India Cement and Construction Materials journal (ICCM) 43 by CemWeek

india A CemWeek Publication

issue 43

Cement

AUGUST / SEPTEMBER 2018

& construction Materials

LEADERS Q&A

Phil Hodgson

CW Research

Cement prices improve in 2Q

Managing Director of Calix Indian Cement Market

White Cement

Can cement demand survive rising production costs?

News

Analysis

Market Coverage

The rise of emerging economies

Interviews

People

GLOBAL WHITE CEMENT

MARKET & TRADE REPORT The Global White Cement Market & Trade Report provides an in-depth, data-oriented market assessment of the worldwide white cement industry, focusing on industry trends, global movement of product as well as major suppliers and consumer markets. White cement consumption and production figures are discussed, along with import and export data, pricing trends and white cement capacity developments. The research team highlights global leading white cement producers to provide insight into the production capacity, distribution and marketing initiatives.

Comprehensive analysis of the global white cement market.

LET US GUIDE YOU.

This comprehensive and rigorous outlook provides: •

5-year projection of global white cement consumption and production (in tons) through 2023 by country and region

•

White cement plant production facility mapping with manufacturing details and capacity market shares

•

Extensive quantitative information on consumption, usage segments, production, local prices, regional benchmark trade prices, trading facilities and trade-flows, by region and major country

CEM ENT • BUILDING MATERIALS • DRY BULK CARGO & SHIPPING • CHEMICALS • INDUST RIAL MINERALS • INDUSTRIAL EQUIPMENT • PAPER & PULP • PETCOKE research.cwgrp.com •

inquiries@cwgrp.com • sales@cwgrp.com

FEATURES Leaders Q&A: Phil Hodgson 04 As environment-friendly technology has become an inescapable subject of discussion in the cement industry, CemWeek presents an exclusive interview with Phil Hodgson, Managing Director at Calix, about carbon capture and storage (CCS) and how it can help the cement sector step up its ecologic game

Insight Analysis: On Solid Ground– Norway’s plan to create an international CCS value chain

As Norway looks into the feasibility of an innovative CCS project, HeidelbergCement’s Norcem could become the world’s first cement plant with full-scale carbon capture

Analysis - Can Indian cement 14 Insight demand survive rising production costs?

After a challenging first quarter of the 20182019 fiscal year, ICCM assesses how the Indian cement industry can withstand increasing input costs and adverse weather conditions

Research: Cement prices 18 CW continue positive momentum in 2Q 2018 Both gray cement trade prices and domestic indices recorded an overall improvement in the second quarter of 2018. Nevertheless, the outlook for the third quarter doesn’t appear as promising

india

Cement

DEPARTMENTS 2 Letter from the editor Burning out

rOBERT MADEIRA

numbers in brief 3 After a troubled 1Q2018, demand is back on

Margarida Cunha

& construction Materials

www.cemweek.com/india

track

cemweek publisher head of cw group research

Editorial Coordinator

Research and Analytics 34 Cement Volumes

Liviu Dinu Mihnea Manea Advertising

Paulo Cruz Raluca Cercel Sara Ruas Simão Alvarez

cement 36 people 38 equipment highlights 40 regional news

CONTRIBUTING WRITERS & RESEARCHERS

sANTOSH sHETTYE DESIGN

BUZZ 42 Top 10 CemWeek, BMWeek and PetcokeWeek stories

To subscribe or advertise, please contact us at T (India): +91-989-236-1085 E: sales@cwgrp.com ©2018 CemWeek LLC. All rights reserved. The contents of this publication may not be reproduced by any means, in whole or in part, without the prior written consent of the publisher. Cover image credit: cheyaho74 SUBMISSIONS To submit a contribution to the India Cement & Construction Materials magazine send us an email at inquiries@cwgrp.com

Analysis: How can a trade 24 Insight war affect the global cement

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

CemWeek draws a timeline of the latest developments in the US-China trade dispute and ponders on how a possible trade war could affect global cement market dynamics and trade flows

The CemWeek Magazine is published by the CW Group LLC

industry?

Research: White cement 28 CW consumption to accelerate on increasing purchasing power A premium building material traditionally favored by developed markets, white cement is carving its place among emerging economies. CW Research assesses the world white cement market, including global and regional trends on capacity, production, and end-use sectors, and presents a forecast on consumption trends through 2023

Greenwich: India: PO Box 5263 Andheri East, Greenwich, CT 06831 USA Mumbai - 400072 www.cwgrp.com Maharashtra www.cemweek.com The publishers regret that they cannot accept liability for error or omissions contained in this publication, however caused. The opinions and views contained in this publication are not necessarily those of the publishers. Readers are advised to seek specialist advice before acting on information contained in this publication which is provided for general use and may not be appropriate for the reader's particular circumstances. The ownership of trademarks is acknowledged. No part of this publication or any part of its contents thereof may be reproduced, stored in a retrieval system or transmitted in any form without the permission of the publishers in writing. An exemption is hereby granted for extracts used for the purpose of fair review.

To subscribe please visit http://www.cwgrp.com/subscribe-cemweek

letter from the editor

Burning out

he first quarter of the 2018-2019 fiscal year proved challenging for Indian cement manufacturers. Top producers, such as India Cements, Ramco Cement, and Shree Cement, reported a decrease in margins and net profit, a trend largely attributable to rising petcoke prices. In this issue, we look back on the first quarter of the fiscal year and reflect on how increasing input costs and weather constraints may affect Indian cement demand and producers’ margins. The cement industry’s, particularly India’s, reliance on petcoke is undeniable, as proven by the first quarter results. However, it’s limestone that poses the bigger problem. As Phil Hodgson, Managing Director at the multiaward-winning Australian technology company Calix, underlined in the interview ahead, roughly two-thirds of emissions from a cement plant is CO2 from the limestone. So, if emissions become inevitable, how do we solve the problem? We bury it.

As the future of sustainable cement production remains on the table, prices for the commodity enjoyed positive developments in the second quarter, a trend that is unlikely to persist in 3Q. Be sure to check our feature on the topic, where CW Research crunches the numbers and takes an in-depth look into the trends that shaped cement domestic and trade prices between April and June. Meanwhile, the white cement market, traditionally a niche for developed economies, is witnessing the rise of a promising target: emerging markets. Don’t miss CW Research’s main figures and insights on capacity, production, consumption and end-user trends for this cement segment. Time seems to be burning out, both for petcoke and the cement industry. As a satisfying fuel alternative that meets manufacturers’ needs while reaching the zero emissions goal hasn’t surfaced yet, burying the problem seems to be a good step forward.

In this issue, we take a look at Norway’s groundbreaking CCS project. The country is assessing the feasibility of capturing carbon dioxide emissions from several industrial sources. If it succeeds, Norway could lay the foundation for the establishment of the Norwegian continental shelf as a large-scale centralized storage facility for European CO2 – and, thus, create a sustainable and lucrative model that could be replicated in markets around the world.

AUGUST / SEPTEMBER 2018

India Cement and Construction Materials Journal

Margarida Cunha

Editorial Coordinator

numbers in brief

Consumption picks up speed in 2Q2018 After a troubled 1Q2018, demand is back on track Some of the largest cement manufacturers in the world registered encouraging results in the first half of the year. In spite of a lackluster performance in 1Q2018, when demand was troubled by the unseasonal cold in Europe and North America, consumption picked up speed considerably in the second quarter of the year, both quarter-on-quarter and year-on-year. CHART: 1H2017 and 1H2018 revenue (USD mn)

Source: Company reports, CW Research

The pricing strategy companies such as Cemex and LafargeHolcim implemented were also helpful and translated into the growth of margins. HeidelbergCement registered volume growth across business lines, and also plans further price increases to compensate the higher-than-expected cost of inflation. For Cementir, positive results in the European and Asian markets countered the lackluster performance in Egypt. CHART: 1H2017 and 1H2018 EBITDA margin (%)

Source: Company reports, CW Research

EBITDA results were also sufficient to offset a soft first quarter, but not sufficient to surpass the levels registered a year before. Operating expenses continue to increase during the quarter, as input costs are recovering to the detriment of cement manufacturers.

India Cement and Construction Materials Journal

AUGUST / SEPTEMBER 2018

Leaders Q&A

AUGUST / SEPTEMBER 2018

India Cement and Construction Materials Journal

P hil Hodgson Managing Director, Calix As environment-friendly technology has become an inescapable subject of discussion in the cement industry, CemWeek presents an exclusive interview with Phil Hodgson, Managing Director at Calix, about carbon capture and storage (CCS) and how it can help the cement sector step up its ecologic game

India Cement and Construction Materials Journal

AUGUST / SEPTEMBER 2018

Leaders Q&A Calix is leading the LEILAC (Low Emissions Intensity Lime And Cement) project, which includes a consortium of the world’s largest cement (HeidelbergCement, Cemex, CRH/Tarmac), and lime (Lhoist) companies, as well as leading research and environmental institutions (Imperial College, ECN, Quantis, The Carbon Trust). How did this project come to be? Calix’s technology was originally developed to look at processing carbonates such as limestone and directly separate and thus efficiently capture CO2. After Calix proved the technology on a commercial scale for another carbonate mineral, magnesite, in its Bacchus Marsh plant, it reignited interest in looking at applying the technology to the cement and lime industry, which use huge amounts of limestone. Calix started talking to big cement and lime

companies and, with those that took an interest, formed a consortium to apply for funding from the European Horizon 2020 scheme, which is specifically for research and development relating to climate change strategies. The consortium, with Calix in the lead, was successful in winning funding and the project commenced in 2016. The project team included a selection of major

Because CO2 is kept in a contained space in the reactor tube, (…) [it] comes off as a pure stream, which allows us to capture it directly for no energy penalty cement and lime companies plus some research institutes and specialist engineering and technology companies. Calix has secured €3.4 million in working capital from EFIC, the Australian G o v e r n m e n t ’s export credit agency, to build a CO2 capture facility for the LEILAC project, in Belgium. What are your expectations for this initiative? Typically with grant funding of projects such as LEILAC, there

AUGUST / SEPTEMBER 2018

India Cement and Construction Materials Journal

is a grant drawdown schedule that pays back eligible costs once they are incurred. That means that costs are incurred and carried by the grant recipients until their work is checked and verified by the grant administrators. As a small Australian company building a plant in Europe, the upfront costs were significant. While the grant would repay these costs, Calix had to come up with the money upfront to purchase equipment and employ contractors to build the plant. Reimbursement would come months or even a year or two later, which could create a large gap in the business’s cash flow. To help Calix secure its commitments under the Horizon 2020 grant, EFIC provided the working capital. The expectation is that, once construction is complete, Calix will achieve the grant drawdown, which will let it repay the EFIC loan. The consortium can then start up the plant, and hopefully prove the technology works! One of the cornerstones of LEILAC’s CO2 capture facility is Direct Separation technology. How does it work, and what are the benefits for cement manufacturers? In a regular cement or lime kiln, there is a need to generate a very high heat, so these kilns use furnaces that burn fuel. Very hot gases are brought into contact with the feedstock, which is basically limestone. That limestone converts into lime, which is the core product in cement. In doing so, the limestone gives off a lot of CO2 – about half the weight of limestone! This, added to the furnace gases, produces a significant amount of CO2. The Calix technology uses an externallyheated reactor tube that is heated to around 1,000 degrees. The limestone is ground

down to a small size, like the consistency of flour, and it floats down that tube and turns into lime while giving off CO2. Because the CO2 is kept in a contained space in the reactor tube, and not mixed with furnace gases, the CO2 comes off as a pure stream, which allows us to capture it directly for no energy penalty. When it comes to the fuel being burned, there are other technologies being worked on to capture the CO2 associated with burning that fuel. But it’s very important to capture the CO2 from the limestone, as roughly two-thirds of emissions from a cement plant is CO2 from the limestone. The aim of the LEILAC project is thus to demonstrate how Calix’s technology can lead to the direct separation of those CO2 emissions without additional capital or operating costs, compared to a current cement or lime plant. Despite an increasingly environmentally aware cement industry, carbon-capture technology remains far from mainstream adoption, with some opponents deeming it unavailable, immature and/or expensive. How can CCS (Carbon Capture and Storage) overcome its reputation problem? CCS is often talked about in relation to fossil fuels such as a coal-fired power stations. It’s important to understand fossil-fuel CCS solutions in the light of the cost of alternative energy sources such as solar and wind. And, it’s important to further separate fossilfuel CCS from the CCS associated with industrial sources of CO2. One of the largest industrial sources of CO2 is the cement industry. The CO2 in that industry comes mostly from the raw limestone,

which means it’s an unavoidable emission, as opposed to the emissions that come from burning fossil fuels in preference to solar or wind power.

CCS and discuss each on their merits. With respect to unavoidable industrial CO2 emissions CCS has a very important role to play.

The aim of the LEILAC project is to demonstrate how Calix’s technology can lead to the direct separation of CO2 emissions without additional capital or operating costs

According to CW Research’s 2017 World Cement Equipment Market and Forecast Report, environmental and automation are the cement equipment sub-markets most likely to increase in the next five years. Does this trend signal a new cement production approach? How?

Part of the dialogue that needs to take place is to separate fossil-fuel CCS and industrial

European cement companies and, to a lesser extent, companies in other parts of the world, have started to use interesting fuel substitutions in cement production. They’re moving from coal- or gas-fired kilns to biomass and recycled waste materials. This is increasingly helping to reduce the carbon footprint of the cement industry.

India Cement and Construction Materials Journal

AUGUST / SEPTEMBER 2018

Leaders Q&A Perhaps within a time period of five years, with enough willpower and incentives, significant fuel substitution already achieved in Europe could be achieved in the rest of the world. This will go some way to helping the carbon footprint of the industry. The Calix technology will require a longer horizon than five years for the cement industry. While the technology will be tested in Europe in the next few years, it will need to be scaled up and proven at scale, which is likely to take more than five years. However, the industry is certainly moving with respect to dealing with emissions, and multiple technologies, including Calix’s technology, are being advanced by the industry in the hope of dealing with CO2 emissions in the future. In February 2018, the US president Donald Trump signed the 45Q, a bill focused on expanding tax incentives for carbon-capture initiatives. Can this step somehow validate the economic viability of CCS? When talking about the economic viability of CCS, it’s important to understand when and to what extent there will be a price on carbon emissions. While there are some active carbon markets around the world, generally speaking, the cost

AUGUST / SEPTEMBER 2018

of carbon emissions is currently fairly low. In terms of the economic viability of CCS today, it’s unlikely that there would be many economically viable CCS projects. As CO2 gains a price or penalty, more CCS projects will probably become economically viable.

Perhaps within a time period of five years, with enough willpower and incentives, significant fuel substitution already achieved in Europe could be achieved in the rest of the world Considering it in the context of tax and other incentives, it’s important to be aware that early stage technology is typically expensive to develop and first stage implementation is this very costly. Over time, the cost of the application of those technologies will typically decrease. However, before this can happen, those upfront incentives are necessary to help drive the innovation required in the first place.

India Cement and Construction Materials Journal

In summary, as long as the incentives are designed to drive innovation in the short to medium term, rather than be a longerterm crutch for non-economically viable outcomes, they have a crucial role to play. According to the 2017 update of the Global Status of the CCS report by the Global CCS Institute, in order to achieve Paris Agreement targets, more than 2,000 CCS facilities will be needed by 2040, and 14 percent of cumulative emissions reductions must be derived from CCS. Currently, there are 17 large-scale CCS facilities operating globally, with four more coming onstream in 2018. How can the cement sector play a role in pushing the numbers up? Cement is one of the highest industrial sources of CO2, however it is dwarfed by the power and transportation sectors. Despite this, the cement industry seems to generally acknowledge it has a role to play in reducing CO2 emissions. There is enormous money going into infrastructure as the world urbanizes, and there is massive demand for new production capability. One Chinese cement company is building 100 new cement plants in three years across 50 countries. The cement industry

Calix is a multi-award-winning Australian technology company that is developing new processes and materials to solve global challenges. The core technology is a worldfirst, patented "kiln" built in Bacchus Marsh, Victoria that produces "mineral honeycomb" â&#x20AC;&#x201C; very highly active minerals.

Australia

Calix

By using these minerals, which are safe and environmentally friendly, Calix aims at improving waste water treatment and phosphate removal, help protect sewer assets from corrosion, and help improve food production from aquaculture and agriculture with reduced anti-biotics, fungicides and pesticides.

Calix's technology has also been adopted overseas, where the company is working with some

of the world's largest companies, governments and research institutions on CO2 capture.

must therefore investigate ways to reduce emissions and quickly scale the technology to utilize it across the industry.

The industry has already seen good initiatives in Europe and the cement industry is moving quickly there. In other parts of the world, movement appears

slower. A lot of cement companies are global companies, so they need to continue to spearhead developing new technologies and spread their use quickly to help mitigate the industryâ&#x20AC;&#x2122;s emissions.

India Cement and Construction Materials Journal

AUGUST / SEPTEMBER 2018

Insight Analysis

ON SOLID GROUND

Norway’s plan to create an international CCS value chain

As Norway looks into the feasibility of an innovative CCS project, HeidelbergCement’s Norcem could become the world’s first cement plant with fullscale carbon capture

AUGUST / SEPTEMBER 2018

India Cement and Construction Materials Journal

AUGUST / SEPTEMBER 2018

Insight Analysis

arbon dioxide emissions are an increasingly pressing issue across industries, and an inevitability for the cement sector. After one failed attempt to make carbon capture and storage economically viable, Norway is back with a groundbreaking project that aims to sequester CO2 emissions from several industries… and countries. BURYING THE PROBLEM

The cement industry has a sustainability problem. According to the Cement Sustainability Initiative (CSI) – a flagship sectoral project of the World Business Council for Sustainable Development (WBCSD) that counts among its members major players such as Cemex, CRH, HeidelbergCement, LafargeHolcim, and Votorantim Cimentos – the cement sector is the third-largest industrial energy consumer in the world, responsible for seven percent of industrial energy use, and the second industrial CO2 emitter, accounting for seven percent of global CO2 emissions. With global cement production projected to grow by 12 to 23 percent by 2050, carbon emissions from the global cement industry are expected to increase by four percent. Nonetheless, according to the Carbon Disclosure Project, thirteen of the world’s largest publicly-listed cement companies need to more than double their emissions reductions if they are to limit global warming to below two degrees, as agreed in the Paris climate deal. What is a company to do when emitting CO2 is almost an inevitability of its production process? It buries the problem. Literally.

AUGUST / SEPTEMBER 2018

A GROUNDBREAKING INITIATIVE Carbon capture and storage (CCS) technologies may be a pressing topic today, but capturing, transporting and storing CO2 has been done for decades. Since 1996, as a response to high taxes on carbon emissions, Statoil (now Equinor), Norway’s national oil and gas company, has separated and stored over 20 million tons of CO2 underground. Now, Gassnova, the Norwegian state enterprise for carbon capture and storage, has entrusted Equinor with a more ambitious endeavor: the world’s first undersea CCS project to capture CO2 emissions from multiple industrial sources, which would then be stored in the Norwegian continental shelf (NCS). According to Equinor, the first

According to Equinor, the first phase of this CO2 project could reach a capacity of approximately 1.5 million tons per year phase of this CO2 project could reach a capacity of approximately 1.5 million tons per year. Norway would thus stimulate new commercial carbon capture projects in the country, Europe and more globally across the world. In addition, the project has the potential to be the first storage project site in the world receiving CO2 from industrial sources in several countries.

India Cement and Construction Materials Journal

The initial plan comprised proposals for capturing CO2 from a cement factory, HeidelbergCement-owned Norcem’s Brevik production unit, a waste incinerator from Fortum Oslo Varme, and Yara’s ammonia factory. The carbon dioxide would then be shipped from each plant to an onshore facility on the Norwegian West Coast for temporary storage, after which it would be sent through a pipeline in the seabed to several injection wells east of the Troll field on the NCS. In order to accomplish the storage stage of the process, last year, Equinor signed a partnership agreement with Norske Shell and Total E&P Norge.

THE CHALLENGES OF CCS The Norwegian government estimated the project will cost up to 12.6 billion crowns ($1.6 billion), and announced it would decide whether to invest in 2019. With wind and solar technologies getting increasingly cheaper, carbon capture initiatives may seem like a heavy financial load, since they require significant capital expenditure. Furthermore, this is not the first time Norway gives CCS a try. In 2013, the country abandoned a similar project since it was proving challenging and costly. When public funds are involved, deploying CCS technology becomes all the more intricate. In October 2017, Norway announced it would slash the budget for the new CCS project by 90 percent, which

cast doubt all over the world concerning its continuity. As a pioneering nation in the CCS department, Norway’s cancellation of the project would represent not only another failure for the country, but also a worldwide step back regarding the adoption of carbon and capture storage technologies. For industries such as cement, CO2 emissions are practically inescapable. As Phil Hodgson, Managing Director of Calix, told CemWeek in an interview published on this issue, limestone accounts for roughly two-thirds of emissions from a cement plant, making it all the more important to capture them. In addition, according to the 2017 update of the Global Status of the CCS report by the Global CCS Institute, in order to achieve Paris Agreement targets, more than 2,000 CCS facilities will be needed by 2040, and 14 percent of cumulative emissions reductions must be derived from CCS. Currently, there are only 17 large-scale CCS facilities operating globally, with four more coming online in 2018.

There is no solar route to making cement environment-friendly route since “it’s not green” and storing CO2 could seem “sort of a waste bin”.

THE WORLD’S FIRST CCS CEMENT PLANT?

Despite the support from the oil industry, in May this year, the Norwegian government declared the decision to invest was postponed to 2020 or 2021. At the same time, Yara was dropped from the project. According to the government, the company was dismissed for not having much commercial motivation to prioritize CO2 capture at its facility. Not only does Yara already capture carbon dioxide, which is then sold to fizzy drinks companies, When in doubt, a little incentive can’t it is also pondering to change its fuel to hurt. In February 2018, Equinor, Shell liquefied natural gas, which would reduce and Total gathered to urge the Norwegian CO2 emissions. government to carry the CCS initiative forward. As reported by Bloomberg, at Nonetheless, the Norwegian government HeidelbergCement’s subsidiary the time, Shell’s CEO Ben van Beurden gave Norcem the green light. As reported by stressed the importance of speeding up Reuters, the government affirmed its the project, since “you do not have a intention to grant the company 80 million solar route to making cement.” Total’s CEO Patrick Pouyanne underlined the crowns ($10 million) for the annual struggle of convincing people CCS is an capture of roughly 400,000 tons of CO2 emissions at its Brevik plant. Norcem announced it received funding from the Norwegian state budget for 2018 for the last stage (FEED-study) before the final construction. According to the company, the aim of the FEED-study is a detailed review of the project to provide a basis for

an investment decision. The study will be ready by the end of August 2019. Recently, in August 2018, the Ministry of Petroleum and Energy said it would also offer Fortum Oslo Varme grants for FEEDstudies of CO2 capture at their waste incineration plant at Klemetsrud, in Oslo.

THE NEXT STEP: HYDROGEN Concurrently, Equinor is looking into the feasibility of combining carbon capture storage with hydrogen production. In July 2017, the company announced in a press release it signed a Memorandum of Understanding (MoU) with the Swedish power company Vattenfall and the Dutch gas infrastructure company Gasunie to evaluate the possibilities of converting Vattenfall’s gas power plant Magnum in the Netherlands into a hydrogen-powered plant. The potential CO2 emission reduction is four million tons of CO2 per year. Equinor added that the scope of the MoU also includes exploring how to design a large-scale value chain where production of hydrogen is combined with CO2 capture, transport and permanent storage, as well as considering potential business models. For that purpose, in July this year, Jacobs Engineering Group was awarded a feasibility study contract from Equinor to evaluate the possibilities for building a hydrogen production plant, including CO2 capture and export facilities, in Eemshaven, the Netherlands. When talking about the future and sustainability, people and companies always tend to look ahead. In its pioneering fashion, Norway may prove the world the future is well beneath us.

India Cement and Construction Materials Journal

AUGUST / SEPTEMBER 2018

Insight Analysis

AUGUST / SEPTEMBER 2018

India Cement and Construction Materials Journal

Can Indian cement demand survive rising production costs? After a challenging first quarter of the 2018-2019 fiscal year, ICCM assesses how the Indian cement industry can withstand increasing input costs and adverse weather conditions

India Cement and Construction Materials Journal

AUGUST / SEPTEMBER 2018

Insight Analysis

ndia’s cement companies have reported a decrease in their margins in the first quarter of the new fiscal year due to several cost constraints. As cement demand is set to grow in the country, can companies see their profit expand? A challenging first quarter In the first quarter of the 2018-2019 fiscal year, cement manufacturers in India mainly reported a decrease in margins and net profit, which was attributed to a rise in prices for petcoke and freight rates. This happened with several companies, such as India Cements, Dalmia Bharat, Ramco Cement, JK Lakshmi Cement, and Shree Cement. Conversely, one of the largest cement manufacturers in the world, Ultratech, reported solid quarterly earnings, but the figures cannot be compared to the ones of the previous fiscal, as the company has since then acquired several cement assets from Jaiprakash Associates.

AUGUST / SEPTEMBER 2018

Input costs on the rise

Demand will remain healthy throughout the year on the back of private and public investment Although the cement industry was one of the few allowed to use petcoke, the material can now only be used during the cement manufacturing process, in the kiln, and had to be replaced with pricier fuels to provide energy, such as coal. All of these extra charges added up to an estimated impact of nine to fifteen percent on the cement producers’ margins, according to ICRA’s calculations, and the road ahead remains murky for the manufacturers, despite an expected increase in cement demand.

India Cement and Construction Materials Journal

Some of the cement companies, such as Ramco Cement, reported a rise in sales during the period, while Ambuja Cement’s and ACC’s profits increased when compared to the first quarter of fiscal 201718. This happened despite the 28 percent Goods and Services Tax (GST) rate for cement products, one of the highest tiers of taxation, and mostly attributed to luxury goods. In part, this is due to an increase in demand, coupled with a rise in costs of energy and freight, as well as declines in cement prices in some of the regions. Petcoke prices reached an all-time high during this period. Despite a ban on its use and import into India, the cement industry is allowed to use the product in its kilns during the cement manufacturing process. Most companies have switched to using coal for their energy needs, but prices were also pressured up by 30 percent during the quarter, and a rise of 21 percent in diesel prices translated into an increase in freight costs. Price-wise, cement bags suffered a decline of around five to six percent at a pan-India level during the April-June 2018 quarter, and are expected to remain under pressure during the second quarter of the fiscal year as the monsoon season starts and construction efforts will either be halted or slowed down.

The thinning of cement companies’ margins is a recent event, but risks have increased over the past years due to the increase in the country’s cement capacity and the expanded competition both from domestic players and from external suppliers. The galloping prices for petcoke and coal, which have peaked in the last few months, have fanned the flames of the fire, and a decrease in infrastructure investment by the government in 2017-18 has only contributed to the trend.

Push in demand According to ICRA, India’s cement demand in fiscal year 2018-19 is set to expand by around six percent, as the affordable and rural housing segments rise, along with road and irrigation projects in infrastructure. In the first quarter, the eastern region saw cement demand grow due to low-cost housing and infrastructure demand, while in the western markets it expanded through the execution of infrastructure projects. The low-base effect of the fiscal year of 2017-18 will also boost construction results. Supplies have also been expanding, but cement prices have taken a hit of around five to six percent across the entire country, which does not bode well for cement companies in the coming year, as costs have been expanding, thus pressuring

company margins. However, companies are expecting prices to increase over the next few months, due to growing demand and a ramp-up in cement production from existing facilities. However, cement demand in some regions could be affected by weather constraints, such as floods in Kerala. In addition, prices are set to remain muted in the near-term in the region due to both the decrease in demand and the oversupply of the product, despite the ongoing reconstruction efforts having a positive effect on cement demand.

ACC's and Ramco’s cements profits defied the overall decreasing trend and grew in the first quarter

Looking ahead, cement companies’ profitability hinges on a multitude of aspects, most of which are out of manufacturers’ control. Yet, as the increase in costs comes from very necessary inputs, it is unlikely that they will be reined in, unless prices for coal, petcoke and diesel contract in the coming months. The weather will also remain an important factor as the country goes through its monsoon season, a period when construction efforts typically slow down. During the second quarter of the fiscal year, in July-September, construction activity is likely to decrease due to the heavy rain affecting part of the country, which will push cement companies’ earnings down. Despite profitability being challenging at the moment, India’s cement market will nevertheless continue expanding both through greenfield and brownfield projects. Players keep on cementing their positioning in the industry through mergers, acquisitions and daring new projects, boosted by infrastructure investment in its fast-growing urban areas, and in rural settings as well.

Conclusion The effect of several macroeconomic factors on cement companies’ margins during the second quarter came from both international and domestic pressures, namely the added impact of fuel costs and the high GST rate for cement.

India Cement and Construction Materials Journal

AUGUST / SEPTEMBER 2018

feature cw research

Cement prices continue positive momentum in 2Q 2018

AUGUST / SEPTEMBER 2018

India Cement and Construction Materials Journal

Both gray cement trade prices and domestic indices recorded an overall improvement in the second quarter of 2018. Nevertheless, the outlook for the third quarter doesnâ&#x20AC;&#x2122;t appear as promising

India Cement and Construction Materials Journal

AUGUST / SEPTEMBER 2018

feature

etween April and June 2018, there was a generalized improvement in FOB and exwork prices, noticeable in most of the regions. This was supported by an increase in the volumes of both domestic and international sales. Exceptions in demand growth include Brazil and Kenya, still affected by political turmoil. On the other hand, Turkey showed particularly strong domestic demand and exports. Demand highlights

Overall, cement demand remained strong during the second quarter of the year, growing globally with some exemptions. Turkey was among the markets displaying the strongest growth, as builders were surprised with good weather conditions during the first four months of the year – a very different scenario from the harsh winter of 2017. Thus, cement demand benefited from a low-base effect from

2017 and rose by 33.2 percent year-onyear in 2018. In Mexico, cement demand has also increased but not as much as expected. Between January and May 2018, consumption rose by only three percent year-on-year. Faced with uncertainty over the July 1 presidential election, many public and private investors have postponed their decisions.

Turkey took the lead in terms of cement exports during the second quarter of 2018

GLOBAL OUTLOOK: GRAY CEMENT EXPORT PRICE

Source: CW Research

AUGUST / SEPTEMBER 2018

India Cement and Construction Materials Journal

To the contrary, cement demand continued to decline in Brazil, after some dim signs of recovery. The national cement sector was strongly affected by a general truck drivers’ strike held during May that paralyzed logistic chains and led to as much as 70 percent of the country’s factories halting production, either for lack of raw materials or for excess inventory. Demand figures were similarly disappointing in Kenya. The local cement market is still reeling with the impact of a protracted presidential election that created uncertainty among investors. While cement demand tumbled seven percent year-on-year in May 2018 alone, CW Research believes that the local market will tend towards stabilization as the government rolls out new infrastructure projects.

Trading Traded volumes improved between the first and second quarters, as the harsh weather and other seasonal effects such as the Easter holiday impacted demand during

January-March 2018. The second quarter was also marked by sudden movements in prices and traded volumes for some of the major exporters. Turkey took the lead in terms of cement exports during the second quarter of 2018, dethroning China, which stayed was only the fourth major exporter behind Japan and Thailand. Chinaâ&#x20AC;&#x2122;s traded volumes fell by almost 50 percent year-on-year to 1.5 million tons, while trading prices jumped 18 percent year-on-year to USD 53-54 per ton, a reflection of tough policies on cement production imposed by Beijing and the provincial governments. Likewise, Turkish exports soared by 40 percent yearon-year boosted by a higher demand from

Turkey took the lead in terms of cement exports during the second quarter of 2018

both more traditional buyers and smaller ones, such as Haiti, Mauritania, Ghana, and Brazil; whereas FOB prices fell by five percent quarter-on-quarter.

Ex-work Prices Domestic prices have risen in most of the major markets assessed by CW Research, with the most positive movements seen in the Mediterranean Basin, Western Europe, Eastern Europe and China. Favorable weather, a more positive feeling in the construction sector, and the appreciation of the Euro against the US dollar has contributed to an improvement of 10 percent year-on-year in Western European cement prices, with Germany and France emerging as the top performers. In the Mediterranean Basin, a slow demand recovery was seen in Italy, as investment increased in the housing and infrastructure segments, in spite of uncertainty over the election cycle, leading to cement prices reaching almost USD 78 per ton.

India Cement and Construction Materials Journal

AUGUST / SEPTEMBER 2018

feature Some of the worst price scenarios in 2Q 2018 were observed in South America, with Brazil and Argentina weighting down on the regional prices, and the Middle East. In the UAE, the times when exceeding demand sustained high prices are gone, and manufacturers are now dealing with stiff competition, rising energy costs, and overcapacity. For the coming quarters, CW Research forecasts a generalized downturn in ex-

AUGUST / SEPTEMBER 2018

work prices. One exception is China, where the renovation plan for town areas and large investments in transportation infrastructure, coupled with pressure on the supply side from policies designed to reduce overcapacity and pollution, are expected to boost prices. The Mediterranean Basin is another exception, driven by growth in Italy and Egypt, counterbalanced by a fall in Spanish prices.

India Cement and Construction Materials Journal

FOB Prices Globally, median FOB cement prices increased during the first quarter of 2018, reaching USD 63 per ton, falling back to USD 58 per ton in April, only to resume their progress in the months afterward. Top prices were close to USD 155 per ton by June 2018, after following a mixed trend for the last couple of months. Traditionally, the highest cement prices are observed in markets such as Canada, the United States, Denmark, and Luxembourg. At the bottom end, the lowest prices â&#x20AC;&#x201C; traditionally coming from Turkey, Iran, South Korea, Vietnam, and Japan â&#x20AC;&#x201C; have made a slight rebound from the USD 31 per ton registered in January and February to reach USD 32 per ton in June.

Going forward, CW Research expects global average FOB gray cement prices to enter a negative phase Global average FOB prices for gray cement have steadily improved after a slump in December 2017. Both higher input prices and demand have contributed to an increase in almost all regions during the second quarter, with a wider improvement seen in Western Europe and the Mediterranean Basin. On a quarter-on-quarter basis, prices improved mostly owing to seasonal factors and a low-base effect. Going forward, CW Research expects FOB gray cement prices to enter a negative phase in the third quarter of 2018, with prices likely to slip more noticeably in the Middle East and the Mediterranean Basin. Only Asia-Pacific-Japan and North America are expected to escape the trend.

In Asia-Pacific and Japan, prices are expected to improve 2.1 percent by September 2018 and average USD 49 per ton, propelled by a large hike in Bangladesh and a more moderate one in Japan. The upward trend will be partly offset by lower prices in China, India, Taiwan, and Vietnam, where competition remains fierce. In the meantime, prices are expected to marginally decrease in Western Europe from June through September, averaging USD 82 per ton. While most of the regional markets are expected to maintain their recovery trend, Austria is facing a potential fall of eight percent in 3Q 2018 quarter-on-quarter. To the south, in the Mediterranean Basin, prices are forecast to slip by 2.3 percent, with improvements in Spain and Italy unlikely to make up for the decrease in prices in Portugal and Greece.

Conclusion An improvement in domestic demand and export volumes across most of the considered regions has created a supportive environment for a recovery in both FOB and ex-work prices. However, the outlook is not so promising, with prices likely to contract in most of the regions. An important exception is China, where demand will likely grow in pair with new measures to limit industrial output, leading to a tighter supply and demand relation.

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 +40-74467-44-11, or e-mail at ld@cwgrp.com.

India Cement and Construction Materials Journal

AUGUST / SEPTEMBER 2018

Insight Analysis

How can a affect global cement

CemWeek draws a timeline of th China trade dispute and ponders o affect global cement marke

AUGUST / SEPTEMBER 2018

India Cement and Construction Materials Journal

trade war affect the cement industry?

he latest developments in the USon how a possible trade war could et dynamics and trade flows

Photo Credit: UltraTech Cement

India Cement and Construction Materials Journal

AUGUST / SEPTEMBER 2018

Insight Analysis

he United States and China, the largest global economies, have set high import duties on several of each other’s goods, among them cement. As US President Donald Trump moves forward with the plan and China retaliates, the world prepares for a plausible trade war and its impacts on the global cement market

US government has placed tariffs on cement and related products

A trade war is brewing The new president of the United States’ aggressive style of international politics has been wreaking havoc on the markets. It started with his import tariff on aluminum and steel on Chinese goods as well as other United States’ long-term allies, such as Canada and the EU, which prompted Canada to reply with its own tariffs, while the EU is aiming to clear a trade deal with the US. Yet, the latest move – which the government justified by saying it needs to protect national security, the intellectual property of US businesses, and to reduce the trade deficit between the two countries – consists of imposed tariffs on around USD 50 billion worth of goods coming from its largest trade partner, China. This move, however, set off a trade war whose effects are yet to be fully assessed, as it enters its initial stages.

AUGUST / SEPTEMBER 2018

The US government first set tariffs on foreign solar panels and washing machines on January 2018, which China, the world’s largest manufacturer of both, decried. Later, the Trump administration imposed tariffs of 25 percent on steel imports and of ten percent on aluminum imports, mainly targeting Chinese products. Yet, tariffs were extended to trade partners such as the European Union, Canada and Mexico, which some have matched, claiming that these were harmful to US manufacturing efforts. Later, the president had the United States Trade Representative apply tariffs of USD 50 billion on Chinese goods, based on Section 301 of the Trade Act of 1974, claiming that the tariffs were “a response to the unfair trade practices of China over the years”, such as the theft of US intellectual property.

India Cement and Construction Materials Journal

This prompted China to accuse the US of starting a trade war, and retaliated by imposing its own trade sanctions after negotiations between the two parties fell apart. The first tiff started on July 6, when the US imposed a 25 percent import tariff on USD 34 billion worth of Chinese imported products, while China responded with similar tariffs. This prompted the US to impose an additional ten percent tariff on USD 200 billion worth of Chinese imports, to begin in August 2018. Among these products were mineral goods, such as cement and other related products.

Cementing issues The proposed ten percent tariff on Chinese mineral products will come into force in August 2018, and includes over 600 items, among them cement, limestone flux, quicklime, slaked lime, gypsum, anhydrite, clinkers of Portland, aluminous, slag, super sulfate and similar hydraulic cements, white Portland cement, Portland cement, aluminous cement, slag cement, refractory cements, additives for cement, cement-based building materials, and more. The United States is not only China’s main trade partner, it is also a large import market for cement and building materials. Lately, construction activity in larger US cities have been expanding, and the President’s USD 1.5

trillion infrastructure plan could accelerate this growth even further. After the steel tariffs kicked in, however, costs have expanded, thrust upward by an increase in energy prices, which could cause delays, scaling down, or even cancellation of some projects. This, in turn, could affect cement demand growth in the United States, although, for now, Chinese imports of the product aren’t the top concern. The United States’ main cement provider is its neighbor Canada, which so far has responded to Trump’s aluminum and steel tariffs with their own set of import duties for US goods. Overall imports of cementitious materials into the US, however, remain at around USD 1 billion, with cement imports estimated below twelve million tons in 2017, a very small part of the total US imports. China supplied only around eleven percent of total cement imports, while Canada’s share reached almost 40 percent. For 2018, CW Research estimates that the United States will import around 14.3 million tons of cement and clinker, or USD 1.3 billion, although it remains to be seen how this forecast will be affected by the budding trade war.

Conclusion Despite the latest developments, the US tariffs on cement and other related materials are likely to be more of a hiccup than a choke: China is not the United States’ main cement supplier, and there are other nearby markets that are capable of supplying it to the country. However, the imposition of tariffs for products related to the industry is not negligible, since it could cause a rise in cement prices as domestic companies try to offset the higher input costs. The concerns regarding cement demand are not to be neglected as well, especially as prices for the construction industry seem to be rising, which could turn Trump’s infrastructure plan into a lot more expensive venture, or render some projects much less viable.

Cement imports to the US account for a low percentage of the country’s total trade

The concerns for the trade war should be placed on other markets as well, as it can affect supply and demand dynamics in other countries and regions, either due to the financial impacts, or in the two potencies’ search for other markets; Chinese cheaper cement exports into other nations could affect an emerging industry in developing nations, particularly in Africa, as China moves forward with its Belt and Road initiative, while the United States’ demand could affect supply flows in some of its trade partners, such as Canada and Mexico. As the trade war is yet in the beginning, its full effects in the global economy remain to be seen, although many experts expect the worst, and have already spoken against the United States’ tariffs, claiming that these are harmful for global trade. China had proposed to increase its spending on US goods, which was still not enough to deter president Trump’s “America First” approach to global policies. If these are to continue, the playground of the global economy will have more losers than winners – and most seem to agree that the United States will have a hard time fitting in the latter category.

India Cement and Construction Materials Journal

AUGUST / SEPTEMBER 2018

feature

CW RESEARCH

White cement consumption to accelerate on increasing purchasing power

AUGUST / SEPTEMBER 2018

India Cement and Construction Materials Journal

A premium building material traditionally favored by developed markets, white cement is carving its place among emerging economies. CW Research assesses the world white cement market, including global and regional trends on capacity, production, and end-use sectors, and presents a forecast on consumption trends through 2023

India Cement and Construction Materials Journal

AUGUST / SEPTEMBER 2018

feature

hite cement, a premium building material as compared to grey cement, is a more expensive commodity due to its composition and production costs. It follows its own trends in terms of geographical distribution of output capacity, bagging and transportation, trade, and consumption. Developed markets with more purchasing power are the main users, but

cultural and climatic variables are also significant. The typical way in which white cement is applied – ranging from masonry and architectural precasting to pool finishes – also varies widely from region to region. Since white cement has higher price margins and the raw materials for its production are scarce in some regions, trade plays an important role in the market. While some markets, such as China, have attained self-sufficiency, others, like the United States, remaining largely dependent on imports. Capacity additions White cement production capacity has increased by an average annual rate of 2.5 percent between 2013 and 2018, a much faster pace when compared to the cumulative average growth of 0.6 percent registered in consumption. China, which has the capacity to produce 7.6 million tons of white cement per annum – representing around 25.4 percent of the global installed capacity – increased its output capabilities by 1.9 percent per annum during that period. To the contrary, Western Europe, which has the capacity to produce 4.4 million tons per annum, saw a fall of 0.3 percent per annum between 2013 and 2018. Going forward, capacity additions will be c o n c e nt r at e d in the Middle East, where installed capacity

AUGUST / SEPTEMBER 2018

India Cement and Construction Materials Journal

is expected to increase by one million tons until 2023. Excluding China, the region will have the largest capacity of every other region by that year. Right now, Raysut Cement and Oman Cement Company are working on a joint venture called Al Wusta Cement that will produce 300,000 tons of white cement per annum once finished, in 2020. The new factory will supply white cement to the Duqm – a fast-growing special economic zone in central Oman – but also to markets across the Middle East, East Africa, and India.

Output distribution The availability of raw materials to manufacture white cement is confined to a few producing regions, thus prompting the trade of the premium commodity. China continues to be the largest white cement producer in the world, with a market share of around 28 percent, enough to make the country relatively self-sufficient. Western Europe is the second largest producer of white cement, with around 16 percent of market share, or an output of three million tons per annum.

White cement production capacity has increased by an average annual rate of 2.5 percent between 2013 and 2018 Production is also concentrated around a small number of manufacturers, a trend that has become more salient since 2014, with a wave of mergers and acquisitions. Those include the takeover of Italcementi by HeidelbergCement in October 2016 and the enlargement of Cementir through its subsidiary Aalborg, which bought two white

Regional and company-wise distribution of white cement production

Source: CW Research

cement plants from HeidelbergCement in Belgium, acquired Sacci in Italy and expanded into the Malaysian market. Currently, the top 10 global producers of white cement control around 60 percent of the total production, with the table being led by Cementir, followed by LafargeHolcim in second, and Cimsa in third.

Trade dynamics With production hubs normally far from the end-user markets, trade plays a key role on white cement distribution. In 2017, white cement trade reached 5.7 million tons, an increase of 1.8 percent compared to the previous year. Seaborne haulage represents most of the white cement trade globally, at around 65 percent. Most of that trade is made in large bags, which represent around 60 percent of all trade, while retail bags account for the remaining 40 percent. That is another distinctive aspect of white cement when compared to grey, which has even higher levels of bulk transportation, thus making white cement relatively more expensive to transport. However, there are some regional discrepancies when it comes to bagging, with big bags being much more used than retail bags in North America, while in Western Europe retail bags are more prevalent.

The largest traders of white cement are mostly developed markets, together with some developing ones like Middle East, where weather conditions play a large role, and North Africa, where white cement has an important cultural significance.

China continues to be the largest white cement producer in the world Western Europe is the largest exporter of white cement, with trade among regional markets representing 55 percent of the flow, with the remaining 45 percent finding its way mostly to North American, and Eastern Europe and the CIS. Denmark and Spain are the largest exporters within Western Europe. The region is also a top global importer, accounting for 22 percent of the total imports in 2017, a share similar

to that of North America and the Middle East. Eastern Europe and the CIS exported around 1.3 million tons of white cement in 2017, mostly to the Middle East and Western Europe. The United States has the largest deficit of white cement in the world, with installed capacity representing only 10 percent of its needs. White cement used by the country comes mostly from Canada, Mexico, and Denmark.

Consumption and end-use sectors Producing white cement requires costlier raw materials and energy choices, such as using low-sulfur petcoke instead of coal, which could contaminate the final product, or adding pigments to achieve more brightness and cleanness. It is therefore a more expensive construction material not accessible to all. Thus, consumption is concentrated in developed markets with more purchasing power, such as Western Europe and North America. Developing regions, like Africa, where practical concerns more often than not override aesthetical ones, have a low per-capita consumption of white

India Cement and Construction Materials Journal

AUGUST / SEPTEMBER 2018

feature Regional distribution of white cement capacity

Source: CW Research

cement. The exception is the Middle East, where applying white cement finishes is a cultural aspect that has resisted modern construction techniques, making for a much larger per-capita consumption than more developed regions. Nevertheless, the popularity of white cement is increasing in emerging economies on the back of a growing purchasing power. Given its properties, white cement is used in a variety of applications, including masonry, architectural pre-cast, and pool finishes. In most of the world regions, masonry applications â&#x20AC;&#x201C; which include stucco, mortars, grouts, adhesives and

AUGUST / SEPTEMBER 2018

There are some risks for the industry, including the high distribution costs and the competition by substitutes

India Cement and Construction Materials Journal

flooring â&#x20AC;&#x201C; account for the largest share of white cement consumption. However, that can vary widely from region to region, with architectural precast being the main utilization in North America and Western Europe, and masonry accounting for 82 percent of total regional consumption in Africa so far in 2018. Especially in North Africa, the heat-reflective nature of white cement makes it attractive for flooring, plastering, and, to a smaller extent, wall building. Of all end-use niche markets, pool finishes accounted for the lowest share in the global consumption, with just 400,000 tons consumed in 2018.

Going forward

Conclusion

CW Research believes that white cement demand growth will accelerate to 1.8 percent per annum between 2018 and 2023, eventually reaching 19 million tons per annum. Asia ex-China and Eastern Europe and the CIS will lead the way, with an average annual growth of 4.4 percent and two percent, respectively.

When looking at white cement market trends, the disparity between regions stands out. Western European traders prefer retail bags, while large bags play a significant role in North America. On both of those markets, architectural precasting is the major application for white cement, contrary to what happens in every other region, where masonry prevails. China has become mostly self-sufficient, whereas the United States produces just a fraction of its domestic requirements.

There are some risks for the industry, including the high distribution costs and the competition by substitutes. Still, white cement continues to be more resilient to market cycles when compared to grey cement, and the growing purchasing power of emerging economies offers a good outlook for the product.

Production is also concentrated around a small number of manufacturers With demand reaching a plateau in more developed economies, white cement will likely find more opportunities for growth in emerging economies. Asia ex-China, and Eastern Europe and the CIS are expected to drive global growth in white cement consumption. The Middle East, where per-capita consumption of white cement is already very high, will record new capacity additions in the next five years that will ensure it a position as the second largest producing region, behind China.

Photo Credit - Eric Kilby

Meanwhile, on developed markets such as North America and Western Europe, white cement demand is expected to grow slower, at 1.8 and 1.3 percent per annum, respectively. This is mostly because their economies are more mature and the margin for growth is lower.

About the report CW Researchâ&#x20AC;&#x2122;s Global White Cement Market and Trade Report (2018 update) examines the worldwide white cement industry and presents the latest market data which cover the 2008-2018 E period, with a medium-term forecast until 2023. 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 data-rich 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 2023.

More information about the report can be found here: https://www.cwgrp. com/research/research-products/ product/274-global-white-cementmarket-and-trade-report-2018-update

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.

India Cement and Construction Materials Journal

AUGUST / SEPTEMBER 2018

CEMENT MARKETS

CW Research

Cement Volumes In May, some South American and Asian markets showed positive developments when it comes to cement production, while others are finding the beginning of 2018 more challenging.

Colombia, Japan and China are the markets that showed a yearto-date decrease in cement production in May 2018.

Year-to-date cement production in Peru increased 1.2 percent in May, as a result of a recovery from corruption scandals related to public tenders. Argentinian cement output increased 8.2 percent on a year-to-date basis, supported by investment in the construction industry. In May, Vietnamese cement production rose 11.9 percent year-to-date, due to good weather conditions and increased demand in importing destinations such as China. As Chinese production limitations hampered production by 9.9 percent in May, the remaining demand was sourced from Vietnam.

From this selection of countries, India registered the biggest year-to-date improvement in cement production in May 2018. The 15.2 percent increase was caused by a string of low-cost housing projects that are being implemented, mostly in the states of Andhra Pradesh and Telangana. Colombia, Japan and China are the markets that showed a year-to-date decrease in cement production in May 2018. Colombia recorded a production decrease of 1.1 percent, as housing sales dropped and slowed activity in the construction sector. Cement consumption in the country registered a one percent year-to-date decrease in May due to few investments in the construction sector.

CHART: Year-to-Date Cement Demand (%) Pakistan Argentina Colombia Chile Morocco Brazil Kenya -10%

-5%

10%

Sources: CW Research

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

AUGUST / SEPTEMBER 2018

India Cement and Construction Materials Journal

15%

20%

CW Research CEMENT MARKETS

The Japanese cement market showed a decrease in production of 1.5 percent, year-to-date to in May, following a workforce shortage. Of all the selected countries that presented a decrease, China was the one with the most pronounced, 9.9 percent, year-to-date in May. This decline was due to the bad weather conditions in the region. In Pakistan, the reason behind a 14.4 YTD consumption increase in May was a massive ongoing investment in the infrastructure and housing sector. In Argentina, cement consumption rose 9.3 percent year-to-date in May, due to public and private investments in infrastructure. Cement consumption in Chile slipped two percent yearto-date in May due to the stagnation in real estate investment.

In Brazil, investors are inhibited to invest because of the political instability, which brought down cement consumption by 4.8 percent year-to-date in May. Moroccan cement consumption was affected by bad weather and lower activity in the real estate market, decreasing by 4.8 percent in May 2018. In Kenya, political uncertainty affected investorsâ&#x20AC;&#x2122; confidence and values of building plans fell drastically. Therefore, cement demand recorded a 6.9 percent year-to-date decrease in May. If the Kenyan government had not invested in large infrastructure projects, such as the Standard Gauge Railway, the contraction in cement demand would likely have been more evident.

CHART: Year-to-Date Cement Production (%)

India Vietnam

In Brazil, investors are inhibited to invest because of the political instability, which brought down cement consumption by 4.8 percent yearto-date in May.

Argentina Peru Colombia Japan China -15%

-10%

-5%

10%

15%

20%

Sources: CW Research

To learn more, please contact the CW Research team at sales@cwgrp.com India Cement and Construction Materials Journal

AUGUST / SEPTEMBER 2018

cement PEOPLE

eople

Dalmia Cement appoints new COO

Ujjwal Batria has been appointed the new chief operating officer of Dalmia Cement. He will be responsible for overseeing operations of sales and marketing, logistics, manufacturing and technical services departments. Batria graduated from the Birla Institute of Technology and has 33 years of experience in the building materials industry. He specializes in structuring of teams, project delivery, and realization of corporate objectives. Formerly, he served as CEO of Lafarge India, and has also been associated to the cement divisions of Tata Steel and Century Textiles & Industries, and to Eicher Motors.

ACC appoints new chief commercial officer Sridhar Balakrishnan has been announced as the new chief commercial officer of ACC. With 24 years of experience in the fastmoving consumer goods industry, Balakrishnan was the president and head of India Star before accepting this new challenge at the cement maker.

AUGUST / SEPTEMBER 2018

India Cement and Construction Materials Journal

"I am delighted to welcome B Sridhar to ACC. He brings with him rich experience in the consumer business that will benefit ACC as we transform from a traditional cement manufacturing business to a total building materials company with innovative technology-based products and solutionsâ&#x20AC;?, commented Neeraj Akhoury, CEO and managing director of ACC.

Penna Cement joins World Cement Association

World Cement Association. “There is a positive outlook for the Indian cement industry and we are delighted to welcome an important player of this exciting growth market to our global network.” The company was founded in 1991 and today holds a cement capacity of ten Mt per year. Penna Cement is a leading Indian cement brand and serves a clientele ranging from small house owners and organized real estate developers to state governments and construction majors. Over the past years, the company has implemented many measures to ensure the reduction of CO2 emissions and energy conservation measures such as waste heat recovery and efficiency improvements in the pyro process. Penna Cement’s social responsibility programs aim at positively impacting the society and making it a better place to live. The company focuses on free education and vocational training to children of nearby communities and is actively involved in the improvement of roads and other infrastructure in the villages.

On August 20, the World Cement Association announced that Penna Cement, one of India’s largest privately held cement producers, has joined the organization as a Corporate Member.

“With Penna Cement, a new member strongly committed to the improvement of society and the environment is joining our international community,” said Norman Greig, Secretary General of the

“We are glad to be part of the World Cement Association, which will help us to benchmark against the best companies in the world to improve our environmental sustainability and energy conservation,” said Krishna Srivastava, Director of Marketing at Penna Cement.

New cement director at Global Cement & Concrete Association Claude Loréa has been appointed the new cement director at the Global Cement & Concrete Association, a new entity set up earlier this year. The appointment will become effective starting in early November. Currently, Claude Loréa is deputy chief executive and industrial affairs director at Cembureau. She will report to the

future chief executive of Global Cement & Concrete Association, Benjamin Sporton. The new director will handle questions regarding practical understanding of cement chemistry, production, coprocessing, data collection and standards, as well as international climate policy, regulatory requirements and trends.

India Cement and Construction Materials Journal

AUGUST / SEPTEMBER 2018

cement orders & equipment

rders & equipment

Loesche to deliver two vertical roller mills to Bangladesh

Loesche recently received an order from the cement manufacturer Seven Circle Bangladesh Ltd. (SCBL), part of the holding company Shun Shing Group (SSGIL) / Hong Kong, for a vertical roller mill for its new grinding plant in Gazipur, near the capital Dhaka. With four main and four support rollers, the mill will be used for grinding clinker/ slag and will have a throughput capacity of 400 t/h. This makes it the largest Loesche cement mill in the emerging Bangladeshi market. At the same time as the order for the new grinding plant in Gazipur, Loesche also received an order for a further mill for end customer Shun Shing Cement Mills Ltd. (SSCML), also

part of the Shun Shing Group. An LM 53.3+3 CS will be used, with three main and three support rollers and a drive power of 4,650 kW. The mill will grind clinker and slag at a capacity of 180 t/h in a newly-built grinding plant belonging to SSCML in Shikalbaha near Chittagong. The scope of delivery for both mills includes the complete mill including the

static mill components. Both mills will continue to be equipped with PRONAMICÂŽ wear parts, developed by Loesche, for the main rollers, support rollers and the grinding table. It is anticipated that commissioning of both grinding plants will take place in autumn 2019.

Lafarge Malaysia commissions new bag filters broader investment of MYR 80 million on operational efficiency and dust emissions that will have an impact on the three integrated cement plants in the country.

The cement maker has installed new bag filters valued at MYR 20 million at its Kanthan cement plant, in Perak, hoping

AUGUST / SEPTEMBER 2018

to improve sustainability and reduce its environmental impact. According to Lafarge Malaysia, this is part of a

India Cement and Construction Materials Journal

"The bag filter system replaces the old electrostatic precipitator dust control system and is a more efficient industrial solution to address dust emission. The bag filter captures dust particles, releasing only filtered air into the environmentâ&#x20AC;?, explained Lafarge Malaysia.

Ramco Cement orders new vertical roller mills power range of 3000 kW and a capacity of 130 t/h has been ordered to grind the Portland Pozzolana Cement (PPC). One of the two VRMs is to be implemented in Kolaghat, West Bengal (Northeast India, approx. 50 km from Calcutta), where RCL is currently increasing the annual tonnage of its grinding plant by 0.95 - 2 million. Here, clinker, slag, gypsum and fly ash from the material starting point for the end product. The second of these mills will be used in the grinding plant in Gobburupalam in Visakhapatnam, in the state of Andhra Pradesh in South India. LOESCHE could now sell this mill type in India for the first time. RCL has also purchased a third VRM type LM 46.2+2 CS with a capacity of 3.750 kW for its newlyconstructed 900,000 annual tonnage cement plant in Haridaspur, Odisha in South east India.

The Indian cement producer has ordered Loesche mills for three of its cement plants for the grinding of clinker and/or slag. For

each cement plant, one vertical roller mill type LM 41.2+2 CS with two grinding rollers and two support rollers with a

This mill grinds PPC with a throughput of 165 t/h. Mill fans, bag-type filters and further auxiliary equipment also belongs to the delivery, which will be carried out in approximately six months.

Pakistani Kohat Cement orders four vertical roller mills The cement producer has recently ordered as many as four vertical roller mills (VRM) from Loesche in order to expand their cement plant in Kohat, 160 km west of the capital city of Islamabad. The order comprises a 4-roller raw material mill with a material throughput of 500 t/h and two cement mills each with a grinding capacity of 210 t/h of Portland cement. The order is finally complemented by another vertical roller mill for grinding 50 t/h of anthracite. At its plant of the same name, Kohat Cement works with a current annual production capacity of around 2.8 million

tons of Portland and white cement per year. With the newly constructed line, the

daily capacity is now set to be expanded by 7,800 tons of Portland cement.

India Cement and Construction Materials Journal

AUGUST / SEPTEMBER 2018

cement Regional news

egional news

Indian cement makers struggle with input costs

Indian cement manufacturers continue to struggle with input costs, including expenses with petcoke and freighting, which are putting pressure on their margins on the short term. During the second quarter of 2018, cement demand grew by 14.2 percent in India. Owing to the rising costs, higher demand has not translated into improved financial results. Prices are another factor dragging down the results of those companies. During the second quarter, an increase in supply has led to a decline of five to six percent in pan-Indian cement prices.

Vietnamese cement consumption rises in August According to the Construction Materials Department of Vietnamâ&#x20AC;&#x2122;s Ministry of Construction, cement consumption reached 7.66 million tons in August, an increase of three percent compared to the same period last year. The figure includes 5.65 million tons of domestic sales and 2.01 million tons of exports.

AUGUST / SEPTEMBER 2018

India Cement and Construction Materials Journal

During the first eight months of 2018, cement consumption reached 63.85 million tons, 30 percent more than a year ago. The figure includes 43.76 million tons of domestic sales and 20.09 million tons of exports. Exports have already surpassed the full-year target of 18-19 million tons, while overall consumption is now at 76 percent of the plan.

Pakistan's cement exports decline in value, July 2018

Works start at new cement plant from OCL India

In a ceremony with the presence of Odisha’s Chief Minister Naveen Patnaik, the first stone of the third integrated cement plant of OCL India, part of Dalmia Cement, at Rajgangpur was set. OCL India intends to build a new integrated cement plant with the

capacity to produce 2.25 million tons of cement and three million tons of clinker per annum, elevating the total capacity in Rajgangpur to 6.25 million tons of cement and 5.9 million tons of clinker per annum. The new integrated cement plant will cost INR 2,000 crore to develop and is expected to be commissioned by late 2019.

Sino-Nepalese cement project secures funding

In July, Pakistan exported USD 20.96 million worth of cement, a decline of 6.91 percent compared to USD 22.52 million in the same month last year, according to figures from the Pakistan Bureau of Statistics. Overall exports in Pakistan increased by 1.17 percent year-on-year. In terms of quantity, cement exports actually increased by 10.89 percent year-on-year, from 428,000 tons to 475,000 tons. Between June and July 2018, exports increased both in value, by 28.5 percent against USD 16.32 million, and in volume, by 28.59 percent against 370,000 tons.

Cement sales rise in India, 2Q2018 After a challenging fiscal year in 2017-18, with cement demand and margins being dragged down by a ban on sand mining and a surge on petcoke prices, manufacturers in India are now experiencing healthy volume growth.

Hongshi Shivam Cement, a joint venture between Nepal and China, secured USD 140.48 million in credit from five commercial banks in Nepal in one of the largest funding operation every made by Nepalese banks on any industry or infrastructure projects. The consortium of lenders is led by NMB Bank, co-led by Nepal Investment Bank, and includes Prabhu Bank, Everest

Bank, and Nepal SBI Bank. With the new funding, the cement company will achieve financial closure for its plant.

Birla Corporation has registered a revenue increase of 14 percent to INR 1,656 crore during the second quarter of 2018. Ramco Cement clocked a 22-percent growth in volumes thanks to higher demand in the eastern region and a moderate recovery in Tamil Nadu.

The project has already received USD 86.22 million of foreign direct investment, approved by the Nepalese Investment Board and by the country’s central bank. In total, the company is expected to inject a total foreign direct investment of USD 359.18 million.

JK Lakshmi Cement’s revenue rose by three percent year-on-year to INR 897 crore. Sagar Cement posted a surge of 15 percent in its volumes thanks to strong demand in the states of Andhra Pradesh and Telangana.

India Cement and Construction Materials Journal

AUGUST / SEPTEMBER 2018

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

Russia 23 articles France 12 articles United States 24 articles

Turkey 15 articles Egypt 37 articles

Mexico 21 articles

Pakistan 32 articles Philippines 19 articles

Nigeria 28 articles

Indonesia 18 articles

Kenya 12 articles

Brazil 19 articles

cw Research agenda / reports The CW Research will be hosting and participating in a number of webinars and conferences. We invite you to join us on-line or in person at the events to discuss our views of the industry. To learn more, please visit https://www.cwgrp.com/research/webinars-and-meetings

CW Research's meeting agenda includes: September 27, 2018

World Natural and Synthetic Graphite Market Demand Forecast â&#x20AC;&#x201C; 2018 Update

October 25, 2018

Global Cement Trade Prices 3Q 2018

CW Research's newest reportS:

Webinars

AUGUST / SEPTEMBER 2018

Global White Global Cement Cement Market and Trade Price Report Trade Report 2Q 2018

Global Cement Volume Forecast Report 2H 2018

June 2018

September 2018

India Cement and Construction Materials Journal

July 2018

BUZZ

Vietnam M&A wave to continue in 2018

Lafarge Africa studies next expansion projects

Dangote Cement secures natural gas supply in Tanzania

HeidelbergCement eyes assets from LafargeHolcim in Indonesia

FLSmidth signs two large cement plant contracts in Central America

Cementos Argos improves net profit, 1H2018

10. Siemens enters Beni Suef cement project

recorded

exports consumption crore

economic

products

slag

ministry

waste

global portland

materials

concrete

exports

growth

sold

imports russia

results

industrial activity

India’s cement industry allowed import of petcoke 2. Birla Corp doubles net profit in 2Q2018 3. Vicat Group arrives at Mumbai, India 4. UltraTech surpasses profit expectations for 1Q 5. Bharathi Cement presents new cement brand 6. Works start at new cement plant from OCL India 7. Shree Cement's net profit falls by double-digit margin 8. White cement project announced for Himachal Pradesh 9. Birla Corporation to set up a new integrated cement plant in Maharashtra 10. India Cements posts lower net profit, 2Q2018

using

output

materials results

investment

INDIA

region economic development

waste

coke

recorded

paid

industrial

FACTORY

power reach

short thermal volume

IRAN

large

produce

refinery

decline exports

IRAN

products

Cement producers join fight against climate change

1h2016

Large investors expand stake in CRH

Petcoke prices in China contract mildly Petcoke production rises in India; slips in China and Brazil 3. Abu Dhabi refinery commissions specialized coker unit 4. India: Petcoke import ban to affect aluminum and steel industries 5. US imposes aluminum import quotas for a single market 6. Reliance’s petcoke demand to rise 7. China: Petcoke prices rise 8. Dangote Cement secures natural gas supply in Tanzania 9. India exempts cement makers from petcoke import ban 10. Goa Carbon to be affected by petcoke import ban

petroleum

vietnam

produce

1. 2.

imports

LAFARGE

increased

decline

Buzzi Unicem's cement deliveries in Europe improve YoY

India Cement and Construction Materials journal (ICCM) 43

Articles inside

Can Indian cement demand survive rising production costs?

How can a trade war affect the global cement industry?

CW Research: Cement prices continue positive momentum in 2Q 2018

On Solid Ground – Norway’s plan to create an international CCS value chain

CW Research: White cement consumption to accelerate on increasing purchasing power