has been the consensus forecast since the sentiment of investment analysts improved on Nov 6, 2012. The previous consensus forecast advised investors to hold their position in Ramco Cements, according to the Financial Times.

Sagar Cements As of August 4, the consensus forecast amongst 5 investment analysts advises investors to purchase equity in the company, according to Financial Times. This has been the consensus forecast since the sentiment of investment analysts improved on Jul 11, 2014. The previous consensus forecast advised that Sagar Cements Limited would outperform the market.

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BUZZ

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Holcim Mexico targets own house builders

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recorded

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economic

waste

global portland

materials

concrete

exports

growth

Port in the UK to receive petcoke shipment

4.

Russia: Omsk refinery announces installation of petcoke equipment

5.

India: Petcoke consumption dives in June

6.

US: Detroit Lawmaker proposing petcoke regulation

7.

BP inaugurates petcoke storage space in Spain

output

coke

refinery

2.

India cements posts lower net profit, 1q2017

3.

India gov't approves Cement Corporation of India’s unit’s revival

4.

India: four cement plants ordered to close in Telangana

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India’s Bharat to build new plant

6.

India cements focus on utilization rate

7.

Indian producers ask for balance in export customs with Pakistan India cements to focus on exports, market expansion New cement project in Telangana, India

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using

IRAN

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short thermal volume

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India’s Birla Corporation with lower profit in 1q2017

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3.

materials results

industrial

1.

9.

India: Petcoke burning to be allowed

imports russia

results

INDIA

8.

sold

investment

ministry products

slag

waste

2.

exports

Cimaf to build new plant in Gabon

Reliance’s petcoke project is at advanced stage

products

3.

IRAN

1h2016

Intercement to launch ipo on Loma Negra

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vietnam

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TOP BMWeek.com STORIES 1.

US: ACG Materials acquires Gypsum Company

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Sandvik sells conveyor businesses to Australian company

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Fletcher building’s chief executive is resigning

industrial

4.

United States lime & minerals improves revenue in Q2

imports

region results

5.

U.S. Researchers looking into roman concrete

6.

UK: Wienerberger adds to blended bricks offer

7.

Breedon group H1 turnover grows

8.

FLSmidth acquiring part of Sandvik mining systems

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Lehigh Hanson opening new aggregates quarry

large

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10. Imerys acquires zirconia producer in China

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CW SUMMIT DUBAI 2017 CW Group Cement and Fuel Strategy, Trade and Finance Summit Middle East & Africa

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