Concrete Report 2019 by CPI Trade Media

A supplement of:

CONCRETE REPORT

ConCrete teChnology how sustAInABIlIty softwAre Is IMprovIng ArCon’s ConCrete MarKet rePort AnAlysIng the ConCrete deMAnd deClIne In ksA for 2019

ConCrete Change

CIC’s Bashar Abou-Mayaleh on why his company is leading the call for change in the concrete sector

Introduction

A supplement of:

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eDItORIAL DIRectOR VIJAYA CHERIAN vijaya.cherian@cpitrademedia.com +971 4 375 5472 eDItORIAL eDItOR GAVIN DAVIDS gavin.davids@cpitrademedia.com +971 4 375 5480 JUNIOR RePORteR ANGItHA PRADEEP angitha.pradeep@cpitrademedia.com +971 4 375 5479 SUB eDItOR AELRED DOYLE aelred.doyle@cpitrademedia.com ADVeRtISING cOMMeRcIAL DIRectOR JUDE SLANN jude.slann@cpitrademedia.com +971 4 375 5714 DeSIGN ARt DIRectOR SIMON COBON simon.cobon@cpitrademedia.com DeSIGNeR PERCIVAL MANALAYSAY percival.manalaysay@cpitrademedia.com PHOtOGRAPHY MAkSYM PORIECHkIN MARKetING MARKetING MANAGeR SHEENA SAPSfORD sheena.sapsford@cpitrademedia.com +971 4 375 5498 cIRcULAtION & PRODUctION PRODUctION MANAGeR VIPIN V. VIJAY vipin.vijay@cpitrademedia.com +971 4 375 5713 DIStRIBUtION MANAGeR PHINSON MAtHEW GEORGE phinson.george@cpitrademedia.com +971 4 375 5476 WeB DeVeLOPMeNt MOHAMMAD AWAIS SADIq SIDDIqUI FOUNDeR DOMINIC DE SOUSA (1959-2015) PRINteD BY RASHID PRINtING PRESS LLC

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Time to evolve

CONCRETE INDUSTRIES COMPLEX

o anyone who’s been paying attention to the concrete sector, it should come as no surprise that the entire industry has been struggling over the last few years. Not only are prices and margins being squeezed, but the terms and conditions that suppliers are operating under are crippling. Therefore, it’s understandable that companies are looking for ways to alleviate the stresses that they find themselves under. One such company – Concrete Industries Complex, helmed by Bashar Abou-Mayaleh – is rewriting the rules of what it means to be a concrete provider. With heavy investment across all three sections of the business, CIC aims to become a technology driven concrete provider. As Abou-Mayaleh explains in his interview in the 2019 edition of the Concrete Report, this value engineered approach to production is paying major dividends for the company and is setting an example for the rest of the industry to follow.

Licensed by tECOM to registered company,

ANALYSING THE MIX

KSA CEMENT MARKET REPORT

MOVING THE MIX

CPI trade Publishing fZ LLC whose registered office is 207 – 209, Building 3, Dubai Studio City, Dubai, UAE www.cpitrademedia.com © Copyright 2019 CPI trade Media. All rights reserved. While the publishers have made every effort to ensure the accuracy of all information in this magazine, they will not be held responsible for any errors therein.

Gavin Davids editor gavin.davids@cpimediagroup.com Concrete Report 2019 1

In Profile

2 Concrete Report 2019

In Profile

“The indusTry conTinues To focus on cosT cuTTing in a very negaTive way, buT now, iT’s Time To reinvesT To reduce cosTs. iT’s Time To reinvesT and bring more auTomaTion wiThin The indusTry and To increase efficiences”

Big Project ME speaks to Bashar Abou-Mayaleh, managing director of Concrete Industries Complex, about the state of the concrete industry in 2019 and how technology is helping his company gain a competitive advantage Concrete Report 2019 3

In Profile

he last few years have seen the construction industry go through a process of self-reflection and evolution in the UAE. With budgets tightening, companies associated with the industry have had to revaluate how they do business and adopt new methodologies and technologies to stay relevant in an ultra-competitive marketplace. Unfortunately, this message doesn’t seem to have percolated down to the precast concrete industry, where there have been several issues affecting the overall performance and effectiveness of the sector, despite an increase in demand over the last two years, says Bashar Abou-Mayaleh, managing director of Concrete Industries Complex (CIC). “If we talk about the precast industry in general, then it’s really very sick, starting from five or six years ago, and it’s still declining every year. Precast is a huge operation in one company, you have to be a design company and a manufacturer. Then you have the logistics and the installation, where you act as a subcontractor [on a project]. In addition to all this, you have to make sure you don’t compromise on your commercial, estimation and contracts departments, and then you have quality control and planning as well. All of these are vital departments to the main operation, so it’s a really huge business model,” he explains. “Unfortunately, with such big overheads, most of the precast firms end up making a huge mistake. For the last five or six years, they have been reducing 4 Concrete Report 2019

going digital Abou-Mayaleh says that CIC has embraced the digital revolution completely, with signficant sums invested into the digitalisation of the three arms of the business.

their overheads through their quality control, commercial and contracts departments. As a result, the general performance of the industry has been declining. There were no proper programmes, with most of the projects going into chaos with no control over time and lots of bad observations in terms of quality, and that has resulted in huge repair works at the site. “And on top of that they have had very poor contracts, with the upper hand with the main contractors. Precast firms have been compromising a lot with their contracts, and they are reflecting a lot of hidden costs. As a result, the industry was seeing a huge impact on its reputation,” he asserts strongly, speaking exclusively to Big Project ME. CIC is the umbrella organisation for three concrete-focused firms – Hard Precast Building Systems (HBPS), Hard Block Factory and Emirates Beton – and in his role as managing director, Abou-Mayaleh has seen plenty of ups and downs

“We are the only precast company in the UAE, if not the Middle East, that runs 3D-design processes. Everything we do goes through BIM, and all the fabrication drawings are produced in 3D. All the BOQs come from the drawings.”

over the years. However, given the current market situation, he warns that it is time for the precast industry to pull up its collective socks and improve itself. “Unfortunately, we are very much behind [the rest of the world]. As an industry, we need a revolution and new methodologies to give real value to the industry. The precast industry can contribute to the construction sector in an excellent way, but that’s not the actual situation. The industry continues to focus on cost-cutting in a very negative way, but now it’s time to reinvest to reduce costs. It’s time to reinvest and bring more automation within the industry and to increase efficiencies. But I believe that no one is going in that direction,” he states sombrely, pointing out that Dubai’s construction sector is fixated on volume and output, rather than technological advancements. “They don’t focus on advancements that happen in other countries like China, Malaysia, Singapore and even the USA or some European countries. In general, if you compare the construction industry [in the region] to other industries around the world, it’s the lowest in terms of growth and putting in new technology. Precast in general is suffering, much like the whole industry. We still have a long way to go. “But it’s absolutely coming. The whole construction industry has squeezed itself to rock bottom. Everybody is working almost at zero margins, so what else is there? Where can you go after that? You can go bankrupt, or you must find a strategic alternative and revolutionary solutions.” Rather than wait for that to happen, CIC and parent company Al Shafar Construction Group decided to begin the revolution itself, investing millions in a complete revamp of the three

In Profile

changing track By the last quarter of 2017, CIC made the decision that it couldn’t continue its precast operations as a profit-oriented business, and opted for new strategic alignment, where it became volume-oriented.

companies’ production and manufacturing facilities. “By the last quarter of 2017, we decided that we can’t continue precast as a profit-oriented business. We always had these prestigious projects, these high-end engineering projects where we didn’t have much competition, but in the absence of these kinds of projects, we had to adapt to a huge new strategic alignment. We had to become volume-oriented to try and keep some profit. “The margins of the industry have gone. To give you one small example – the trendiest application in precast is villas and townhouses. Thousands of villas and townhouses are built by precast and the actual price of precast is 20% less than it was five years ago. It’s also very well-known that every industry has had more overheads in the last five years. So how can we deal with this very big problem, if the prices are reducing with this margin?” he asks. The answer is through investing more than $40.8m in expanding facilities and advanced technologies. CIC has automated its steel reinforcement activities, it has also invested in creating new methodologies for mould and shutter-making, resulting in a 34% reduction in mould costs.

The company is expanding further with a new factory being built for the ready-mix division and a new plant being added to the block factory, which will be specialised for thermal blocks. A full set for sandblasting has also been added, set up as per the latest environmental requirements, and 26 transit mixers have been bought for the ready-mix division, along with six mobile pumps. This is in addition to the 15 concrete pumps and 25 transit mixers bought in 2017, Abou-Mayaleh adds.

“These are the business strategy alignments. We have increased our turnover by 27% for HPBS in 2018, as compared to 2017. We have increased our rock-bottom figures by 35%, which was much beyond our expectations. We didn’t think that such advancement within our activities and operations, such increase in our revenues [was possible]. “2018 was in general our best year ever in the history of CIC, revenue and profit-wise. We crossed our budget with the three

companies, and with the readymix and block industries, we made good results by increasing our share of the market, using our very good name as a main competitive advantage, our special customer service and our real, genuine care,” he highlights, in addition to considerable investment across the board for the three companies that make up CIC. “We are in a digital era now and we strongly believe that every activity needs to go smoothly within a digital framework. That’s why we’re focusing so strongly on the development of software and ERPs and trying to come in every day with new ideas that will enhance what we already have. “We are the only precast company in the UAE, if not the Middle East, that runs 3D design processes. Everything we do goes through BIM, and all the fabrication drawings are produced in 3D. All the BOQs come from the drawings themselves, so if you have the BOQs coming directly from the workshop drawings, then the starting point of your operations is 100% digital and all the following processes become much easier.” investing in the future CIC has invested heavily to automate all of its steel reinforcement activities and to create new methodologies for mould and shutter-making.

Concrete Report 2019 5

In Profile

Abou-Mayaleh adds that this approach is especially useful when it comes to coordination for the MEP aspect of projects. With everything from the MEP side having to be installed in the walls prior to pouring, it’s essential that even the slightest margins of error are removed. “We have brought in thirdparty software that works in three dimensions, which helps any MEP contractor to superimpose all their MEP fixtures on our workshop drawings with a very short period of time. “This is a huge facility to the MEP subcontractors, to the main contractor and to the stakeholders of any major project. This has been implemented and has been in place for more than a year now,” he explains. “Plus we have created, inhouse, excellent software that is customised to the nature of HPBS’s work. Now everything goes from 3D design to our operational software, and then through to the financial umbrella software from Oracle, which is the ERP for the biggest modules – financial, purchasing, HR and inventory.”

streamlined models The construction industry is moving towards adopting a more streamlined and efficient model, and the concrete sector needs to follow suit, Abou-Mayaleh says.

Furthermore, as part of a group-wide strategy, there have been collaborations with several universities in Europe and the US, specifically MIT and Harvard, with a number of ASGC Group employees involved in educational programmes that allow them to explore future applications in the construction industry, Abou-Mayaleh reveals. These investments and expansions are likely to stand CIC in good stead as the industry continues to move towards

adopting a more streamlined and efficient model, with high-end developers and government bodies realising that this is the way forward. “There are several A-class companies going in that direction, but they’re still very few. You can’t ignore that there are a lot of commercial directors who are planning on much shorter terms, but there are very serious and huge projects in the pipeline right now [for us]. These projects can’t be declared right now,

but in general we’re trying to increase the availability of A-class contractors and their projects on our customer list, at the expense of C-class companies. “In C-Class, you have much more payment security issues right now. Everybody knows that there is a shortage of liquidity in this sector, so we’re trying to be with A-class firms. We are already booking landmark projects with them and many of them are in the finalising stage, so we are always optimistic,” he concludes.

focusing on the top-end of the market Abou-Mayaleh says that CIC is looking to increase the availability of A-class contractors and projects on its customer list.

6 Concrete Report 2019

Technology

AnAlysing the Mix

Jason Gregory speaks to Angitha Pradeep about how ARCON is implementing sustainability software to improve the quality of ready-mix concrete

Al Naboodah Ready-mix Concrete (ARCON) recently implemented Dubaiâ&#x20AC;&#x2122;s first fully integrated Environmental Product Declaration (EPD) software, to provide EPD analysis for its ready-mix concrete. Using German sustainability software Gabi EPD and consulting company Thinkstep to analyse the data, ARCON aims to use the results to improve the performance and environmental impact of its concrete.

Big Project ME speaks to Jason Gregory, operations

8 Concrete Report 2019

manager at ARCON, to understand why this is a step in the right direction amid increasing efforts to raise awareness about sustainable use of products and green building certifications. What is the importance of an Environmental Product Declaration (EPD)?

The EPD gives us the ability to calculate the required environmental indicators for the lifecycle of our concrete

mix designs for certain specific projects or clients who require it. Also, it lets us see the environmental and sustainability impact of the products that we produce. What are some of the reasons for implementing an EPD?

Thereâ&#x20AC;&#x2122;s a host of reasons for us moving forward with the EPD facility. The major reason relates to reducing our environmental impact with the design and production of concrete, and

to also streamline our internal process through that discipline. Our ongoing contracts with Expo 2020 Dubai created a need to provide EPDs; and also, being part of an integrated group, we felt there was an advantage here. We could offer a product to clients which could be a part of the sustainable lifecycle of finished buildings, which has a huge benefit to all stakeholders. What is the scope of the EPD facility/software in Dubai?

Technology

of utmost importance. What long-term benefits do you see for the EPD facility?

Sustainability is of paramount value to Al Naboodah, and the introduction of the EPD is just a small part of that process for the group. We are introducing a number of technologies that reduce our impact on the environment, such as solar PVC panels and an energy management system, for which the introduction of the EPD software is instrumental. Going forward, the longterm benefits of the EPD will be the ability to assess the environmental performance of ready-mix concrete with indepth lifecycle analysis (LCA) and create data sets which will be posted on recognised LCA databases worldwide, benefiting the industry as a whole. The enhancement of internal and external environmental communication with all connected stakeholders will meet the growing demand for transparent and comparable information on the environmental impacts of construction materials. What major challenges does ARCON face in this market? What are the market trends in environmentally friendly concrete? Do you see it extending to the wider Middle East soon?

We think it has the potential to extend extensively throughout the region and also into numerous other processes within construction. Dubai Municipality are now taking serious steps towards the process of looking at EPDs for various other materials, so we can see multiple applications across the industry. Al Naboodah has always considered sustainability to be

We believe the market is still fairly buoyant but has its challenges with oversupply and the usual commercial constraints. Going forward, we think clients will be looking for suppliers that can offer products which fit with their remit environmentally and also add value through the whole production process. The progression in materials technology is moving very quickly in the region, and getting ahead of the curve on this front will obviously be beneficial to all stakeholders involved in the

process of the supply chain. Does having an EPD improve energy efficiency, minimise emissions and reduce environmental impacts? Are statistics available to support this?

long- term benefits Jason Gregory says that using EPD software will result in long-term benefits for ARCON, including in sustainability and in performanc e.

â&#x20AC;&#x153;Thereâ&#x20AC;&#x2122;s a host of reasons for us moving forward with the EPD facility. The major reason relates to reducing our environmental impact with the design and production of concrete, and to also streamline our internal process through that disciplineâ&#x20AC;?

We are now in process with the first tranche of EPD verifications. Third-party verification of this data is underway with our licensed provider, and when that data is released it will enable us to make the specific changes that will lessen our impact environmentally. Leading the region with an EPD facility, what are some milestones you want to achieve going forward?

Having the ability to internally produce EPDs for construction materials creates huge advantages within the group and is a great milestone for the business. Client demand for the ability to monitor environmental impact is becoming paramount within the industry. The EPDs, when verified, will be then published on an independent worldwide EPD database, which will then be fully transparent for a tenure of five years. What are some of the wider trends in the concrete and construction industry as we move into 2019? What should manufacturers and suppliers like yourselves be preparing for?

The region has always been a focal point regarding the ability to undertake and deliver major projects, and the ready-mix concrete market has adapted to that over the years. There has been a change towards a more mature supply market, with suppliers offering a product which has high-performance characteristics as well as offering value to the customer.

Concrete Report 2019 9

Industry Insight

AdvAncing concrete

Big Project ME speaks to Ahmad Mhanna, director, Middle East/ North Africa Region, American Concrete Institute, about the launch of the organisation’s new office in Dubai and its plans for the region

Why has ACI decided to open a new office in Dubai?

Dubai has become the Middle East hub for many international companies and organisations; that puts it in a leading position for industry, trade and tourism. Additionally, the ACI Middle East Regional Office will provide more opportunities for the Institute to engage with the hundreds of members in the region, our many Middle Eastern chapters and our partners. With so much cutting-edge work regarding structural concrete, concrete design and concrete materials, the rest of the world can be inspired by and learn from the tremendous innovation happening in the region. Combined with ACI’s hundredplus years of consensus-based knowledge, we aim to collectively accelerate the advancement of the concrete industry globally. In addition, concrete is even more dominant in the Middle East marketplace, with 93% of Dubai’s newest supertalls constructed of concrete building systems. Dubai alone has 225 buildings over 150m made of concrete. What are the expectations for the new office, and what is its likely impact on the local construction industry?

The office will focus on advancing the development, dissemination and adoption of ACI consensusbased knowledge on concrete and its uses in the region. ACI aims to use the office to share the innovations happening regionally

10 Concrete Report 2019

with Institute members located around the world. And to increase the awareness of regional concrete design and construction practices, which eventually will provide more resources for concrete professionals and the construction industry to effectively meet the demands of a changing world, which leads to infrastructure and buildings being built to the highest standards. As part of your role, you have said you will “assist in establishing and nurturing regional strategic relationships” – can you elaborate on this?

By building upon recent partnership agreements, increasing ACI events and knowledgesharing throughout the Middle East among members, chapters, companies, governmental bodies, educational institutions, partners and other construction industry organisations. Recently ACI launched a new weekly email news digest for concrete industry professionals in and around the Middle East. The ACI Concrete SmartBrief Middle East features concrete news, innovation and major new projects from throughout the region, in an easy-to-consume format with links to detailed articles. Also, ACI created a new fellowship specifically for students studying in the Middle East. Funded by the ACI and administered by the ACI Foundation, the Middle East Fellowship is open to graduate

students currently attending a university in Bahrain, Kuwait, Oman, Qatar, Saudi Arabia or the UAE. The winning student will receive $10,000 in educational support, full funding to attend two upcoming ACI Conventions, and more. What are the biggest obstacles facing the regional concrete industry? Building partn erships Ahmad Mhanna says ACI will look to build partnerships in the GCC region with both regional governments and existing organisations.

“Concrete is even more dominant in the Middle East, with 93% of Dubai’s newest supertalls constructed of concrete building systems. Dubai alone has 225 buildings over 150m made of concrete”

A shortage of skilled and qualified workers, safety issues, increasing material costs and not reducing the gap between research and practice. What long-term plans are in place for ACI to “educate and nurture” the industry? How are you working with regional governments and authorities?

ACI aims to continue advancing concrete knowledge to serve as a vehicle for increasing awareness of regional concrete design and construction practices. ACI has also been working with many regional governments and construction organisations, and looks forward to working with new partners too. Are there any specific short-term goals or targets, particularly in light of major regional events like Expo 2020?

ACI will organise a special event next year in line with Expo 2020, following the launch of the new ACI 318 Building Code Requirements for Structural Concrete.

50 Years of Excellence in Flooring www.ucrete.com

Comment

Michael L. Tholen

Recommended PRactices foR Hot WeatHeR concReting Michael L. Tholen, managing director, Engineering & Professional Development, American Concrete Institute, outlines some crucial practices for concreting in high temperatures Hot weather concreting is defined by the American Concrete Institute (ACI) as one or a combination of high ambient temperature, high concrete temperature, low relative humidity and high wind speed that tends to impair the quality of freshly mixed or hardened concrete by accelerating the rate of moisture loss and rate of cement hydration, or otherwise causing detrimental results. Various adverse effects on the properties and serviceability of concrete are brought on by hot weather. Just one of those is the impact on strength – concrete 12 Concrete Report 2019

mixed, placed and cured at elevated temperatures normally develops higher early strengths than concrete produced and cured at lower temperatures, but the long-term strength will suffer. Potential deficiencies to concrete in the hardened state include decreased strength resulting from higher water demand, and decreased durability resulting from cracking. Although the adverse effects of hot weather can never be fully alleviated, proper practices can help minimise the impact by protecting the concrete from early water evaporation from the

mixture. Typical hot weather concrete evaporation protection measures include fogging, evaporation retarders, wet burlap, wind breaks and protection of quality control specimens. To inform concrete professionals in hot climates, the ACI has published its ‘Guide to Hot Weather Concreting (ACI 305R-10)’, which defines hot weather, discusses potential problems and provides recommendations on how material selection, proportioning, pre-cooling ingredients and batching can minimise the impacts.

Other topics detailed in the guide include length of haul, consideration of concrete temperature as placed, facilities for handling concrete at the site, placing and curing techniques during the early curing period, and appropriate testing and inspection procedures. Additionally, the ACI’s ‘Specification for Hot Weather Concreting (ACI 305.1-14)’ is a reference specification that makes it simple to incorporate hot weather requirements into any set of construction documents. As part of concrete construction in hot weather

Comment

adverse effects Hot weather can have an impact on the mixing, placing and curing of hydraulic-cement concrete, adversely affecting its properties and serviceability. The ACI has recommendations for minimising this.

conditions, contractors and concrete producers are faced with the challenge of protecting concrete from potentially high temperatures, loss of moisture and rapid workability loss that can affect behaviour of fresh concrete during production, delivery and placement operations. ACI University offers several on-demand courses covering the topic of hot weather concrete. A recently released course highlights the best practices and examples from projects where pre-cooling measures, moisture controls, mixture adjustments and

“Various adverse effects on the properties of concrete are brought on by hot weather – one of those is the impact on strength”

admixture technologies have been implemented to reduce adverse effects to the concrete under hot, drying conditions. Case studies from large infrastructure projects are included to describe different cost-effective ways to improve constructability of field operations in hot weather. Hot weather concreting can be a challenge – to minimise the disadvantages and make your next hot weather concreting project a success, use ACI’s resources, including ACI University online courses, free online education presentations, publications and downloadable journal articles.

Founded in 1904, the American Concrete Institute is a member-based authority and resource worldwide for the development and distribution of consensusbased standards, recommended practices, educational and training programmes, certification programmes and proven expertise for individuals and organisations. ACI has over 95 global chapters, 125 student chapters and nearly 20,000 members in over 120 countries. Visit www.concrete.org for more information. Concrete Report 2019 13

Market Report

KSA cement demAnd to decline in 2019

Al Rajhi Capital report provides an outlook for the Kingdom’s cement sector in the year ahead The Saudi Cement Sector continued to remain under pressure for the third consecutive year, with the local sales volume declining 13% y-o-y in 2018. Average sales prices remained weak in 2018, although we witnessed a sharp jump in cement prices sequentially in Q4 2018 for several companies, which can be attributable to producers’ preference towards higher pricing and the postpone of the price

war. Going forward, we expect the current sales prices to remain firm as producers are now focused more on pricing rather than volume. Further, the cement demand will continue to decline in 2019, on the back of limited capital spending by the government, coupled with rising construction costs.

The government’s announced mega projects (including Neom, Qiddiya, Red Sea Tourism and

social housing) are likely to create an incremental demand only in the long-term, in our view. In addition, weak cement demand will also push the producers to start exporting more to other markets outside Saudi Arabia, which could help the sector to liquidate the current huge inventory level. Overall, we remain on Underweight on the sector, given the current weak market dynamics.

Weak cement demand to continue in 2019

• In 2018, total cement dispatch in the Kingdom continued to decline for the third consecutive year, down by 13% y-o-y to ~40.9mn tons, primarily due to weak construction activities (Figure 1). • Central region impacted the most, with the market share falling to 27% (- 300bps drop)

“Companies have to look for more export opportunities to liquidate the huge inventory level amid weak domestic cement demand” 14 Concrete Report 2019

Market Report

Saudi cement demand, million tonnes

Saudi cement exports, thousand tonnes Thousand tonnes

Total sales %

6000

18%

5000

15%

4000

12%

3000

2000

1000

2013

2014

2015

2016

in 2018, weighed down by lower sales volume of City Cement (-31% drop; -150bps decline in the market share), Riyadh Cement (-28%; -100bps) and Qassim Cement (-22%; -80bps). Western region too remained under pressure (2018 market share: 27% vs. 29% in 2017) in 2018. • The construction sector is expected to remain under pressure in 2019, due to higher costs on construction companies (such as Al Khodari) including higher labour costs and energy prices, and the exodus expats

2017

2018

2019

2013

workers. Consequently, we expect the total cement demand to decline by 5% y-o-y to reach ~39mn tons.

2014

2015

42.3mn tons of inventory as of January 2019, which represents 105% of its last 12-month sales. • We believe that the companies have to look for more export opportunities to liquidate the huge inventory level amid weak domestic cement demand. However, the average realized export prices could be lower, largely due to oversupply market condition in the most of neighbouring countries. Accordingly, we expect total exports to reach ~5.5mn tons (cement + clinker) in 2019.

Exports picking up

• Lower domestic demand has pushed the producers to start exporting more quantities outside the Kingdom. In 2018, total exports (clinker + cement) jumped from just 165k tons in 2017 to 4.3mn tons (1.1mn tons of cement + 3.2mn tons of clinker), accounting 9.5% of 2018 total sales volume (Figure 3). • Further, the sector has

2016

2017

2018

2019

The top exporters, who are likely to witness a jump in their exports, are shown below.

• Southern Province Cement Co.: The company signed deals to export 1.5mn tons of clinker to Bangladesh (starting from Jan 2019 to June 2020) and 20k tons of cement to Yemen. If we assume average price of SAR75 per ton for clinker and SAR80 per ton for cement, then export revenue from these deals would be ~SAR114.1mn (SAR112.5mn for clinker and SAR1.6mn for cement). This will reduce the total clinker inventory level to 2.5mn tons (Jan 2019:

Saudi cement inventory 12 month sales %

United Cement

Umm Alqura Cement

Hail Cement

Safuah Cement

Jouf Cement

30% Northern Cement

1000 Cement City

60%

Najran Cement

2000

Riyadh Cement

90%

Tabuk Cement

3000

Southern Cement

120%

Arabian Cement

4000

Yanbu Cement

150%

Qassim Cement

5000

Eastern Cement

180%

Saudi Cement

6000

Yamama Cement

Sources: Yamama Cement, Al Rajhi Capital

Thousand tonnes

Concrete Report 2019 15

Market Report

4.0mn tons) as well increase the EPS to SAR1.7 for 2019. • Yanbu Cement: If the company is able to maintain the current level of export, then it can export ~1.6mn tons of clinker and 0.25mn tons of cement in 2019, implying an export revenue of ~SAR140mn (SAR120mn for clinker + SAR20mn for cement) in 2019. Further, this will also bring down the total clinker inventory level to 2.9mn tons (Jan 2019: 4.5mn tons of clinker) while increasing the EPS to SAR1.1for 2019. • Saudi Cement: Based on the current export run-rate, we expect the company to export ~0.6mn tons of clinker and 0.65mn tons of cement, enabling the company to generate ~SAR220mn of revenue (higher average export price as most of the export is towards Bahrain). • We can also witness the incremental export activities for the other companies like Jouf (50k tons of cement to Palestine), Tabuk (150k

16 Concrete Report 2019

tons of clinker to Yemen + MOU of additional 600k tons of clinker to Yemen) and Northern Cement (plans to export the white cement following the inauguration of its White Cement Production Line project, which would be the largest production line in the world with a production capacity of 1,500 tons per day). Local prices

In Q4 2018, we observed that the producers (who have announced their Q4 results so far) reported a substantial rise in average realized cement prices (ranges from 43- 60% q-o-q), reflecting the postpone of price war among companies, particularly in the Central region. Producers are now focusing more on pricing rather than sale volume, which was the case, seen over the past few quarters. Below, we present the cement prices outlook under different market scenarios. • Scenario 1: If the cement demand remains broadly at the current level or increases partially in only one particular

“Weak cement demand will also push the producers to start exporting more to other markets outside Saudi Arabia, which could help the sector to liquidate the current huge inventory level”

region (for an example, the Western region, due to mega projects such as Neom), then the current rise in cement prices seems to be sustainable, in our view. However, in case of any sharp and sustainable rise in demand across the regions or a sharp demand in one region, producers are expected to liquidate their huge inventory backlog by lowering their sales prices and jump into the other high demand region. • Scenario 2: In case of a significant decrease in demand across all the regions, the cement producers are likely to keep the prices at the optimum level with limited downside potential. On the other hand, if the cement demand decreases sharply only in one region, then producers of that particular region may shift to other regions to maintain/ regain their market shares and liquidate some of its inventory position. This will also pressurize the other producers to keep the sales prices.

CMY

Concrete Equipment

Moving the Mix

With transit mixers among the most important pieces of kit in the Middle East’s concrete-guzzling construction landscape, major players in the sector discuss the models and technologies they have devised for the region The most ubiquitous of all construction machinery and related equipment on the roads of the GCC countries is not the crane or the dump truck, the excavator or the skid-steer, but the humble transit mixer. Indeed, so high are its numbers on our roads and so much is it a part of normal everyday traffic, that it has become commonplace enough to not catch the eye.

But this often-ignored piece of kit is actually the bulwark of the construction sector anywhere. Whether it is the boom times of not so long ago or the leaner present economic scenario, the GCC countries never stop building. And this keeps the wheels and barrels of transit mixers in the region turning as they rush from ready-mix concrete plants to job-sites with their cargo of the ready-to-pour stuff that the skyscrapers, bridges and flyovers of the region are made of. The importance of the transit mixer to the construction process cannot be overstated. Without this piece of equipment, the furious pace of construction that countries like the UAE are used to would slow down considerably. Every project would need its own concrete plant built adjacent to it on-site – which is surely a financial and logistical impossibility.

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Now that we have established the importance of the transit mixer – not that it needed establishing – let us look into what the equipment is all about and what its exponents offer in the market. A name that readily comes to mind is CIFA. The Italian concrete product specialist, now owned by Chinese giant Zoomlion, makes some of the best and most cutting-edge mixer products. Speaking to Big Project ME about CIFA products and the concrete equipment market in the region, Wajih Eit, GM, Zoomlion Gulf, says: “The demand for concrete in the region is quite different from one country to another. While in Saudi Arabia it’s lower than previous years, in the UAE there’s a huge demand for concrete, especially in Dubai, where different big projects were launched recently and are under construction already. “We can say the same for Kuwait – important investments in the construction sector have been released, which of course increased concrete demand.” Coming to his company, Eit says the Zoomlion Group has been able to acquire leading European companies such as CIFA SpA (Italy), one of the three global leaders in concrete equipment.

Concrete Equipment

Meeting demand Demand for concrete in the region varies from country to country, with KSA showing reduced demand and the UAE showing a massive increase.

“One of the strategies of our group was to unify all the construction machinery businesses units under Zoomlion’s umbrella. We know very well that any project requires different equipment, so my main target today is to ensure smooth and complete coordination among the different business units we have – Concrete Equipment, Tower Cranes, Mobile Cranes, Earthmoving and Piling Machineries – within our team, and to provide a complete solution to our customers with our high level of support, service and follow-up,” Eit adds. In the discharge of this strategy, CIFA assumes great importance as the company’s concrete arm. “Already today, CIFA is enjoying a very wide and high-level dealer network in the region. In order to support them properly, and consequently our end users, we’re invested not only in human resources, but also in spare parts. Our hub in Zoomlion Gulf today is already geared up to deliver CIFA parts to the whole region in less than 24 hours,” Eit says. “We are now closer to CIFA customers in the region with a branch under the Zoomlion Group – Zoomlion Gulf – which I’m in charge of. Our group presence in Jebel Ali includes a 10,000sqm yard and hub for spare parts. The stock includes CIFA equipment and spares. Zoomlion Gulf will be the regional distributor for CIFA spare parts in the GCC region.” CIFA’s strategy for the UAE market will be direct selling of its transit mixers to end users with a complete team of sales, engineers and technicians, as well as the stock of parts and machines suitable to cover the whole region, not only the UAE. “Our main target is to give full support to our dealers by having a dedicated team following their business – we have people in

different countries in the GCC – and the stock of machines and parts to shorten delivery time and reduce their investments in terms of inventory. However, for the UAE market only, we decided to have a direct sales strategy and ensure that we have all that is needed – subsidiary, dedicated team, inventory, investment and focus on our products – within the country.” CIFA used to follow a policy of customising its products for the Middle East market and its conditions. But a couple of years ago, the company took the very significant step of introducing a whole series of products, the HD (heavy duty), specifically for the Middle East countries. “Harsh environments, high temperatures and bumpy desert tracks are home for these mixers. Specific solutions were developed, such as wider drum rollers, drum anti-rebound systems, increased chassis beam resistance, oversized heat exchangers and so on. The HD series has just been enlarged with the HD15, the only truck mixer with 15m3 of nominal capacity that can be installed on a four-axle truck,” says Eit. CIFA has also developed the first plug-in hybrid truck mixer in the concrete industry, the Energya. This mixer is able to keep the drum rotating when the truck engine is turned off, using batteries and an electric motor. The Energya reduces fuel consumption by up to 30%, with lower CO2 emissions and significant noise reduction that is good for cities or closed work-sites such as tunnels. The company says the Energya is already working successfully in many European countries but is not yet mainstream. However, CIFA hopes to be a pioneer in bringing new sustainability to the concrete mixer industry. Another concrete specialist, Germany’s Putzmeister, which

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Concrete Equipment

is also Chinese-owned after being acquired by Sany a few years ago, styles itself as a very niche transit mixer maker. Bestknown for its concrete pumps, Putzmeister does however offer mixers as on-demand products for Middle Eastern customers. Speaking with BPME, Paul Bruns, regional director, Middle East at Putzmeister, says: “Five years back, Putzmeister acquired a company called Intermix in the south of Germany. Intermix was founded by the owners of the Stetter company after they had sold Stetter to Schwing. Intermix now makes transit mixers for Putzmeister. “Capacity-wise, Intermix is small, though it is a premium manufacturer. Its main focus is Germany, France and the European markets, where its high-quality offerings are more in demand. Of course, it’s in our interest to also sell transit mixers under the Putzmeister brand in the Middle

“An important factor for this region is to adjust the product to, first of all, bumpier road conditions, so obviously the drum support has been prepped for more stress. Then there is the heat, which is a major issue”

Full support CIFA’s strategy for the Middle East is to provide full support to its dealers through a dedicated team following their businesses.

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East region, so we have recently changed or developed the Intermix products a little bit further to build a product portfolio to also cater more for the needs of the Middle Eastern customer. The mixers have the Putzmeister branding on them, so of course that is a guarantee of quality and performance that the market knows us for. “The changes that Putzmeister has made are a combination of the welding and the steel. Our steel is high-quality Bormagan steel from Thyssen in Germany. So steel is one of the major components of our GCC specifications. Of course, everyone has a different welding technique and a slightly different drum capacity, but then what matters is that the mixer, the gearbox and the hydraulics are all German-made. “Another important factor for this region is to adjust the product to, first of all, bumpier road conditions, so obviously the drum support has been prepped

for more stress. Then there is the heat, which is a major issue, so you cannot use the same cooling fan or the same cooling requirements as in Europe. So this is another major modification on all our mixers for this region. “With Europe being a sophisticated market with several demands, we also developed digital tools and telematics to improve production and the delivery; it’s like you have it in trucks and other fleet maintenance or management systems.” Telematics brings us to the latest developments in the sector, and Laith Haboubi, regional business director, Middle East, Turkey, Africa and India for GCP Technologies, says: “With more than 22,000 ongoing projects worth $2.5tn across the GCC construction sector, there is a clear need for technology to allow the industry to maximise its market potential across the board – operationally, commercially and quality-wise.”

Concrete Equipment

Adjusting to the region Putzmeister has tailored its products so that they are adapted to the environmental conditions in the GCC region.

GCP is a solutions provider for monitoring concrete from production to pouring, including monitoring systems for transit mixers with its Verifi system. “The visibility into operations provided by the Verifi system provides readymix producers the opportunity to make improvements around asset utilisation, mix design optimisation and job-site performance metrics. Additionally, Verifi in-transit managed concrete has the highest quality,” Haboubi says. With electronic monitoring of the mixed concrete, the process generates data, which is owned by the ready-mix producer and stored securely in the cloud. Furthermore, clients have the ability to access data in real time through a browser-based portal that combines limited reporting, an executive dashboard and the ability to send real-time messages

to and from the truck (see box). Another European giant that is very active in the Middle East transit mixer space is Liebherr, which offers a line-up of 14 models in the region with various capacities and features. The 12.9m3 HTM 1204, available in both truck and trailer versions, is one of Liebherr’s best-selling models in the region and popular on numerous job-sites in the region. However, not resting on its laurels, Liebherr has recently introduced the 1304 model with the Middle East specifically in mind. Ali Kassem, regional sales manager, Concrete Equipment Division, Liebherr Middle East, says the new model is also a 12m3 model, built on the new Mercedes Arocs truck chassis, but it provides more internal volume on the same footprint and exterior dimensions to control spillage, backflow and viscosity of

the concrete being transported. “Being a very new model, we are still familiarising customers about the 1304’s benefits. The market has moved to the 12m3 models, and when we tell customers that our new model is the 1304, they ask whether they can fill 13m3, whereas the model is still a 12m3 mixer but has more water volume. A larger water volume helps the concrete to be more fluid in the mixer, but that increases the risk of spillage while driving. So we increased the water volume so that users can fill high-flow concrete without the risk of spillage on the road,” Kassem explains. Liebherr has also signed an agreement with Daimler Commercial Vehicles which saw the latter supply 200 MercedesBenz Actros trucks for Liebherr transit mixers, to help firms across the UAE deliver on their

infrastructural commitments in a growing construction landscape. The partnership comprises 200 Actros 8x4 trucks with 12m3 Liebherr mixers, out of which 100 units were supplied to one of the largest ready-mix companies in the UAE. The state-of-the-art technology comes with a ‘Connected Trucks’ concept where a Fleetboard system is used for vehicle tracking and driver performance measurement. The combination of Mercedes chassis and Liebherr mixer bodies is a perfect technically coordinated fit for reliable and high-quality truck mixer units, say the two companies. EMC supplied the vehicles with a five-year extended warranty and also provided driver training courses for enhanced safety on the road and economical driving techniques.

“The demand for concrete in the region is quite different from one country to another. In the UAE there’s a huge demand for concrete, especially in Dubai, where big projects were launched recently”

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Top Tips

Clean regularly Make sure to clean your mixer on a regular basis, including the mixing paddles and drum. Clean the mixer using a water hose to wash away fresh concrete before it starts setting; setting makes it harder to get rid of at a later stage.

remove ConCreTe build-up If you see concrete build-up in the drum, use a high-pressure water pump to remove it. If a high-pressure water pump is unable to remove the build-up, carefully chip it away with a chisel.

TransiT mixer safeTy and operaTion Tips

Follow these steps for safe operation and maintenance of your transit mixer

Careful on Turns With the way mixed concrete behaves due to its viscous state – just as any other liquid or semi-solid material – the centre of gravity of the transit mixer is usually at a precarious point of stability, which is easily disturbed by the inertia caused by lurching motions. Be extra cautious while turning, always ensuring a slow enough speed for stability.

Keep roTaTing It is important to keep the drum rotating in the mixing direction at agitating speed – about 3-4rpm – during transport. This not only maintains the consistency of the concrete but also prevents it sticking to the mixer parts, improving the life and efficiency of the mixer.

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Top Tips

Clear paTh Construction job-sites are usually littered with debris, material and a host of tools and implements, not all of which are safe for tyres. Clear any steel rebar, timbers with nails, wire and other objects that may damage the transit mixersâ&#x20AC;&#x2122; tyres, and ensure the pathway to the discharge area is free.

slow down aT disCharge While approaching the discharge area, always maintain a slow, crawling and even speed, not exceeding 10km/h. This will prevent sudden, jolting stops or starts which, combined with the inertia of the vehicle and its load, might lead to a loss of stability.

ensure firm and dry ground Before driving into the discharge area, ensure the ground is adequately firm and dry. A transit mixer is a considerably heavy piece of equipment and can easily sink into wet and muddy ground or sandy soil and construction debris. Keeping the drum level or within a safe recommended angle is also a plus for quick and effective discharge of the concrete.

7 bloCK wheels Before operating the mixer, block the wheels of the truck so that any vibrations and inertia from the rotating drum that get transmitted to the wheels are unable to overpower the parking brake and move the vehicle. Use wedges or other blocking implements to jam the wheels as a doubly protective measure.

safeTy KiT All mixer trucks in your fleet should be equipped with a safety kit. Among other things, the kit should include fire extinguishers, flares, spare fuses and light bulbs, a first aid kit and accident report forms â&#x20AC;&#x201C; with the aim being to tackle minor emergencies for both men and the machine.

mainTain adequaTe disTanCe While the drum is rotating, it is important to stand clear of certain areas for safety. For example, do not climb the ladder or platform, or stand on the chutes while the drum rotates and the mixing paddles spin inside it. Serious injury may result. Concrete Report 2019 23

Last Word

Protecting your green rating Fabrizio Nicoli, commercial director of the Middle East branch of FILA Industria Chimica, on how the latest technology in concrete protection allows buildings to keep their green ratings Concrete is one of the most common construction materials. While it used to be considered an unpleasant surface to look at, one that needed to be covered up, more and more designers and architects are using it as an element of urban design in the region. This is a global trend I have noticed around Europe, Asia and the Middle East, and it is likely to stay.

Raw concrete is now appearing on the surface, with floors and walls showing the naked material for interiors with an urban look. The highly recognisable shade and texture of concrete can grant a very trendy aspect to interiors, yet there is a reason why concrete was not used for décor in the past: it is an extremely absorbing material, and highly susceptible to stains. The good news is that there are chemicals that can shield it from stains and prevent its surface from being ruined. I therefore feel it is mandatory to protect urban design

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“The highly recognisable texture of concrete can grant a very trendy aspect to interiors, yet there is a reason why concrete was not used for décor in the past: it is an extremely absorbing material, and highly susceptible to stains”

concrete with a proper penetrating water-based sealer before the project is handed over, to avoid irreversible damage. What’s more, the latest technology in concrete protection offers LEEDcertified products with extremely low VOC emissions, so the green rating of the building is not affected by the use of a chemical sealer. This is particularly pertinent with projects that have made use of green concrete; it would be a pity to waste the benefits of green concrete by using a polluting sealer to protect it. A second trend I have noticed recently has to do with landscaping: more and more outdoor areas are making use of cementbased interlock bricks. As they are a low-budget material that can be made in different colours, they allow interesting designs at a reasonable price. These are often used in projects with surfaces exceeding 50,000sqm.

Yet, just like with concrete, interlock bricks are extremely porous. I have witnessed that, when they are protected, the products used tend to be low-performance, meaning the protection only lasts for five to six months before it has to be re-applied – which can be a real issue when dealing with surfaces this size. Because interlock bricks are low-budget products for external paving, developers often do not have a suitable budget forecast for their protection, but if the sealer used is not UV-resistant and evaporates in the scorching heat, there is no real protection. Proper UV-resistant, water-based protection exists, and though it is a higher cost at the start of a project, its longevity makes it more profitable in the long run. The last regional trend has to do with the building of arenas and stadiums: the Dubai Arena is being finalised as we speak, another one is being built in Abu Dhabi and

new stadiums have also been added to the pool of sporting facilities in the region. In the case of the Dubai Arena, concrete is a key element of the project, with all surfaces using that material, including benches for visitors. This is very common and appropriate for such buildings, and in this case anti-stain water-repellent protection is being used to shield the seats and floors from coloured stains from ketchup, food or drinks that spill in the excitement of an event. The water-based protection does not change the friction value, the gloss or the natural look of the concrete, and as it is LEEDcertified, it contributes to LEED credits. This ensures a better experience for the public, as the concrete surfaces will remain unstained and keep their fresh look. In short, concrete protection can be longlasting, eco-friendly and high-performing, making for easy maintenance.

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