Asian Ceramics - AC16-2 Edition

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AC16-2

OFFICIAL MAGAZINE:

IND IAN CERAM ICS 2016

AHMEDABAD, INDIA

INSIDE:

Sri Lanka in focus Bangladesh: a land of opportunity?

Cost savings in heavy clay Chinese bricks: building momentum

PLUS NEWS, VIEWS, ANALYSIS AND MUCH MORE!

EXHIBITION PREVIEW EXHIBITION PREVIEW EXHIBITION REPORT EXHIBITION PREVIEW

The 27th China International Ceramic & Bathroom Fair, Foshan (CeramBath) Awaits Your Participation The 26th CeramBath, Foshan International Ceramic & Bathroom Fair, held in Foshan from Oct. 18-21, 2015, was attended by over 46,632 visitors, 1.37% more than last session. These include international attendees, who accounted for 9.8% of the total (a decrease of 1%); of which, Asia accounted for 64.3%, Europe accounted for 10.3%, Africa accounted for 8.9%, North America accounted for 5.8%, South America accounted for 3.5%, and Oceania accounted for 2.5%. visitors’ decrease reflects the continued weakness of the global market. On the other hand, the numbers of Chinese visitors remained stable, 43.4% of which applied the gate pass via Wechat self-help registration.

China International Ceramics & Bathroom Fair, Foshan (CeramBath) will enter its 27th session in April, 2016.

The biannual CeramBath is regarded as the most prestigious and influential ceramic and bathroom exhibition in China. Having 700 leading manufacturers of ceramic tiles and bathrooms, CeramBath is the most professional exhibition of the sector in China, with most famous brands, largest scale and strongest aggregation effect. It has been seen as the market vane of the section in China.

For 13 years, CeramBath has retained its position as the first ceramic exhibition in Asia and the second ceramic exhibition in the world. Its domestic exhibitors covered districts of Foshan, Guangzhou, Qingyuan, Zhongshan, Jiangmen, Zhaoqing, Heyuan, Zibo, Linyi, Fujian, Zhejiang, Anhui, Anyang, Hebi, Gaoan, Jingdezhen, Guangxi, etc. International exhibitors mainly came from America, Germany, Italy, Spain, Japan, Mexico, Malaysia, Brazil, etc.

For 13 years, CeramBath has attracted visitors of over 2 million person-times, constructing an important platform for distributors from over 50 countries to know about China ceramics and helping establishing over 2500 ceramic and sanitary ware trading companies. By far, it has become the bridgehead of China ceramic industry connecting China and the world.

CeramBath covers three venues. China Ceramics City serves as the top trade window for import and export; China Ceramics Industry Headquarters focuses on domestic market, gathering famous brands from home and abroad; Foshan International Conference & Exhibition Center is orientated to boost the development of new brands. With various orientations, three venues rely on and coexist with each other, constructing an important platform for ceramic & bathroom enterprises to exploit the market and upgrade brand value.

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The 27th China International Ceramic & Bathroom Fair, Foshan Organizer: Foshan China Ceramics City Group Co., Ltd Date: April 18-21, 2016 Exhibits: 1. Building Ceramic (wall & floor tile, mosaic, plaza tile, roof

tile etc.)

2. Bathroom (Toilet, bathtub, shower room, bathroom cabinet,

bathroom accessories such as faucet, hanger, etc.)

3. Others (Stone, art ceramic, ceramics technology, and media etc.)

Venues: > China Ceramics City Add: China Ceramics City, No.2, 3rd Jiangwan Road, Chancheng District, Foshan, Guangdong, China > China Ceramics Industry Headquarters Add: No.68, West Jihua Road, Foshan, Guangdong, China > Foshan International Conference & Exhibition Center Add: Taobo Avenue, Nanzhuang Town, Chancheng District, Foshan, Guangdong, China Visitor Registration Please apply the E-ticket at: http://en.cerambath.org/

Contact Us: Mandy Liu International Market Department Tel: 86-757-82525961 Fax: 86-757-82525996 E-mail: fair@eccc.com.cn Web: en.cerambath.org

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25 th International exhibition of technology and supplies for the ceramic and brick industries

The future of ceramics

26 -30 SEPTEMBER 2016 RIMINI - ITALY th

Organized by

In cooperation with

With the support of

tecnargilla.it

th

www.sitibt.com

News

Contents: AC 16-2

n a i d n I o t e m o W e lc C e ra m i cs 2016

Well, here we are again! As China continues to transform itself from a state of rapid growth, to one of more orderly development, eyes continue to focus on the sub-continent and the massive potential that keeps presenting itself in the region’s ceramic industries. This year will be the first time Indian Ceramics has partnered with Ceramics Asia to become one event for the region, and we wish Messe Muenchen, MMI and Unifair in their exciting jointventure. Of course, the Indian Ceramics brand remains as strong as ever, and as the company – and magazine – that started the whole series way back in 2006 up in Morbi, we are excited to see what this change in tack will provide for exhibitors and visitors alike.

News 8 Inside Asia

Bangladesh tableware provides options.

10 Welcome

Pressure on China’s real estate.

12 Across The Continent

Openings, closures and industry moves from across Asia.

18 International News Our eye on the international arena.

20 Material Matters Raw materials news and views.

22 Comment & Analysis Cleaner bricks for India.

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26

Monno Ceramic porcelain wares: Monno

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News

www.asianceramics.com Features 26 Bangladesh: land of opportunity

Looking forward

Jahir Ahmed discusses why the industry is getting very excited about the prospects for expansion amongst India’s eastern neighbour…

Cevisama

Spain 01-05-Feb

38 Sri Lanka: a new day dawns

Ambiente

Germany 12-16-Feb

Unicera 2016

Turkey

23-27-Feb

Indian Ceramics

India

02-04-Mar

Keramika

Indonesia 17-20-Mar

Ecobuild China

China

29-Mar-01-Apr

Mosbuild

Moscow

05-08-Apr

Rohan Gunasekera discusses how ceramics makers on the island continues to prosper and capitalise on a rapidly growing economy…

46 The ins-and-outs of Asian brick

Who, where, when, what: an overview of how things have been shaping up for the global heavy clay industry in the past few years and a look ahead to what’s likely to come in the next few years.

52 Brick issues

The problems facing the heavy clay sector in the Peoples’ Republic.

58 Chinese tiles: in perspective

As China’s tile industry enters a new phase of controlled development, AC examines how the industry has shaped itself in the last two decades and what challenges lie ahead.

The 27th China International Ceramic & Bathroom Fair Foshan 18-21-Apr ISH China & CIHE China

30-May-01-Jun

Middle East Stone

UAE

23-26-May

Ceramics China

China

27-30-May

Tecnargilla Italy 26-30-Sep Cersaie

Italy 26-30-Sep

We look forward to seeing our readers and advertisers at the show!

www.asianceramics.com 38 62 Talking Shop

Your favourite magazine is now available at the App Store…

66 Insight

download today to see your first sample issue!

Anaylsis Wang Yinchuan, a leading light at one of China’s leading tile companies, discusses his recent trip to Africa and the prospects for constructing a tile factory there...

Analysis and insight into Thailand.

69 The Hunter And The Hunted

William upgrades to an ipad, but still casts his unsympathetic eye over industry issues: this month he bemoans the constant requirement for the “instant” hit.

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Asian Ceramics: now for mobiles, ipads and androids

AC 16-2

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7

Inside Asia BANGLADESH SET TO BOOM? The entire size of production of the Bangladesh ceramic industry has expanded by 200 percent in the last five years, while the sales in terms of value in local currency, Taka, of the total industry doubled during the same period, according to the Bangladesh Ceramic Ware Manufacturers’ Association (BCWMA). The revenue expansion compared to capacity growth raises a question on utilization of installed capacity and competition in the market among the local manufacturers. However, a shortage of gas could be one of the major reasons that will could cause underutilization of installed production capacity. In this issue, Jahir Ahmed discusses the issues facing the industry‌ Photo: Monno Ceramic

Welcome

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ibe online at www.asiance

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ramics.com

AC16-2

After what have been five years of rapid development, OFFICIAL MAGAZINE: the Chinese real estate industry is reaching much closer to the ceiling as demographic demand continues to disappear. At least‌that’s what we all AHMEDABAD, INDIA thought. As usual, just when you thought that the Chinese government had no tricks left up its sleeve, IN SI DE: it has surprised us all again with a shift in its most Sri Lank a in focus Bangladesh: a land of opportunity? fundamental of policies. The announcement that Cost savings in heav y clay Chinese bricks: build ing momentum PLUS NEWS, VIEWS, ANAL the second-child policy will now be removed, YSIS AND MUCH MORE! allowing families (controversially restricted to just one offspring for many years) to grow, will certainly spark new demand in the sector, remove the downward pressure on sales, and create opportunities for more and greater living space.

IN D IAN CE RAM IC S 2016

For example, when a second child is allowed, the relevant family will certainly look to improve their housing conditions. According to the data from National Health and Family Planning Commission, currently there are 90 million couples meeting the requirements for having a second child. Assume 50% of them would have a second child, and then there would be 45 million new populations in the next 5 years, with each year increasing by 9 million babies. Based on average per capita living space of 20 sq metres, in the same period of time there would be new demand for 900 million sq metres with each year increasing by 180 sq metres.

THERE WOULD BE NEW DEMAND FOR 900 MILLION SQ METRES WITH EACH YEAR

In the long term, till the end of 2028, it is estimated that there will be 180 million households aged between15-49 (as birth control began in 1980) in China. Of the 180 million households, 72 million would be families with one single-child parent, accounting for 40%. There would be 95.4 million families with both non-single-child parents, accounting for 53%. Families with both parents are single-child takes up 7% at 12.3 million households. Therefore second-child policy in an all-round way will provide longterm positive effects for the demand for property industry.

However, there are still some concerns despite the apparent boom. The cost of living in Tier 1 cities has risen so dramatically, that many of the eligible families there would not be motivated to have an extra child, or would need to seek to relocate. As such, much of the benefit and upswing will be expected in the Tier three and four cities with a potential redistribution of the supply industries as a result. May we live in interesting times indeed!

Happy Reading!

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EVENTS Events Email: events@bowheadmedia.com Direct line: + 44 (0) 208 123 0839

Bowhead events OVERSEAS OFFICES China Professor Wen Lu and Wen Xin Email: 18980921123@163.com Tel: +86 28 8701 9077 Fax: +86 28 8701 9077 Bangladesh Jahir Ahmed jahir@asianceramics.com India Yogender Singh Malik yogender@asianceramics.com

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EDITORIAL

Sri Lanka Rohan Gunasekera rohan@asianceramics.com

Andy Skillen Publishing Director

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AC 16-2

Asian Ceramics (ISSN: 1476-1467), is published by Bowhead Media Ltd, registered in the UK no: 6127651

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Zibo forces tile plant relocation • RCL targets city markets • RAK assumes control of subsidiaries • EFI secures new Prime • ROCA takes the digi-route • Innovation conference set for April CHINA

Zibo forces tile plant relocation The Zibo Municipal Government Office officially issued "Opinions on accelerating the transformation and upgrading of the 130 ceramic enterprises in the southern district of the city " on 31st December, 2015. It asks to accelerate the transformation and upgrading of the 130 ceramic enterprises in the southern district of the city in 3 years by relocation, promotion, transformation and shut down.

All small businesses should be shut down by the end of June 2016 and all tasks of transformation, integration and relocation should be completed by the end of 2018. As soon as the "Opinions" published, it quickly set off a great disturbance in the industry. What outsiders follow is how these ceramic tile enterprises cope with the government punch when they are trapped in nightmares of inventory and sales, and where to go for the 130 enterprises on "black list" of relocation and shutting down as well as tens of thousands employees?

The structural adjustment, transformation and upgrading of Zibo’s ceramic tile industry are urgent, of course. As early as the end of 2008, Zibo region

has already had 252 ceramic tile production enterprises with capacity of 1.2b. sq metres/y, which accounts for 23% of China total.

However, the ceramic tile enterprises are not strong and their performance and management are not very good.

The local government has conducted rectifications on the ceramic tile industry for a few times. The production capacity of ceramic tiles is reduced from 1.2b. sq metres/y to 0.7b. sq metres/y in three years.

Under the heavy pressures from a new round of the requirements of environmental protection, safety production, energy saving and emission reduction, the Zibo production region urgently need to accelerate the transformation and upgrading of ceramic tile enterprises to achieve the goal of survival of the fittest.

Three paths are given to the enterprises. One of them is to move to Qilu Industrial Park nearby and relocate to Shizuishan, Ningxia, two thousand kilometers away.

The output value of the ceramics tile industry accounts for only a very small proportion of the city's total industrial output value, but the comprehensive

energy consumption is very high as well as the land and other resources. Moreover, the city’s tax revenue is RMB 25,647m. for 2014 and the tax from 130 ceramic tile enterprises is RMB 387m., accounting for 1.5% only.

Therefore, a “revolution” promoted by administrative means is very necessary to the ceramic tile industry in Zibo.

Zibo producing region is now facing a severe objective reality.

That is, most of the ceramic enterprises have no brands, which is a very embarrassing problem for development of Zibo ceramic tile enterprises in recent years. Under the current economy recession situation most Zibo ceramic tile enterprises are trapped in the dilemma of "suppress by Foshan brands and impact by low price tiles from surrounding producing regions."

There are two reasons for the moving. One is pressure from environmental protection.

Another is that the local government wants to make the local ceramic tile industry better and stronger.

There are two ways for the enterprises if they want to survive and maintain competitive advantage. One is expansion of

production capacity and another is to create their own brands.

Under the current economic situation, the expansion is not realistic, but enterprises can enhance their brands. Zibo's current path is very similar to the development path of Foshan in previous years. So, two paths are available to the enterprises, brand promotion or relocation.

The enterprises can only exit from the industry stage if they can’t cope with the two choices.

Relocation of the enterprises means that most of the equipment will be scrapped and the enterprises have to reinvest heavily on purchasing new equipment.

Although the government will give a certain financial subsidies to enterprises in the park, but it can be described as a drop in the bucket compared with the enterprises’ investments.

It is estimated that two third of the enterprises can’t afford the huge investment on relocation in the park. Many companies are now trying to survive.

If they are forced to move, most enterprises have to be closed down.

“Although this is a good thing, this is not the ideal time to move”, one company said.

pieces of sanitary ware from its three manufacturing plants in the island.

“We set an ambitious goal for ourselves of becoming a global tile and bathware manufacturer in 2015,” according to Tharana Thoradeniya, director of marketing and business development. “We have made inroads into the U.S. and Australian market, and now we are happy to sign up with Pakistan’s leading premium

brands retailer SFnZ & Co. We will continue to expand our global footprint in the New Year.”

In 2015, Rocell introduced value added 450x900mm tile, as well as two new collections – a 600x600 mm new glazed polished range and the 150x900mm wood plank range.

The company also spent over Sri Lankan Rs.20Mn in warehouse capacity expansion. The new finished goods warehouse has a 100,000 sqm capacity.

PAKISTAN

RCL targets city markets Royal Ceramics Lanka PLC has entered into a JV agreement with Pakistani company. SFnZ & Co. Ltd. to distribute its products in Karachi and Lahore, Pakistan.

The agreement will see the opening of flagship stores in the two cities in 2016.

The agreement covers the exports, trade and retail of Royal Ceramics products in

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Karachi and Lahore. The JV agreement will see the two parties collaboratively opening flagship stores in the two cities.

An estimated 40 million people live in these two cities of Pakistan.

Royal Ceramics or Rocell, as it is popularily known has an installed capacity to produce about 6 million sqm of porcelain and ceramic tiles and 250,000

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ws APAC HQ • Capacity usage falls as industry stutters • SCG has eyes on

EUROPE

RAK assumes control of subsidiaries RAK Ceramics P.S.C., one of the world’s largest hi-tech manufacturers of lifestyle ceramics solutions, today announced that it now has complete control of both its British entity (“RAK Ceramics UK”) and its German entity (RAK Germany) with the full acquisition of the remaining shares for both subsidiaries.

Complementing this move, RAK Ceramics announced the appointment of a new leadership team to head its core European operations.

The move is expected to support RAK Ceramics as it grows within Europe’s highvalue markets and further consolidates the interests of its

global operations.

Alvin Biggs has been appointed as Managing Director for RAK UK. Math Rietrae has been appointed as General Manager of RAK Ceramics’ Central Europe division, based in Germany and Søren Hougaard has been appointed as General Manager of RAK Ceramics’ North Europe division, based in Denmark.

The new European set-up confirms RAK Ceramics’ ongoing commitment to its Value Creation Plan, which primarily focuses on investing in ‘core businesses’ in key markets and includes a strong focus on corporate restructuring and robust corporate governance.

RAK Ceramics UK is strategically important to RAK Ceramics’ global operations, and the move confirms the company’s efforts to invest in the development and growth of its footprint in the European market.

Abdallah Massaad, Group Chief Executive Officer at RAK Ceramics, said, “We are excited to have strengthened our presence in the UK and Europe.

These recent acquisitions and new management appointments reflect the success of our refocused strategy and continued execution of the Value Creation Plan endorsed by the Board of Directors in 2014. We are

confident in our ability to enhance margins in the longrun and become a strong global competitor, strengthening our position within the ceramics industry around the world.”

RAK Ceramics exports approximately 70% of the output that it produces in the UAE, most of which are dispatched to markets in Europe and Saudi Arabia. At the end of Q3 2015, the total net sales from Europe for tiles and sanitaryware reached AED 248 million. The new European offices will ensure that RAK Ceramics is strategically positioned to serve the entire European market, which is a fast-growing value market for the company.

CHINA

EFI secures news APAC HQ In its latest development to support its strong commitment to customers in the Asia-Pacific (APAC) region, Electronics For Imaging, Inc. (Nasdaq:EFII) has relocated its APAC headquarters from Singapore to a new, stateof-the-art facility in Shanghai.

The recently constructed building in Shanghai’s Minhang district is more than twice the size of the company’s former APAC headquarters.

And, it houses a new, high-tech customer experience center to provide real-life demonstrations of the productivity and quality advantages EFI’s advanced industrial inkjet, Fiery® digital production print technology and integrated MIS/ERP workflow and Web-to-print software products offer.

Located in one of the most dynamic cities in the world, the facility is a high-tech environment

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designed to provide a valuable showcase experience for visitors.

“EFI’s brand new APAC headquarters strengthens our presence and provides a platform for further growth in a region where face-to-face interaction is extremely important,” said Stephen Green, EFI’s APAC vice president of sales. “It also offers a great working environment for our employees, something we work hard to do in all of our facilities around the globe.”

The move to the new Shanghai facility is the latest EFI™ investment in the region to address and support customers’ ongoing success using EFI products. The company, which also has APAC facilities in Japan, Australia, New Zealand and India, continues to hire additional service, sales and R&D/product development staff in the region.

In addition to serving the

entire region, the new Shanghai facility directly supports growing business opportunities taking place in China, a nation that is on pace to become the world’s largest market for printing technology by 2017, according to industry vendor association NPES and print research organization PRIMIR. China already is one of the top countries for EFI’s Cretaprint® ceramic tile printers, print servers and inks. EFI Reggiani textile and VUTEk® superwideformat inkjet printers also have a strong, growing presence there.

And, the company has recently introduced a range of valuepriced, dedicated roll-to-roll LED printers featuring advanced material handling capabilities to the China market.

CEFI’s new Shanghai office and customer experience center is located in the Caohejing Pujiang

Hi-Tech Park at Unit 01A/01D, Building 9, No.2388, Chenhang Road, Minhang District, 201114 Shanghai.

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News

INDONESIA

Capacity usage falls as industry stutters Utilization of Indonesia's installed ceramic production capacity fell from 92 percent in 2014 to 62 percent in 2015, while the country's ceramic sales plunged 28.6 percent (y/y) to 350 million square meters over the same period.

Elisa Sinaga, Chairman of the Indonesian Ceramic Industry Association (ASAKI), said ceramic sales have fallen over the past two years due to slowing economic growth and the sluggish property sector.

Sales are expected to remain stagnant in 2016.

Total annual installed ceramic production capacity in Indonesia grew 7.7 percent (y/y) from 520 million square meters in 2014 to 560 million square meters in 2015 due to promising perspectives on the back of Indonesia's hot property sector in the years before 2014. In fact, Indonesia's property sector was so rapidly expanding in the years 2012-2013 that Bank Indonesia was concerned about a property bubble (it detected speculative buying) and therefore implemented a tighter monetary policy.

This tighter policy involved the raising of the minimum down payment (DP) requirement for property purchases and

curbing mortgages for second home ownership (to prevent an excessive build-up of housing debt). Banks were also barred from providing loans for the purchase of properties that were still under construction (for second time - or more - home buyers). The higher DP requirement (or lower loan-to-value ratio) applied to properties measuring over 70 square meters, thus aiming specifically at the middleupper end of the market.

In combination with the slowing domestic economy, the relatively high benchmark interest rate (BI rate) and high inflation, the country's property developers have been postponing or canceling new property projects since 2014. As largest demand for ceramics stems from the property sector, Indonesia's ceramic industry was heavily influenced by the country's slowing property sector. The official figure has not been released yet but it is estimated that Indonesia's ceramic sales declined 30 percent (y/y) to IDR 25 trillion (approx. USD $1.8 billion) in 2015 from total sales worth IDR 36 trillion in the preceding year.

Asaki Chairman Sinaga, who believes ceramic sales

will remain stagnant in 2016, requests the government to offer incentives in order to boost the industry. One example of a good incentive would be a lower gas price. Particularly as Indonesia's regional counterparts (in the ASEAN region) pay a cheaper gas price, implying that Indonesia's ceramic products become less competitive. Indonesian ceramic producers pay USD $6 per mmbtu, considerably higher than the USD $4 per mmbtu that regional peers pay, Sinaga says. Although the Indonesian government announced a lower gas price for industrial use in the third economic stimulus package that was announced in September 2015, this incentive has not been implemented yet as the government is still in the middle of formulating new rules. When the cheaper gas will be offered remains unknown.

Gas accounts for about 30 percent of total ceramic production costs and therefore a lower gas price would give a boost to the industry. Other threats to the ceramic industry are higher minimum wages and the weakening rupiah.

But to end on a positive note, the central bank and government of Indonesia have been eager to boost the country's property sector. Per June 2015 Bank Indonesia raised the LTV ratio for home mortgage loans, thereby reducing the obligatory minimum DP for first home buyers, while the government launched its "one million houses program" last year, offered a tax incentive for first-time home buyers to obtain a subsidized lending rate, and allowed foreigners to own apartments as well as landed houses (under the socalled right of use category).

Indonesian Ceramic Industry 2009-2015: 2009

2010

2011

2012

2013

2014

2015 1

Revenue (IDR trillion)

13

17

17

24

30

36

25

Growth YoY (%)

-20

30

0

41

25

20

-30

ยน indicates a forecast Source: ASAKI

VIETNAM

SCG has eyes on Prime According to the announcement of the business plan of the Siam Cement Group (SCG), Thailand's largest cement producer,said in The Nation it has approved the decision to buy 15% remaining stake of Prime Group JSC in Vietnam.

This plan is expected to cost Siam more than $60 million.

If the plan is completed, the percentage of ownership of the SCG at Prime Group will reach 100%. Earlier, in 12/2012, SCG signed an

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agreement to buy 85% stake in Prime Group for about $240 million.

Acquiring Prime Group will help SCG become the world's largest floor tiles manufacturer, because Prime Group is the fifth manufacturer of floor tiles in the world and the biggest manufacturer of building materials in Vietnam (accounting for 20% market share). SCG has up to 200 subsidiaries, and earns annual revenues up to $13.7 billion.

In addition to owning shares

in the Prime Group, SCG also invests in many plastic and packaging companies in Vietnam. Through its subsidiary Nawaplastic Industries (Saraburi), SCG holds more than 20% stake in two listed plastic manufacturing enterprises of Vietnam - Tien Phong and Binh Minh Plastics. Currently, the total share of Tien Phong and Binh Minh Plastics in the construction plastic pipe market of Vietnam is over 50%.

In the packaging industry,

SCG owns two factories in Vietnam, by acquiring 80% stake in Tin Thanh Plastic Packaging JSC (Batico). This group is also a shareholder of Alcamax Packaging Company (Vietnam) Co Ltd Packamex Packaging (Vietnam), Vina Kraft Paper Co. and Tan A Industrial Company.

SCG aims for profit growth of 9% in 2016, and will extract about 47 billion baht (equivalent to $1.3 billion) to conduct a takeover operation.

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News

INDIA

ROCA takes the digi-route Spanish sanitary-ware major Roca has said that it would be focusing on more promotion of its brands, including Parryware, through digital mode, considering the shift of trend to digital from the print publications.

The company said that the new looks, including the new colours added to the product line, the R&D measures initiated along with the digital push, would improve its presence in the market for brand Parryware in the country.

The company recently entered into brand promotion through digital medium, including the social media and online space.

In July, it hired a digital manager, and tied up with a digital agency to spread its brand promotion over digital space.

“The AMP (advertising, marketing and promotion) focus, year after year, is shifting from the traditional medium to social channels, and the change is tremendous," said Pau Abello Pellicer, managing director, Roca Bathroom Products Pvt Ltd. The response in the digital

medium is much gaugeable compared to the print medium, considering that the data on who spend how much time on the advertisement material and how much interest is created could be recorded and viewed to study the trend in detail in the digital space, he added.

The company’s AMP expenditure is around 4-5% of its sales and is growing every year with the growth in sales.

The company has posted around Rs 800 crore turnover last year.

Roca, which launched a new brand image and range of its mass segment brand Parryware, said that the brand revival after almost 60 years of existence in the market, has been welcomed.

"After a few months from the launch of the new brand and logo, we are satisfied with the response from the market," he said. However, he said that the result of the brand revamp could not be quantified with the increase in number of sales in a short period and will have to be proven over a period of time.

The change has seen in the

daily operations, the response from the customers through calls, messages and social media are satisfying for the company at present. The brand revival was carried out after interviewing around 5,000 people.

It may be noted that the company is also planning to launch more electronic bathroom products in the Parryware range in India, by importing products from its overseas facilties.

Roca, which has been selling an electronic toilet product i-klin under the Parryware brand in India, is planning to launch around four to five electronic toilet products under the brand.

This would include automatic seat covers and seats which could change temperature. It may be noted that the company has positioned the Parryware brand, which originated in the Chennai-based Murugappa Group firm EID Parry, as a mass brand.

The brand, currently, has around 30% market share and competes with products in the Hindware and Sera brands in

UNITED KINGDOM

Innovation conference set for April Lucideon, the materials technology company, is hosting and cosponsoring the free to attend Ceramic Innovation Network conference, ‘Energy Efficiency in Ceramic Processing’ on 13 April 2016 with the British Ceramic Confederation (BCC).

The conference will bring together academics and industrialists from all subsectors of the ceramics industry who are seeking to reduce energy consumption and costs within ceramic manufacturing processes.

Speakers will include representatives from the BCC, Knowledge Transfer Network (KTN), Ibstock Building Products Ltd, Endeka Ceramics Ltd, Mantec Technical Ceramics

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Ltd and academics from universities, including Oxford, Birmingham, Sheffield Hallam and Queen Mary University of London.

Lucideon’s Dr David Pearmain, Head of Field Enhanced Processing, will present the ground breaking sintering technology Lucideon is developing to reduce firing times and energy consumption.

Stuart Maclachlan, Head of Research and Development at Lucideon, said: “Reducing energy consumption in ceramics manufacturing has become a major focus in recent years, both for financial and environmental reasons. A large number of leading industry researchers and practitioners will deliver their latest findings, thoughts and breakthroughs.

“The event will appeal to anybody who is involved within the ceramics sector, whether they’re manufacturers, retailers, suppliers or academics.

Significantly reducing carbon emissions and energy usage is a big task for the industry and it will be interesting to hear the latest news and innovations.”

Lee Brownsword, Technical & Environmental Manager at BCC, added: “Fostering closer links between ceramic manufacturers and the UK research base is integral to improving energy efficiency in ceramic processing.

This event aims to promote collaborative and innovative working between industry and academia in order to meet the decarbonisation challenge.”

the bathroom products and Jaguar among others in the faucet segment. At present it has around 1,000 dealers and 9,000 sub dealers for Parryware.

The company would also launch an experience centre for Parryware products in Gurgaon in February, the first such store for the brand. The centre will showcase the products under the brand and also introduce the new products in the centre.

"Our target is that Parryware has to be the undisputable leader in the orgainsed barthroom segment," said Pellicer. While almost 80 % of its business comes from Parryware brand, it currently has brands including Armani Roca, which is the top most brand in terms of value in its offerings, followed by Laufen, Roca and Johnson Suisse. It also owns a brand Johnson Pedder, which is placed below Parryware in terms of offering of the product.

NEWS IN BRIEF Indian-paint giant, Asian Paints, has let-slip that as a further step to creating a complete bathroom solutions over time, the company shall be launching a comprehensive sanitar yware range by end of Januar y 2016 under the brand name "Ess Ess

by Asian Paints. This is a step further towards the company's vision to move from being a paints company to being a provider of complete decor solution to help customers create their dream homes, the company said. Although unconfirmed that this is to be the construction of a new factor y, or acquisition of an existing one, the reality is that one of India’s industrial majors has opted to enter the sanitar yware scene.

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GEA is free thinking: no restriction, no limits.

Free to think of a new dimension for ceramics.

With endless aesthetic options.

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International News

Greenhouse gas limits to hit pottery makers United Kingdom

P

ottery industry leaders believe new proposals to reduce greenhouse gas emissions could spark disaster for North Staffordshire's ceramics industry.

Currently, businesses making up the ceramic, oil, engineering and manufacturing industries are tasked with reducing their emissions as part of the EU Emissions Trading System (ETS).

The ETS uses financial sanctions to limit the overall amount of pollution by factories so that total emissions fall over time.

However, industry leaders have now raised concerns over the latest legislative proposals, claiming they would effectively increase the cost to firms who keep production in the UK, rather than those who move it abroad to countries with less strict climate policies.

They say the scheme discriminates against carbon intensive industries like ceramics and could cost the region jobs and business And with Stoke-on-Trent's new Ceramic Valley enterprise zone set to create more than 7,000 jobs across 200 companies, councillor Abi Brown, the deputy leader of Stoke-on-Trent City Council believes the proposals could have a significant effect on North Staffordshire's economy.

"With the ceramic valley enterprise zone and the fact our economy has a large focus on ceramics, the EU ETS proposals could potentially have a huge impact on that," she said.

"We need the proposals to help support the North Staffordshire industry for the future.”

As part of the ETS 'cap and trade'

system, companies are encouraged to be as green as possible.

This is because the more they pollute above their 'free allowance', the more money it costs them as they are forced to pay other firms to use up their emissions quota.

And with 'phase four' of the EU ETS being launched in 2021 to achieve the EU's target of a 40 per cent reduction in emissions by 2030, business leaders want the rules to be applied fairly to all firms.

Dr Laura Cohen, chief executive of the British Ceramic Confederation, said: "We need to ensure all ceramic businesses retain full 'carbon leakage' protection in the EU ETS after 2020. "We want to work with politicians to find a fair solution, as current proposals, especially the UK Government's proposal to focus free allowances on a handful of sectors, could tax

Confederation points finger at politics United Kingdom

T

he British Ceramic Confederation has accused Prime Minister David Cameron of getting his facts wrong about North Staffordshire industry, following a debate in parliament.

PM David Cameron told the Commons “energy intensive industry measures” were “very, very important” to business in Stoke-on-Trent North.

The measures compensate businesses most at risk of carbon leakage, to help offset the additional cost of energy and climate change policies.

But Laura Cohen, chief executive of the British Ceramic Confederation, said Mr Cameron had overstated the importance of the measures to the ceramics industry in North Staffordshire.

She said: “The energy intensive industry measures are indeed “very very important” for the whole of ceramic industry, yet none of our members in

18

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Staffordshire will benefit and just 7 of our member companies nationally, unlike the widespread help given to their competitors in Germany and Italy.”

Mr Cameron made his comments after being challenged by Stokeon-Trent North MP Ruth Smeeth about the possibility of trade links with China undercutting jobs in the Potteries.

Ms Cohen added: “China is not a market economy – we want free trade but it has to be fair trade.

“The Prime Minister needs to understand that all we want is a level playing field to enable us to compete internationally. He needs to act now to help secure ceramic investment, jobs and businesses.”

During the debate, Ms Smeeth challenged Mr Cameron on plans to grant China Market Economy Status – which critics say could lead to jobs being lost as the Chinese dumped produce in the markets below its real value.

She said: “Over two and a half thousand people are directly employed by the ceramics industry in Stoke-on-Trent North and Kidsgrove.

“These and tens of thousands of British manufacturing jobs are at risk if China is granted market economy status.

“The Prime Minister is very happy to sell off the family silver but can he guarantee he will not sell off the family crockery?”

Mr Cameron replied: “Even if they get that status they can’t dump steel products or other things into European markets and they can be fine, and what we should be doing is making sure that we’re driving open markets for us to sell to China.

“They are the ones with the massive growth in the middle class taking place with hundreds of millions of people joining that and there are many great products made in Stoke-on-Trent that should be sold in China.”

many companies out of business."

Dr Ian Duncan, Conservative MEP for Scotland, is spearheading the European Parliament's reform on ETS. Yesterday he visited Ibstock Brick, in Chesterton, to understand what effect the new legislation would have.

Mr Duncan said: "Brick manufacturers generate emissions and so the challenge is how do we reduce emissions without destroying the industry."

Ibstock Brick – the UK's largest brick manufacturer – has recently seen a £22 million investment in energy-efficient technology at its Chesterton factory.

Michael McGowan, quality environment and energy manager, said: "We are proud we've invested in UK manufacturing, and Ibstock Brick has one of the most energyefficient plants in the world."

LB trikes Wonder-ful partnership United States

L

B has strengthened its partnership with the Chinese group Wonderful, which after installing LB plants at its factory in China has entrusted the Italian company with a major order for its first production site in the United States.

The new porcelain tile facility, Wonder Porcelain Group LLC, will be built in Tennessee, the new frontier for US ceramic tile production.

The plant to be supplied by LB will include a raw materials preparation area, lines for filling silos from a spray dryer, spray dried product storage silos and press feeding lines with batching modules complete with dry colouring equipment.

This latest order confirms LB's role as one of the leading suppliers of porcelain production technologies to the US Ceramic Valley.

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News

EFI secures award Spain

C

eramic tile producers can maximise efficiency-and profitably manufacture popular new tile sizes-using new technologies that Electronics For Imaging, Inc. unveiled at Cevisama 2016 in Valencia, Spain. During the exhibition, the company's integrated EFI™ Cretaprint® exhibit of new X4 technology for tile printing up to 1.8m wide, ink and Fiery®proServer products won the 40th annual

Sociedad Española de Cerámica y Vidrio (Spanish Society of Ceramics and Glass) Alfa de Oro award for machinery innovation.

This prestigious machinery award, which is presented biennially to honour ceramics and glass manufacturing equipment that stimulates technological and artistic creativity, recognises the family of EFI Cretaprint products and their new integration with innovative Double Tile Printing

System secures multiple orders Spain

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orcelanosa, Colorker, Grespania and Keraben are, in chronological order, the latest Spanish companies to have ordered ceramic tile automation from System.

Following the first installation of

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a Multigecko sorting line at its wall tile facility in 2014, Porcelanosa has purchased a further two units for its porcelain tile factory, the latest of which will be used for the production of 600x1800 mm and 1200x1200 mm sizes.

(DTP) 2.0 technology launched at the exhibition.

DTP, which is compatible with all the printers in the EFI Cretaprint family, enables the simultaneous production of two different patterns or designs within a single print head.

It also gives tile manufacturers the ability to produce differentsized tiles simultaneously on their Cretaprint printer, an advantage that helps users extend beyond standard products to capture growing market demand for longer and larger tiles.

"Tile manufacturers and their clients continue to seek increased production efficiencies in digital inkjet decoration, and the

advancements we have made with DTP 2.0 and the entire EFI Cretaprint ecosystem meet this important demand. Now, manufacturers who previously required multiple printers to produce different-sized tiles can efficiently combine their work on a single device," said José Luis Ramon Moreno, vice president and general manager, EFI Cretaprint. "We are honoured to receive recognition for this innovation from the SECV, and we are pleased to have had many positive conversations with Cevisama attendees about how our complete portfolio of digital ceramics decoration products can fuel their success."

Impressed by the significant contribution it makes to finished product quality, Colorker has equipped all its glazing lines with the Check Point artificial vision system for unfired tile inspection.

For the Keraben group, System has installed and started up a new Creadigit digital printing unit with a resolution of 400 dpi and very high productivity (up to 60 m/min.).

Last but not least, Grespania will shortly be starting up a new plant for the production of 100x300 cm and 120x360 cm sizes with thicknesses of 3, 6 and 10 mm, consisting of a 25,000 ton GEA 2.0press, a decoration line featuring a Creadigit digital system, a kiln, a cutting line, handling and storage systems and a gluing and packaging plant.

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Raw Materials News

Raw Material News A TOUGH START TO 2016?

China // Zircon In winter more than 90 percent of ceramic manufacturers in China suspended production while the investment casting and refractory materials industries also recorded much lower levels of activity. As a result, the zircon sand business throughout those months reached one of the lowest levels of activity it has seen in the last five years.

Indeed, after the New Year Holiday, established sands suppliers and domestic concentrators lowered sands quotations. At the moment, Indonesian sands are between $1,000-1,020 per ton CIF, Iluka premium grades between $1,030-1,050 per ton, Tronox’s Australian sands (former Tiwest) between $1,045-1,055 per ton CIF, Tronox’s Australian sands (former Namakwa) between $1,020-1,030 per ton CIF, RBM’s premium grade ZUG sands between $1,000-1,030 per ton CIF. The decline in sand prices has been primarily for two reasons. On the one hand, as the dollar has constantly risen against the yuan, many suppliers have had to lower CIF prices in order to maintain the downstream prices in terms of the final yuan settlement. What is more, leading sands supplier, Iluka, announced to lower its price by $50 per ton, putting pressure as a result on other suppliers to follow course.

Of course, a further massive production suspension has been seen in ceramic companies as the Spring Festival approached, whilst investment casting manufacturers’ orders were also suspended due to holiday break, resulting in a considerable tail-off in zircon flour trade.

For 1H 2015, flour sales to the zircon frits market had been satisfactory as the

latter had outperformed many other products. However, things became much less optimistic in the second half of the year. Even though investment casting had a slight recovery for August and September last year, it fell back into its previous, less positive ways after October.

For these two sectors in particular, delayed payment was often seen, which for many flour manufacturers caused a major problem. At present, enterprises said that even if they completed delivery before the holiday break, they were unable to collect funds. As a result some of the flour suppliers would rather hold delivery than be unpaid by downstream users. This in turn, of course, results in a bottleneck in production and application.

As AC goes to press, zircon flour trade has fallen almost to zero and many manufactures have suspended business.

With the onset of the Spring Festival, ceramic companies have suspended production for maintenance, leaving the frit trade volumes almost at zero. Most Frit manufacturers finished their small feedstock purchases before late January.

According to sources, the downturn in the ceramic market in 2015, and the suspension of activity at many companies in Shandong and Sichuan in particular, mean that more and more companies switching to fully-polished glazed and rustic tiles lines. As a result, tile grade frit consumption has been affected as well.

For the 2016/17 year, the outlook for frit makers is expected to continue to be gloomy and downstream users only purchased a little amount of frits in stock.

Hainan Wenchang Zircon Price, RMB/Ton

Vietnam Zircon Price, RMB/Ton

Specification: (Zr.Hf)O2≥65%, TiO2≤0.15%, Fe2O3≤0.1%

Specification: (Zr.Hf)O2≥65%, TiO2≤0.15%, Fe2O3≤0.1%

EXW Price (Incl. Tax)

EXW Price (Excl. Tax)

7,100-7,300

6,400-6,600

Early January

Early January

EXW Price (Incl. Tax)

EXW Price (Excl. Tax)

7,000-7,300

6,400-6,500

Mid-January

7,100-7,300

6,400-6,600

Mid-January

7,000-7,300

6,400-6,500

Late January

7,100-7,300

6,400-6,600

Late January

7,000-7,300

6,400-6,500

Average Price

7,200

6,500

Average Price

7,150

6,450

Zirconium Silicate Price in Fujian (RMB/t) Specification:

(Zr.Hf)O2≥63.0%, D50=1.2μm

(Zr.Hf)O2≥64.5%, D50=1.1μm

EXW Price (Incl. Tax)

EXW Price (Excl. Tax)

EXW Price (Incl. Tax)

EXW Price (Excl. Tax)

Early January

8,400-8,600

7,800-8,000

9,200-9,500

8,600-8,900

Mid-January

8,400-8,600

7,800-8,000

9,200-9,500

8,600-8,900

Late January

8,400-8,600

7,800-8,000

9,200-9,500

8,600-8,900

Average Price

8,500

7,900

9,350

8,750

Zirconium Silicate Price in Foshan (RMB/t) Specification:

(Zr.Hf)O2≥63.0%, D50=1.2μm EXW Price (Incl. Tax)

EXW Price (Excl. Tax)

EXW Price (Incl. Tax)

EXW Price (Excl. Tax)

Early January

8,500-8,600

7,800-8,000

9,500-10,000

8,800-9,400

Mid-January

8,500-8,600

7,800-8,000

9,500-10,000

8,800-9,400

Late January

8,500-8,600

7,800-8,000

9,500-10,000

8,800-9,400

Average Price

8,550

7,900

9,750

9,100

Zirconium Silicate Price in Yixing (RMB/t)

Zirconium Silicate Price in Shandong (RMB/t)

Specification: (Zr.Hf)O2≥64.5%, D50=1.0μm

Specification: (Zr.Hf)O2≥64.5%, D50=1.0μm

EXW Price (Incl. Tax)

EXW Price (Excl. Tax)

9,800-10,000

9,100-9,300

Early January

20

(Zr.Hf)O2≥64.5%, D50=1.1μm

Early January

EXW Price (Incl. Tax)

EXW Price (Excl. Tax)

9,500-9,600

8,900-9,000

Mid-January

9,800-10,000

9,100-9,300

Mid-January

9,500-9,600

8,900-9,000

Late January

9,800-10,000

9,100-9,300

Late January

9,500-9,600

8,900-9,000

Average Price

9,900

9,200

Average Price

9,550

8.950

asian ceramics

AC 16-2

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News Anaylsis

News

22

asian ceramics

Verdes: changing the face of Indian brick?

T

he local branch of Talleres Felipe Verdes in India was incorporated in 2011 as a fully owned subsidiary, Verdes Clay & Minerals Equipment Pvt. Its offices and workshop were built the following year in Hosur, near Bangalore. At the same time the basic team of executives and key technicians were being trained in India and abroad and the local market needs continued to be studied visiting at site one hundred local brick makers and investors. The first wholly Indiamanufactured extruders came out in the middle of 2.013 and quickly the range of machineries was increased.

To this day a dozen different models of feeding, mixing, grinding and shaping machines have been manufactured and delivered. With these models and sizes Verdes can design complete preparation lines for the local industrialists, which of course can be complemented with bigger or different imported machines from other Verdes manufacturing units.

From 2011 to 2014 a dozen customers were selected in 5 states of North, Central and South India to install and run the first units. Some of these customers were producing specialities like floor tiles, ceiling tiles, facing slips, but the majority of them were producing only standardsized bricks. However, by their own prospective market studies and with the full collaboration of Verdes several of them are moving into the more attractive and higher added value products, mainly thin-walled

AC 16-2

Hollow Blocks, while still maintaining the production of standard bricks, of course now of better appearance and performance.

The factors that have made these pioneer-minded industrialists choose Verdes instead of the local manufacturers or the imported Chinese or European alternatives are in 2 levels: A) The purely technical level, that is the degree of innovation and modernity of the European-designed made-in- India machines when compared to the other alternatives. 
 B) The service level. It has taken a couple of years for the local brick makers to catch on to the critical importance of this aspect. It involves the project-by-project study of the brick maker or investor needs, at site, in his own factory or plot of land, wherever it may be located in India.

Then to propose and supply to him a finely balanced set of preparation and extrusion equipment, fitted to the characteristics of his clay, his present and future products, or to a step-bystep plant modernization if needed.

This involves physical characteristics clay analysis, well trained engineers, etc. But equally if not more important is the After-sales service, that is the availability of local trained mechanics, of wear parts, the planning and programming with the customer of the availability of parts so that he never has to wait for them, etc.

Initially the prospective customers were not valuing these services, as they had never been available by

the foreign suppliers nor by the local ones. Brick and tile makers expected to fend by themselves as the few mechanized ones had always done.

But today, after the experience of the assisted start-ups and the local technical support during these 1 or 2 years of operation, they have realized the importance of this unique assistance of Verdes. 
 These factors are reflected both in the trickle of second orders from the first customers and in the marked interest generated by the Verdes customer experiences shared by word of mouth to neighbours and colleagues. All in all the tendency is that, in spite of the periodic regional upheavals related to the new clay mining licenses, pollution inspections and ambient permissions, etc., the Indian heavy clay sector is finally starting to move from the cottage-industry level to more efficient industrial operations, safer for their workers and cleaner for their neighbours. They have to drag along this path also the construction companies, which are avid for more quality and resource-efficient building materials. But, at the same time very cautious when little-known new-shaped products are presented to them. Again, in this other battle Verdes and its extensive global network of experts and allies will do its utmost to help our industry in India develop and grow as it deserves.

For more information, contact: Verdes Clay & Minerals Equipment Pvt. Ltd (www.verdes.in)

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AC 16-2

Al Jawdah company for plastic pipes and fittings: The company was founded in 1994 and is engaged in the production of plastic pipes of the (PVC) and (C-PVC) and (UPVC) and (PP-R) This addition to the production of links all kinds of plastic in all sizes and different thickness are used in various fields such as extensions of water lines with high and low pressure and sewage extensions, telephone and electricity and agricultural extensions, according to the Saudi Arabian Standards for Standards, Metrology and international standards.

AL-JAWDAH pLASTIC PIPES & fITTINGS cOMPANY

Al-Jawdah Ceramics Company was established in 1995 and produces ceramics wall and floor tiles with a wide range of products. The Company produces all decorative products such as Listello,skirting etc, to match the tiles. The Company continuous growth to fulfill the Saudi Arabian and Middle East market requirement.

AL-JAWDAH CERAMICS

Group of Companies Abdul Rahman and Abdul Karem Saleh Al-Omran were established in 1975 under the name of Al Omran sanitary ware and specialized in wholesale and retail trade of sanitary ware and accessories, as one of the largest companies imported sanitary ware in the kingdom and the Middle East, where the importation of the major companies and factories World finest varieties and the latest models to suit all tastes and in very large quantity to cover all the request for the large projects and the Group is one of the largest and most famous companies working in this field in Saudi Arabia and the Gulf states in the framework of the Group’s commitment to provide distinctive products has added industrial ACTIVITY through the creation of the group of companies large industrial sophisticated and includes four leading industrial companies under the name of Aljawdah companies, namely:

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23

Visit us at

Email: alomran@cyberia.net.sa / info@aljawdahgroup.com Tel: Al-Jawdah: +966 11 265-0228 / Al-Omran: +966 11 422-3316

Emirates Quality Mark

The photo shows the owner, Mr. Abdul Rahman Saleh Al-Omran center, with son Dr.Saleh Abdul Rahman Al-Omran.

The new production plant of Al Jawdah Porcelain & Ceramics owned by Abdul Rahman Saleh Al-Omran, is currently undergoing installation of machines.

Located in Riyadh, The facility is an impressive INVESTMENT project which when completed will have an output capacity of 110,000 square metres per day.

The centerpiece of this plant is the new PH 6500, a hydraulic press. The first largest press ever INSTALLED in Saudi Arabia, it has a maximum pressing force of 64,000 kN and an inter-column clearance of 2,450 mm, making it ideal for the manufacture of very large tiles.

Two presses of this kind have been installed for the new facility. The first was delivered in early July and a second with similar dimensions and characteristics has now been added to complete the first phase of the INVESTMENT, capable of producing 40,000 sq.m per day.

They join four PH 3200 presses which have already been INSTALLED in the shaping department.

Sacmi has also supplied the other key machines in the production line, including three spray-driers and two high performance mills. The project will be completed by machinery and equipment for the drying and firing deparments.

AL-jawdah PORCELAIN

One of Abdul Rahman, a group of companies and Abdul Karem Saleh Omran TRADE and industry began commercial production of the plant in early 1999, the factory is located in riyadh Second Industrial City and a production capacity of up to (400,000) electric water heater annuall annually.

The factory produces electric water heaters sizes (30.50,100,200,250,300 liters) multiple different colors and models, including horizontal and vertical-fashioned style and ground-style central and style.

AL-JAWDAH WATER HEATER

Raw Materials News

Analysis: Bangladesh

Bangladesh – the of opportunity a bridge to a brighter future Jahir Ahmed discusses why the industry is getting very excited about the prospects for expansion amongst India’s eastern neighbour…

T

he Padma Bridge is now a reality in Bangladesh. It proves what this South Asian country says comes true. Bangladesh Prime Minister Sheikh Hasina said in a two-day Bangladesh Investment and Policy Summit-2016 of global investors at Dhaka in January that Bangladesh will dot the whole country with up to 100 export processing zones. She sought investors’ confidence in Bangladesh’s ability to facilitate investment in various sectors including ceramics. Her latest initiative to construct LNG terminal in Chittagong under private sector with arrangement for regasification and connecting national gas transmission grid were equally stimulating to the investors who already got assurance of augmentation in supply of power and indigenous natural gas in existing situation of gas and power shortage.

No wonder, the square-shaped Bangladesh with an area of about 147,570 square kilometers is like a giant metropolis with about 170 million people living everywhere with more or less equal density.

It has hard-earned infrastructure of roads, railways, power, water routes, countrywide mobile phones, internet networks, massive agro-industrial firms, healthcare and education, almost everything, except enough private cash to invest in industrial manufacturing to open up employment opportunities for the youths who have proven intelligence to be quick in learning, resulting in boosting up economy of the country.

The multipurpose four-lane road-rail Padma Bridge with gas and power transmission facilities offers opportunity for creating many industrial zones, including site for ceramics, in the vast southwest Bangladesh and get easy access to surplus human resources who are known for hard work at home and abroad.

Centuries ago, before entry of colonial power from distant continent, Bangladesh was one of the richest in Asia for its intelligent workforce and craftsmanship in farms and cottage industries, according to the great medieval traveller-writer Marco Polo of the 13th century and Ibn Baṭūṭah (Muhammad Ibn Battuta) of the 14th century. They described this fertile agricultural country, rich with village-based export manufacturing, specially, Muslin, the most uncommonly delicate hand-spun and woven fabrics of cotton and

26

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silk, which were most sought after fashion trade items consumed by the aristocrat ladies in Europe.

An ounce of gold?

Legend has it that an ounce of Muslin used to sell in Rome for an ounce of gold. The British historians noted that failing to compete with Muslin, in an extreme brutality, the colonialists destroyed the industry by cutting off the thumb of the young spinning and weaving women. Interestingly, Bangladesh re-emerged again as a leading textile and clothing exporter. The coming decades are likely to see Bangladesh’s command in the world of ceramics as the country’s economic growth potential has reasons to generate strength to invite globally dominant players to relocate for catering domestic markets and meet export demands.

UAE’s RAK famed former CEO and industrial mineral investment expert, Dr. Khater Massaad, who has major investment interests in Bangladesh’s building ceramic plant Star Ceramics Ltd and tableware manufacturer Star Porcelain Ltd, opined that Bangladesh is a natural choice for ceramic production as it offers every option including a lucratively expanding domestic market.

To the surprise of many, Bangladesh is going ahead with the prestigious project of 6.15 km long Padma Bridge on the mighty Padma River, the downstream Bangladesh part of the Ganges, at Mawa-Janjira point, about 50 km south of Dhaka, at its own funding of US$3.7 billion generated from the country’s tax payers. The bridge will connect the centrally located greater Dhaka metropolis of about 20 million with the huge deltaic southwestern region. Sheikh Hasina opened the construction of the main part of the bridge in last December with a hope to open for fully for traffic by the end of 2018.

What is very significant to note is that the bridge will help facilitate ceramic manufacturers with enough factory lands at economic prices. In other gas and power grid areas, where so many factories are located, lands are expensive and hardly available according to demand.

Natural gas continues to remain the main factor for viability of a ceramic plant in Bangladesh in competition with ceramic manufacturers of other countries.

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Analysis: Bangladesh

land Padma Bridge: Government of Bangladesh

Bangladeshi manufacturers main advantage is based on cheaper gas and labour and protection of domestic industries by the government by imposing three digit import duty. The tile and sanitaryware manufacturers have an additional advantage because of deficit domestic market.

Gas price in Bangladesh is currently one of the lowest in the world at about US$3 per mmBtu, which is about half of Malaysia and Indonesia, and one third of Thailand.

Availability of natural gas at a vital industrial location together with nearby markets, seaports and major national road-rail networks is considered to be the greatest opportunity for the ceramic manufacturers. With the Padma bridge, Bangladesh offers all the vital options of infrastructural installations and facilities. Prime Minister Hasina, who is also Chairperson of the country’s Board of Investment (BoI), said she is committed to let the investors avail this. “It’s our highest level of commitment to facilitate your realistic proposals quickly and give full value of your money,” she told the investors in the Summit.

Gas and power

Bangladesh currently has a gas reserve of some 14 trillion cubic feet, while the present daily gas production is around 2,400 mmscfd, against the demand of over 3,000 mmscfd. Besides, many new industries are in pipeline to add additional demand.

In addition to augmenting its own production, transmission and distribution according to the market demand, the government is going to arrange for import and supply of LNG from the Gulf countries by setting up LNG terminal near Chittagong port under private sector.

Official sources said, under the state oil, gas and mineral corporation Petrobangla’s gas transmission systems in Chittagong, its transmission unit, Gas Transmission Company Limited (GTCL), has already taken initiatives for the construction of 91km-long Moheshkhali-Anwara gas transmission pipeline for transmission of the re-gasified gas from the floating terminal at Moheshkhali to the shore to connect with the Karnaphuli Gas Company systems.

The sources said, Singapore-based Astra Oiland Excelerate Energy Consortium (AEC) would set up the Floating Storage Re-gasification Unit (FSRU) with a capacity of 500 million metre standard cubic feet per day (mmscfd) within June 2017.

Domestic market

According to the data base and markets analysis of the London-

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based Bowhead Media Limited, the publishing organization of Asian Ceramics, the demand for ceramic products, specially, tiles and sanitarywares, in Bangladesh domestic markets will continue to grow at double digit year on year. The domestic consumption will boost up greatly in the coming years parallel to the continued expansion of the economy at over six percent that will bring a massive population under consumption of construction materials like building ceramics in which the country continuously runs deficit requiring over a hundred million dollars annually for imports.

Bangladesh expects to boost up per household yearly income to over US$20,000 from the current US$7,000 by 2021. Each household consists of five persons, according to the official national survey. This means huge activities in construction, housing, domestic and service sectors requiring ceramic products in a massive scale for the first time since independence of Bangladesh in 1971.

Bangladesh’s real economic development began during the nineties when the country’s democratization started to flourish and attracted investment by the private sector.

Much of the ceramic industry developed during the past quartercentury. Before that Monno Ceramic Ind Ltd created the ground work for tableware exports, while Peoples Ceramics Ltd was import substitute. The investors were enterprising compared to the huge garment manufacturers who emerged in a large scale and now earns some 80 percent of Bangladesh’s export receipts of about US$3 billion per month with a steady growth. In ceramic sector, the tableware industry is the main export earner, with shipment of mainly porcelain and bone china dinner wares of about US$4 million per month, mainly to the European and North American countries.

In recent years, the shipments of tablewares are going to some other non-traditional markets, mostly in the Middle East, Latin America and Asia Pacific as a part of diversification of organized buyers, mostly giant retailers and outsourcing companies, and reduce dependence on traditional Western importing countries.

Strategic decisions

The BoI that promotes the country to the foreign investors says, it attracts foreign direct investment in both export and domestic market oriented industries to make up for the deficient domestic investment resources, and to acquire evolving technology and gain access to export markets. It identified ceramics, among others, as a potential sector for foreign investment. It says categorically, Bangladesh offers “clean gas reserves in certain locations to fire kilns for competitive cost advantage.”

AC 16-2

asian ceramics

27

Analysis: Bangladesh

Although, BoI highlighted tableware sector for its certain reputation in the global export markets, it also suggests sanitaryware, insulator and other product types which have good demand at home and abroad. Like sanitaryware and insulator, tile also now emerges as most lucrative area for investment as the domestic demand is rising with a robust double digit growth year on year, parallel to Bangladesh’s continuous GDP growth at over six percent, on average, since past decade with indications of rising further to over seven percent in the coming years.

The GDP’s main contributors, such as, consumer industries, export manufacturing, agriculture, construction, remittance from more than 10 million expatriate Bangladeshi workers and the domestic service sector is now stable to raise consumptions.

However, the housing start still remains slow under organized developers because of higher cost of construction and prices of apartments in the big cities since several years. Construction of new houses and renovation are going on as usual in unorganized markets. Despite slowdown in apartment markets, BoI is trying to impress the foreign investors with steady growth. “We offer a strong local market, greater global market access and proven export competitiveness,” said Dr Syed A Samad, Executive Chairman, BoI, in a message to the investors.

The World Bank estimates that the GDP growth rate would be much higher than six percent and expecting to approach around seven percent in 2016. The government has already projected a seven percent growth and mobilizing revenue and development machineries, as the national budget for the fiscal year 2016-17 (July-June) is likely to rise to around US$40 billion. All this means Bangladesh is going ahead with a giant consumption boom. Zahid Hussain, the Lead Economist at the World Bank’s Dhaka office has already advised the government to accelerate the speed of investment in the private sector to sustain the increasing economic trend and fulfill the higher growth target.

Expansion movements

The entire size of production of the local ceramic industry has expanded by 200 percent in last five years, while the sales in terms of value in local currency, Taka, of the total industry expanded by some 100 percent during the same period, according to the Bangladesh Ceramic Ware Manufacturers’ Association (BCWMA).

The revenue expansion compared to capacity growth raises a question on utilization of installed capacity and competition in the market among the local manufacturers. However, shortage of gas could be one of the major reasons to cause underutilization of installed production capacity.

New factories like tile plant DBL and other expansions were badly affected by gas shortage. Yet, the running factories are earning profits by successfully exploiting the domestic demand taking the advantage of market protection or import restriction.

While the tile and sanitaryware manufacturers make good profit on the domestic market, the tableware manufacturers use the domestic market to save their existence when the export markets face slowdown. Occasionally, the capacity surplus domestic markets become extremely competitive when an influx of alien tablewares hit the market..

“At the moment the imported products pose as threat the local manufacturers because of levying import duty on tons, instead of pieces,” Asian Ceramics was told by ARM Musa, a FARR Ceramics Ltd director who handles marketing and sales. The local manufacturers allege that corruption in Customs department helps foreign tablewares to hold at least a 10 percent market share since

28

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AC 16-2

Estimated production cost of a 32 piece porcelain dinner set in Bangladesh Particulars of cost

Cost per set of 32 pieces, in Bangladesh Taka (US$1=Tk.79)

Cost in percentage

Materials consumed: Raw materials

436.87

Glaze materials

99.86

26.47 6.05

Direct wages

124.82

7.56

Prime cost

661.55

.40.08

Indirect expenses: Factory salary

81.13

4.91

Indirect materials

43.69

2.65

Fuel/Natural Gas

99.86

4.91

Depreciation

62.41

3.78

Other factory overhead Total production cost

43.69

2.66

992.33

58.99

Other expenses: Selling and distribution

99.86

6.05

Administrative expenses

49.93

3.02

Dealer commission (domestic markets)

43.69

2.65

Financial expenses Total cost of goods sold Profit margin 15% Selling price VAT 15% Total domestic market retail price

81.13

4.91

1,266.94

75.62

168.50

11.34

1,435.44 215.31

13.04 100.00

Source: BCWMA estimates

the past decade, despite huge expansion of local products and competition in the market by the local manufacturers.

“Bangladesh needs value added industry and as such continued protection and support of tableware industry to enable it play a vital role in the country’s development process like what Monno did since 1984,” argued Moynul Islam, Vice Chairman of the leading player Monno Ceramic Ind Ltd and Senior Vice President of BCWMA. Moynul is worried about the rising production cost in tableware manufacturing following increasing cost of rawmaterials and irregular supply of natural gas. “Bangladesh do not have any raw material for ceramic tableware except natural gas and very hardworking population, but considering current high raw material prices around the world for tablewares and prevailing non availability and cost of gas in Bangladesh there are no advantages of producing tablewares in Bangladesh,” Moynul lamented.

In face of increasing production cost and competition from the alien products, the local manufacturers search solution in restricted imports, “we are negotiating with the government to keep the existing customs duty and supplementary duty to continue to protect the tableware, tile and sanitary ware industry, as now cheap and under-invoiced tiles, glass wares, etc, from China are posing a threat to all tableware factories in Bangladesh,” Moynul said. “In countries like Turkey and India, they impose higher duty on import from China; Bangladesh needs similar policy,” he added.

“Tiles and sanitaryware or heavy clay industries might have

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Analysis: Bangladesh

Summary of natural gas reserve in Bangladesh in trillion cubic feet (TCF) Recoverable reserve in TCF Proved No of Gas filed

Total GIIP in TCF

26

39.0

Proved + Probable

Proved + Probable + Possible

(1P)

(2P)

(3P)

20.6

27.12

31.31

Cumulative production On June 30, 2014, in TCF

Remaining reserve On July 1, 2014, in TCF

12.10

14.98

Source: Petrobangla, state oil and gas organization of Bangladesh Note: Ceramic manufacturers treat gas as raw material. Gas is currently available at about US$3 per MMBTU, one of the lowest in the world, for the ceramic producers

better future if Bangladesh government allows duty free import of coals and LNG,” Moynul said. He suggests coal in Bangladesh has bright future hence coal mining policy needed to be finalized. He said in case of coal-based industry the law of environment needed modification. “If the government extends cash incentive and consider gas as basic rawmaterial for ceramic, like fertilizer, Bangladesh would be very highly cost effective and quality manufacturing country in the world,” he suggested.

Most of the imported tablewares are shipped from China and Thailand. Other important sources include various Asian and European countries. Bangladesh’s organised tableware manufacturers had a total production capacity of 250 million pieces in July 2014-June 2015 (12 months), but their total turnover, according to BCWMA, was some US$92 million (Taka7,250 million).

US$1=Tk79.

Insignificant value addition and marketing continuously affect the Bangladeshi export manufacturers in tablewares. They are not getting competitive value compared to other Asian competitors, such as, Chinese, Indonesians and Thais, even the rural-based small and medium manufacturing enterprises of Vietnam.

Lucrative offers?

Currently, production of tiles and sanitarywares is more lucrative and has maximum guarantee of earning profit and growth, but the imports still remain a major stakeholder in domestic market. The imports from China and Thailand were able to grab a substantial market share of imported products. According to BCWMA, imported tiles have about 20 percent market shares. Industry sources estimate that Bangladesh currently has a market of about 200,000-250,000 tons of imported ceramic tiles of some US$120 million to US$150 million. The demand for imported tiles is growing by about 10 percent annually.

Generally, Bangladesh has a market demand of at least 120 million sq meters of normal ceramic and porcelain tiles for the current year, 2016, with an estimated 10 percent year on year growth of demand.

If all units of the existing total production capacity of 110-115 million sq meters are able to utilize capacity at maximum 90 percent, the output will go as high as about 100 million sq meters in 2016, leaving an estimated shortage of about 20 million to 30 million sq metres, which will have to be imported, said an industry source.

But, he said, currently, due to shortage of gas, the estimated capacity utilization is something 70 percent, which means the total availability is nearly 80 million sq metres from the domestic sources, requiring import of some 40 million sq metres, or in a suppressed import situation, at least 20 to 25 million sq metres.

According to the Geneva based ITC, Bangladesh imported at least 164,786 tons of tiles under HS Codes 6907 and 6908, at US$89.613 million, in 2014. With 10 percent market growth of imported tiles in 2015 and 2016, the import requirement for 2016 may rise to 199,391 tons or some 10 million sq metres of porcelain tiles equivalent (based on average 8mm thickness) or some 16.668 million sq metres of normal ceramic tiles equivalent (at estimated 12kg per sq

30

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AC 16-2

metre on average).

Foreign tiles of various brands from many countries still have a substantial market shares in Bangladesh both in terms of value and volume. However, according to BCWMA, Chinese and Thai tiles have been dominating the markets of imported tiles. Some of those are cheaper quality. Other import sources of tiles are Spain, Italy, Malaysia and others.

Utilization rates

With setting up of new factories for tile and sanitaryware production, the Bangladesh market leader RAK Ceramics Bangladesh’s market share in value and quantity is gradually shrinking since last several years. The local manufacturers were able to create a niche market of their own, showing their ability to beat RAK and snatch market share.

However, RAK succeeded in earning confidence of premium markets that includes consistent quality seeking construction developers, government institutions and medium and high end local consumers. RAK has recently expanded its capacity to 12 million sq metres of tiles a year, from previous 8.5 million sq metres.

From the beginning, RAK Bangladesh continues to remain a benchmark of standard for its consistency. It has more than 2,000 models active in the ceramic and porcelain tile trade with capability to add more. It manufactures tiles in a very wide range of sizes from 20cmX30cm up to 80cmX80cm and 45cmX90cm.

RAK said it has over 30 models and an exclusive range of sanitarywares to offer with a very wide choice. Its sanitaryware capacity in Bangladesh rose steadily, with expansion of Bangladesh market, to 1.5 million pieces per year.

Like RAK, the newly entrant Bangladesh-Lebanon joint venture Star Ceramics has captured a significant market share soon after its debut in 2013. It claims to be the largest manufacturer of ceramic vitrified tiles in Bangladesh. With an annual aggregated production capacity of 7.3 million sq. meters, it has introduced digital printed tiles in Bangladesh and claims to be the first to introduce Nano Technology and the biggest tiles, such as, 60x90cm and 60x120cm sizes.

According to BCWMA, Star Ceramics has quickly grabbed as much market share as the largest stakeholder RAK has. Its turnover in tiles equals to RAK. At retail level, Star’s premium polished Gress Porcellanato homogeneous floor tile, Nano Crysta, is sold at Taka2,200 and Tk1,350 per sq metre for 60cmx120cm and 60cmx90cm sizes, respectively, while 60cmx60cm glazed/ unglazed homogeneous floor tiles are sold at Tk850 per sq metre.

Higher demand indicates the prices are competitive.

In sanitaryware, a full set, including, water closet, water tank, washbasin and pedestal, is offered at the price range of Tk7,985 to Tk9,940. A 3-piece cheaper set with Asian water closet is sold at almost half of a 4-piece set. Star targeted middle and lower end segments in sanitarywares with its claimed standard quality manufacturing.

www.asianceramics.com

Analysis: Bangladesh

Star says backed by Italian and Spanish technology and research, its quality and durability, combined with the aesthetics of design and color, has transformed it into experts. “Our manufacturing units are equipped with cuffing edge technology.

Intense automation, robotic car application and less chances for human error,” said a company official.

In sanitaryware markets, other operators are, lower to middle segment caterers, Abul Khair, Excellence, Danita, BISF and Dacca Ceramics.

Although, insignificant in number, the most of the higher end markets consume imported sanitarywares, like those of alien tiles of higher quality compared to the local ones.

Bangladesh’s total sanitaryware market production capacity has now increased to 125,000 tons, according to BCWMA.

Bangladesh’s overall monthly gas production in 2015 in MMCM by active producers-explorers, who supply to state owned Petrobangla that operates transmission lines to supply to distribution companies

Heavy clay

Besides the export oriented tablewares, the other important export category is heavy clay products in which Bangladesh has certain advantages, especially for exports to bordering districts of India, in addition to other Asian countries. In absence of new investment in manufacturing export quality heavy clay products the export of heavy clay items is very limited and depended almost entirely on only world class manufacturing company Mirpur Ceramic Works Ltd, which has two plants. in Dhaka and Sylhet, mainly to meet Bangladesh’s domestic demand exclusively. Since last half a century, the West European technology-based Mirpur Ceramic Works is only of its kind in quality in the whole of South Asia and parts of Southeast Asia.

It is the largest structural clay products manufacturer in Bangladesh, with superior quality 30 million pieces of bricks, blocks, facing bricks, pavers, unglazed tiles, including roofing tiles, etc, per year. In financial year 2015-16, ended last June, Bangladesh exported about US$3 million worth of heavy clay products, for which Mirpur Ceramic Works was the main contributor.

Month

BGFCL

SGFL

BAPEX

CHEVRON

TULLOW

TOTAL

Jan'15

718.707

131.16

91.026

518.804

44.353

1,504.05

Feb'15

646.164

118.47

80.599

600.848

36.857

1,482.94

March'15

704.205

131.08

92.501

615.277

50.586

1,593.65

April'15

688.139

126.24

92.905

601.691

41.07

1,550.04

May'15

717.148

129.84

100.81

601.801

40.611

1,590.21

Jun'15

700.344

125.8

94.672

514.499

40.62

1,475.94

Jul'15

719.809

129.72

109.778

502.344

43.807

1,505.46

Aug'15

722.82

129.86

115.189

512.301

40.444

1,520.61

Sep'15

696.532

129.7

107.759

477.902

40.127

1,452.02

Source: Petrobangla, state oil and gas organization of Bangladesh

Shinepukur Ceramics: Shinepukur

Bangladesh’s organized tableware manufacturers: Manufacturers

Year of startup

Factory location

Peoples Ceramic Industries Ltd

1966

Tongi, Gazipur, near Dhaka

Monno Ceramic Industries Ltd.

1985

Shinepukur Ceramics Ltd.

Products

Markets

13 million pieces

Domestic and export markets

and bone Islampur, Dhamrai, Dhaka Porcelain china tablewares

25 million pieces

Domestic and export markets

1998

Kashimpur, Joydebpur, Gazipur, near Dhaka

Porcelain and bone China tablewares

32 million pieces

Domestic and export markets

Bengal Fine Ceramics Ltd.

1986

Bhagalpur, Savar, Dhaka

Stoneware tablewares

2500 ton Currently production Suspended

Domestic and export markets

Standard Ceramic Industries Ltd

1993

Saydana, Joydevpur, Gazipur, near Dhaka

Stoneware tablewares

16 million pieces

Domestic and export markets

FARR Ceramics Ltd

2007

Noulapara, Bhabanipur, Gazipur, near Dhaka

Porcelain tablewares

23 million pieces

Domestic and export markets

Artisan Ceramics Ltd

2006

Boger Bazar, Bhabanipur, Gazipur, near Dhaka

Porcelain tablewares

16 million pieces

Domestic and export markets

Monno Bone China Ltd

See Monno Ceramic

Islampur, Dhamrai, Dhaka Bobe china tablewares

See Monno Ceramic

Domestic and export markets

Tajma Ceramic Industries Ltd

1958

Shatmatha, Bagura

Porcelain tablewares

1,500 tons

Domestic and export markets

Paragon Ceramic Industries Ltd

2011

Dogori (Nayapara), Mirzapur, Gazipur, near Dhaka

Porcelain tablewares

19 million pieces

Domestic and export markets

Protik Ceramics Ltd.

2011

Dautia, Kalampur, Dhaka

Porcelain tablewares

19 million pieces

Domestic and export markets

Star Porcelain Limited

2015

Riaznagar, Baghasura, Madhabpur, Hobiganj

Porcelain and bone china tablewares

19 million pieces

Domestic and export markets

32

asian ceramics

AC 16-2

Porcelain tablewares

Annual production Capacity

www.asianceramics.com

Analysis: Bangladesh Bangladesh’s organized tile manufacturers: Factory location

Products

Annual production Capacity

Manufacturers

Year of startup

Markets

Great Wall Ceramic Industries Ltd

2006

Gilarchala, Sreepur, Gazipur

Ceramic and porcelain 10 million sq metres tiles

Domestic markets. Plans export.

RAK Ceramics (Bangladesh) Limited

2000

Mawna, Sreepur, Gazipur

Ceramic and porcelain tiles and sanitarywares

10 million sq metres

Domestic markets. Plans export.

Akij Ceramics Ltd

2012

Trishal, Mymenshingh

Ceramic and vitrified porcelain tiles

10 million sq metres

Domestic markets. Plans export.

Mir Ceramics Ltd

2003

Mawna, Sreepur, Gazipur, near Dhaka

Ceramic and porcelain 9 million sq metres tiles

Domestic markets

China-Bangla Ceramic Industries Ltd

2002

Tarabo, Rupganj, Narayanganj

Ceramic and homogeneous tiles

6 million sq metres

Domestic markets

ATI Ceramics Ltd

2002

BK Bari, Vawal, Mirzapur, Gazipur

Ceramic and homogeneous tiles

5 million sq metres

Domestic markets

Madhumati Ceramics Ltd

1993

Ganda, Savar, Dhaka

Ceramic and homogeneous tiles

5 million sq metres

Domestic markets

X Ceramics Ltd

2010

Boherar Chala, Gilaberaid, Sreepur, Gazipur,

Ceramic and homogeneous tiles

4 million sq metres

Domestic markets

Fu-wang Ceramic Industry Ltd

1996

Hotapara, Sreepur, Gazipur, near Dhaka

Ceramic and homogeneous tiles

6 million sq metres

Domestic markets

Hua Thai Ceramic Industry Ltd

2003

Hotapara, Sreepur, Gazipur, near Dhaka

Ceramic and homogeneous tiles

5 million sq metres

Domestic markets

DBL Ceramics Ltd

016

Dhonua, Sreepur, Gazipur, near Dhaka

Ceramic and homogeneous tiles

13 million sq metres

Domestic markets

Sun Power Ceramics Co Ltd

2002

Hotapara, Sreepur, Gazipur, near Dhaka

Ceramic and homogeneous tiles

6 million sq metres

Domestic markets

Dhaka Shanghai Ceramics Ltd

2005

Zirani Bazar Savar, Dhaka

Ceramic and homogeneous tiles

5 million sq metres

Domestic markets

Bangladesh Taiwan Ceramic Ind. Ltd

2015

Char Ramjan, Sanaullah, Sonargaon, Narayanganj

Ceramic and homogeneous tiles

4 million sq metres

Domestic markets

Star Ceramics Ltd

2015

Riaznagar, Baghasura, Madhabpur, Hobiganj

Ceramic and homogeneous 7 million sq metres tilesand sanitarywares

Domestic markets

Monalisa Ceramics (Bd) Ltd

2015

Boherar Chala, Gilaberaid, Sreepur, Gazipur, near Dhaka

Ceramic and homogeneous tiles

5 million sq metres

Domestic markets

Mirpur Ceramic Works Ltd

1962 (incorp)

Kalshi, Section-12, Mirpur, Dhaka, and Khadimnagar, Sylhet

Heavy clay tiles, ceramic bricks, roof stiles, pavers

30 million pieces

Domestic and export markets

Khadim Ceramics Limited (KCL)

See Mirpur Ceramic Works

Dholipara, Khadimnagar, Sylhet

Heavy clay tiles, ceramic bricks, roof stiles, pavers

See See Mirpur Ceramic Works

Domestic and export markets

Bangladesh’s organized Sanitaryware manufacturers: Year of startup

RAK Ceramics (Bangladesh) Limited

2000

Mawna, Sreepur, Gazipur

Ceramic and vitreous 1.10 million pieces china sanitarywares

Domestic markets. Plans export.

Bangladesh Insulator and Sanitaryware Factory (BISF) Ltd

1981

Mirpur Zoo Road, Mirpur, Dhaka

Ceramic sanitarywares

5,000 tons

Domestic markets.

Previously exported

Dacca Ceramic & Sanitarywares Ltd

1976

Tongi, Gazipur, near Dhaka

Ceramic sanitarywares

2,200 tons

Domestic markets

Adul Khair Ceramic Ind. Ltd

2005

Tongi, Gazipur, near Dhaka

Ceramic sanitarywares

4,500 tons

Domestic markets

Charu Ceramic Ind Ltd

2016

Shahjibazar, Madhobpur, Hobigonj

Ceramic sanitarywares

750,000 pieces

Domestic markets

Star Ceramics Ltd

2015

Riaznagar, Baghasura, Madhabpur, Hobiganj

Ceramic sanitarywares

400,000 pieces

Domestic markets

Sanita Ceramics (Pvt.) Ltd

2003

New Babu Para, Nilphamari, Bangladesh

Ceramic sanitarywares

4,000 tons

Domestic markets

Excellent Ceramic Industries Ltd

2010

Seed Store Bazar, Paragon, Valuka, Mymensingh

Ceramic sanitarywares

800,000 pieces

Domestic markets

34

asian ceramics

AC 16-2

Factory location

Products

Annual production Capacity

Manufacturers

Markets

www.asianceramics.com

Analysis: Bangladesh

Bangladesh ceramic sector’s position in financial year July 2014-July2015. (US$1=approx.Taka79.)

Product

Number of Industries

Tableware

Annual production capacity

Employments

Investment in million Taka (US$1=Tk.79)

Export in million Taka

Local sale in million Taka

Import in million Taka

Local consumption in million Taka

Market share in %

Local products

Imported products

18

250 million pieces

17,800

22,000

4,205

3,051

305.3

3,356.3

90.90

9.10

20

109 million sq metres

16,750

25,000

56

25,260

5,759.2

31,019.2

81.43

18.57

Sanitaryware

16

125,000 metric tons

5,650

7,500

55

6,565

517.6

7,082.6

92.69

7.31

Total

54

40,200

54,500

4,316

34,876

6,582.1

41,458.1

Tile

Source: BCWMA estimates

Trade in ceramic tableware sector. (US$1=approx.Taka79.)

Exports Financial year July-June

In million US$

Imports

In million Bangladesh Taka

Growth in %

In million Bangladesh Taka

Local sales Growth in %

In million Bangladesh Taka

Domestic market share

Growth in %

Domestic consumption

Local Imported products in % products in %

2014-15

53.57

4,205.0

16.80

305.3

1.77

3,051.0

-3.14

3,356.3

90.90

9.10

2013-14

45.57

3,600.0

6.19

300.0

7.14

3,150.0

7.97

3,550.0

91.55

8.45

2012-13

42.91

3,390.0

7.56

280.0

1.74

3,010.0

8.95

3,290.0

91.48

8.52

2011-12

39.89

3,151.5

18.76

275.2

2.99

2,762.6

3.14

3,037.8

90.94

9.06

2010-11

35.86

2,653.6

---

267.2

---

2,678.4

---

2,945.6

90.92

9.08

Source: BCWMA estimates

Trade in ceramic tile sector. (US$1=approx.Taka79.)

Exports Financial year July-June

In million US$

Imports

In million Bangladesh Taka

Growth in %

In million Bangladesh Taka

Local sales Growth in %

In million Bangladesh Taka

Domestic market share

Growth in %

Domestic consumption

Local Imported products in % products in %

2014-15

0.71

56.0

-53.33

5,759.2

0.16

25,260.0

36.54

32,029.2

82.43

18.57

2013-14

1.51

120.0

33.33

5,750.0

2.22

18,500.0

8.12

24,250.0

76.29

23.71

2012-13

1.13

90.0

15.83

5,625.0

18.58

17,110.0

51.85

22,735.0

75.25

24.75

2011-12

0.98

77.7

7.82

4,742.4

23.44

11,267.2

29.78

16,010.5

70.37

29.63

2010-11

1.13

84.3

12,523.8

69.31

30.79

3,842.5

8,681.3

Source: BCWMA estimates

Trade in ceramic ceramic sanitaryware. (US$1=approx.Taka79.)

Exports Financial year July-June

In million US$

Imports

In million Bangladesh Taka

Growth in %

In million Bangladesh Taka

Local sales Growth in %

In million Bangladesh Taka

Domestic market share

Growth in %

Domestic consumption

Local Imported products in % products in %

2014-15

0.70

55.0

-31.25

517.6

3.52

6,565.0

33.98

7,082.6

92.69

7.31

2013-14

1.01

80.0

60.00

500.0

2.56

4,900.0

28.94

5,400.0

90.74

09.26

2012-13

0.63

50.0

40.84

487.5

18.03

3,800.0

97.73

4,287.5

88.62

11.38

2011-12

0.44

35.5

-31.86

413.0

14.43

1,921.8

128.1

2,334.8

82.31

17.69

2010-11

0.70

52.1

1,203.4

70.00

30.00

360.9

842.5

Source: BCWMA estimates

36

asian ceramics

AC 16-2

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WE GIVE SHAPE

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Analysis: Sri Lanka

Sri Lanka a new day dawns

Rohan Gunasekera discusses how ceramics makers on the island continues to prosper and capitalise on a rapidly growing economy…

S

ri Lankan ceramic tile factories are operating at or near full capacity and are still unable to meet the entire domestic demand. This has left room for a lot of imports and also prompted new investments by existing manufacturers and the setting up of an entirely new tile plant. Local tile manufacturers mostly supply the domestic home market and projects like hotels and hospitals since developers of big high-rise projects, which enjoy import tax concessions, directly import their own requirements.

Sri Lanka’s post-war construction boom looks set to continue with the sector remaining one of the key drivers of economic growth. High-rises are mushrooming at a rate, changing the skyline virtually overnight, supported by local and foreign investments. The government itself has ambitious plans for urban modernisation that will give a further fillip to the building boom, all of which spells good times for the island’s ceramic tiles and sanitaryware industry.

The construction industry has been one of the main post-war drivers of economic growth although there was some slow down in 2015, an election year, which caused some uncertainty. Also, the new government formed in 2015, after presidential polls in January and parliamentary elections in August, which ousted the Mahinda Rajapaksa regime, put some big infrastructure projects on hold as it probed allegations of corruption and inadequate environmental impact studies. The biggest of these was the US$1.4 billion Port City project funded by China Communications Construction Co Ltd with reclamation done by China Harbour Engineering Corporation. The project involves reclaiming 269 hectares from the sea off Colombo’s main business district and next to the new deepwater Colombo South Harbour and investors building apartments, shopping malls, hotels and a marina. The new government which said it wanted to scrap the project now says it will be allowed to go ahead with suitable modifications and proper approvals and is also mending strained ties with China which emerged as a big investor under the Rajapaksa regime.

The new government itself has proposed its own grand project, the ‘Western Region Megapolis’, covering the Colombo metropolitan region and surrounding suburban towns. This envisages creating a large urban agglomeration with the support of urban planners from Singapore and all the modern transport,

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Market share based on sales (sqm) Wall tiles

Jan-Nov 2014

Jan-Nov 2015

LW

1,654,020

51%

1,830,962

41%

Imports

1,612,568

49%

2,651,402

59%

TOTAL

3,266,588

Floor tiles

4,482,364

Jan-Nov 2014

Jan-Nov 2015

LT

3,158,392

23%

3,300,012

19%

Imports

7,838,672

57%

9,575,227

56%

Rocell

2,861,280

21%

3,662,264

21%

-

0%

600,000

4%

Macktiles TOTAL

13,858,344

17,137,503

telecom, sewerage and other infrastructure that go with such a concept. The ‘Megapolis’ will be built in three phases from 2016 to 2030. Megapolis Development Minister Champika Ranawaka says the initiative is expected to draw foreign and local investments of US$40 billion in the next 10 years.

The fact that a new tile plant has been set up and is selling its entire capacity speaks for itself and means local manufacturers can capture more market share from importers. Last year the ceramic tile and sanitary ware industries benefited from the lowering of electricity tariffs and LPG prices which lowered high expenditure on fuel and electricity and production costs. The reduction in corporate tax to 15% in the government’s budget for 2016 will also boost bottom lines in the ceramic industry from FY 2017 onwards.

RCL expansions

The Royal Ceramics Lanka group, which dominates tile production, having acquired the only two competitors at the time, is in expansion mode, with plans to increase output, warehousing and showrooms. “The market is quite vibrant – we had a good month in December 2015,” Royal Ceramics Lanka (RCL) Managing Director Nimal Perera told Asian Ceramics.

“The entire group – Lanka Tile and Rocell group – had about Rs

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Analysis: Sri Lanka

in focus 3 billion in turnover, the highest ever turnover we achieved within a year.”

RCL is the market leader in both local tile and bathware segments with a market share of about 70% for floor and wall tiles and around 50% for bathware, according to stockbroker Bartleet Religare Securities. “RCL is poised to take advantage of the country’s development drive in terms of hotels and condominium constructions that are in the pipeline,” the stockbrokers said in a recent report.

The ceramic units in the listed Royal Ceramics group consist of Lanka Ceramic, which operates clay mines, former rival tile manufacturers Lanka Walltiles and Lanka Tiles, tile maker Royal Porcelain (Pvt) Ltd. and Rocell Bathware Ltd. Perera said that while general economic conditions were not as vibrant as expected – with some projects interrupted by the new government – he hopes work will resume. “Then we can expect a good future for tiles in Sri Lanka,” he declared. Royal Ceramics group factory yields are now around 85 – 95%, a far cry from the time around three years ago when Asian Ceramics visited one plant to see inventory piling up and tiles stacked even in the open. That was a time when restrictions on loans for housing led to a decline in domestic home building.

Expansion plans include investing Rs220 million at RCL’s Eheliyagoda plant to raise capacity by 600 sq m/day to 5,600 sq m/day which is now under way. Another Rs 34 million will be spent on an additional spray drier. Some presses will be shifted from RCL to the RPL (Royal Porcelain) plant in Horana where a

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new press with a bigger capacity is also to be installed. The group also plans to increase kiln length at one of three kilns at the Horana porcelain plant from 77 metres to 96.6 metres which will increase production capacity by another 600 sq m/day. Another kiln will be upgraded with a new burner with a rapid cooling system at a cost of Rs 60 million. All the new machinery will be from Sacmi.

The total investments in upgrades at the porcelain tile plant in Horana will be Rs450 million, including increasing warehousing capacity.

“All our factories now have digital printing machines from Durst,” said Perera. “We have increased warehousing capacity of all factories. In the last two years or so we invested about a billion rupees on more sophisticated warehousing on racking systems and reach trucks.” ‘Schaefer’ racking systems from Germany and German engineered ‘Still’ reach trucks to handle the transportation of tiles are in use at Rocell’s warehouses in Meegoda and Nawala.

“Also we’re modernising RCL’s show room network and at the same time adding new show rooms,” Perera said. “We are also going for large format tiles, which is the trend globally.”

Rocell increases its cast

Rocell Bathware is considering adding more casting lines. It has already added two pressure casting machines from Sacmi and

AC 16-2

asian ceramics

39

Analysis: Sri Lanka

plans to add a new WC casting line and to modify the existing glazing line at a cost about Rs58 million which will raise capacity by 50 pieces/ day. It is also going to add a new concept centre especially for taps and accessories from Grohe construction of which has begun in Narahenpita in Colombo.

Local tile manufacturers, of which the three older ones are all listed, enjoyed high import tariff protection in recent years which made them highly profitable and sent their share prices up. The new government, which has said it is committed to a more open economy and free trade, in its budget for 2016 did propose reducing import tariff protection. But this does not seem to have happened yet.

In his budget speech in November 2015, Finance Minister Ravi Karunanayake said import-related duties will be revised downwards on steel, tiles and sanitaryware “to address the short supply and high prices of building materials.” These products will also be removed from the ‘negative list’ of the Board of Investment, enabling project developers operating under the investment promotion agency, which gives tax breaks, to freely import tiles and sanitaryware. Karunanayake also said a new valuation system will be introduced to curb under invoicing of imports like tiles with effect from January 01, 2016. The announcement, which led to assessments that the tile sector may suffer from increasing competition stemming from lower margins and new entrants to the industry, led to some panic selling on the stock market and a drop in share prices of tile firms. Now, though, both manufacturers and analysts say tariff protection remains the same at least for now, with changes in duty rates effectively cancelling each other off and the industry as a whole enjoying lower corporate and other taxes introduced in the budget.

Construction confidence

Mahendra Jayasekera, Managing Director of Lanka Tiles Ltd. believes there is confidence in the domestic construction sector, especially domestic housing. This is reinforced by land prices going up in Colombo and its suburbs which means more confidence in the construction sector. “We also feel if the ‘Megapolis’ project and intended infrastructure developments go ahead, there will be more investment going into the construction sector which will have spill-over effects on the ceramic industry,” he told Asian Ceramics.

Lanka Tile group is focusing more on the domestic housing market and not so much on large scale constructions projects like high rise apartment and office blocks. “We’re focusing on housing - individual homes and middle class housing. These will drive demand ad we’re ideally positioned to benefit from it.”

In 2015 compared with 2014 Lanka Tiles turnover has not grown that much as it is constrained by capacity limitations. The firm had stock build up due to large imports taking place but was were able to clear a lot of stock in December. “We had record sales in December 2015,” declared Jayasekera. “There’s clearly a marked increase in consumer spending. We’re seeing that trend continuing into January. We feel that’s driven by increased consumer confidence in the economy, despite what’s said about the global economy being bad. Lanka Tiles is now running at 100% capacity. We have no plans to increase capacity right now because we’re uncertain about raw material supplies locally.”

The Lanka Tiles group, which includes the firm, Lanka Walltiles, intends to convert about 20% of wall tile capacity to floor tiles starting April 2016 so it balances its product portfolio in

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ALL OUR FACTORIES NOW HAVE DIGITAL PRINTING MACHINES favour of floor tiles. This will cost about Rs100 million. The group production mix will change from 12,500 sq m/day of floor tiles and 7,500 sq m/day of wall tiles to about 14,000 sq m/day of floor tiles and 6,000 sq m/day of wall tiles.

Jayasekera says that the Lanka Tiles group in the last 2-3 years has been running at full capacity – wall and floor tiles – and that increased demand does warrant a capacity increase but they are not considering it because of raw material constraints. The group is not pushing exports either since there is enough local demand. The group exports about 25% of wall tile production and 5% of floor tile production and exports historically have come down with the local market improving.

The group is diverting more of its production to the local market.

Raw material shortages

“We’re cautious about expanding because of uncertainty over raw material availability,” says Jayasekera. Clay deposits are diminishing and because of environmental concerns the government is also trying to implement regulations more strictly.

That’s putting a lot of pressure on raw material supply, especially ball clay. The company is concerned because importing ball clay is not viable at the moment. The perennial problem with ball clay is that the government is reluctant to allow mining in paddy fields because of the concerns of farmer and restrictive farm laws. To get mining licences requires visiting about 19 places, including Provincial Councils, the Geological Survey and even places like the Archaeological Department. The Ceramics Council, which Jayasekera heads, has been making representations to government to try and relax administrative procedures so mining licences can be acquired more easily.

“What we must ensure is both parties – the private sector and state sector authorities - are aware of the need for coexistence between environment and industry,” says Jayasekera.

“We have to meet consumer demand and employ people while safeguarding the environment. The problem is that when industry expands there’s greater pressure on natural resources and the authorities put more pressure on environmental aspects of mining.”

Unlike in other countries where mines are in remote locations, Sri Lanka being a small country, all the mines are located close to residential areas. There are deposits for 50 years but the problem is if they are commercially mineable.

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Analysis: Sri Lanka

was imported from RCL group continues Major Makers Italy’s SITI as a turnkey to face problems with Company Location Capacity project. The plant is fully ball clay and feldspar automated and equipped supplies. Although group Royal Ceramics Lanka Horana and Eheliyagoda 5,000 sq m/day with the latest technology unit Lanka Ceramics Royal Porcelain (Pvt) Ltd. Horana 10,000 sq m/day like laser guided vehicles does mining and Lanka Tiles Ranala 12,000 sq m/day and employs about 120 processing, the bulk of people, much less than supplies is still sourced Lanka Walltiles Meepe 8,000 sq m/day at other tile factories. from third parties.

Rocell Bathware Ltd Panagoda 700 pieces/day “From the time I started “Consistency is not Mines in Meetiyagoda, Ovala and Dediyawela from which the factory I wanted to there,” explains Perera Lanka Ceramic Kaolin, Feldspar and Ball Clay are mined do automation wherever of RCL. “From batch to Mack Tiles Bandaragama 6,000 sq m/day possible,” explains batch, the composition Thajitha Perera. “This is different.” was because of the labour shortage and also because it is easy These concerns about raw material supplies and also about to go for automation and that’s the trend of the future. Although the threat from cheap imports did not deter a newcomer from the initial investment is high, automation reduces manufacturing entering the fray. Work on building the Mack Tiles plant by its costs and improves productivity.” The entire production run is parent firm Macksons Holdings started in November 2011, as done with digital printing. the construction sector boom got under way with the end of Mack Tiles is already planning to expand production and the 30-year ethnic war in 2009. At the time, Macksons Holdings has begun importing machinery for another homogenous tile had been importing tiles from India, Malaysia, Indonesia and manufacturing line also from an Italian company. The second China and in fact was the biggest importer of tiles to the island. line will have 8,000 sq m / day capacity. Mack Tiles’ maximum Tile imports were high since local production capacity was capacity under one roof would be 24,000 sq m per day when a not enough. Also, some project developers like those building third line is eventually built. The next line will for larger tiles as high-rise mixed office cum apartment block and malls needed the trend is towards large format tiles. Mack Tile is also thinking homogenous tiles – with colour pigments inside the body – of of new products like anti-bacterial, anti0fungal and self-cleaning which local volumes were not enough. tiles using nano technology.

“We realised that there was enough room for another player With power costs in Sri Lanka the highest in the south Asian to come in and develop the local market,” explained Thajitha region for industry, even after the commissioning of coal power Perera, General Manager of Mack Tiles Lanka. “Because at plants by the state utility, improving energy efficiency is critical the time about 50% of the island’s requirement was imported for the island’s ceramic factories. The situation has provided since local production was not enough. So Macksons Holdings, an opportunity for materials engineer Sarath Mallawaarachchi, which had been in the tiles trading business before, decided to former CEO of tableware producer Dankotuwa Porcelain, to manufacture tiles.” form an advisory services company. He is now a Partner of The plant has a current capacity to make 6,000 sq m of floor Dasseldorf Energy and Productivity Engineers, which advises tiles a day but the facility has been built so that it can triple manufacturers on energy and productivity improvements and capacity when needed. About 15% of capacity is exported – the heat-related works, fabrication of machinery, furnaces and firm shipping about one 20-foot container a month to markets dryers, plant/machinery relocation like the Maldives, Mauritius, the and layout planning for efficient use Seychelles and the Middle East. of resources.

Enter the painters…

Mallawaarachchi said that Macksons, whose main business the fall in oil and gas prices has is paints, has business in these undoubtedly helped reduce costs countries and agents, making it for local tile manufacturers but easier to market the tiles as an constant focus on improving extended part of their product energy efficiency is vital for them portfolio. “Macksons exports to remain competitive. “Sri Lanka’s paints to these countries. That’s ceramic industry is not competitive the reason we are able to cater enough for two reasons, high to them,” said Thajitha Perera. energy cost since all fossil fuels are Overseas agents are big hardware imported, and low productivity,” dealers who want to increase their he told Asian Ceramics. “Sri product range.

Lanka’s labour is becoming “Mack Tiles is now operating at expensive. If the ceramic industry 90% capacity utilisation,” Thajitha is to survive we have to come up Perera told Asian Ceramics. “We with lots of improvements on the reached that within one year of productivity side – labour and yield operation. There is room to expand improvements.” and be profitable.”

Manufacturing costs in Asian The entire manufacturing line origins are now going up just like

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Analysis: Sri Lanka

the way rising costs in Europe and Japan prompted factories to shift to Asia. “If we want this industry to survive here all manufacturers have to be more proactive about their cost side,” Mallawaarachchi said. “The ceramic industry is very complex.

If we don’t put the systems right it is very difficult to correct them and compete. You don’t have space to make mistakes – so you have to be efficient in all aspects; costs, labour, materials, energy.”

Ceramic factories in Sri Lanka are now finding it difficult to hire labour and have to pay higher wages since youth, now better educated, prefer white collar work to blue collar jobs and don’t like to getting their hands dirty and the heat on the factory floor. “This means the ceramic industry has to go for more automation,” Mallawaarachchi said.

Power difficulties

Tile factories should also be careful where they locate their plants because of unreliable power supply in some areas.

Sri Lanka’s state power utility says it has achieved almost 100% electrification of the island but industrialists complain of constant interruptions in electricity supply.

“If a new factory is going to be started you need to be careful about location where quality of power is concerned and ensure if you can get continuous supply,” explains Mallawaarachchi. “Most manufacturers have their own standby generators.”

Availability of raw materials has also become a constraint for the ceramic industry in Sri Lanka which has long prided itself for having good quality clay deposits. Manufacturers like tile factories are now trying out different body mixtures because of uncertainty over clay supplies and also to reduce costs.

“With our experience we’ve seen that you may have to change body mixtures since materials deposits are getting exhausted,” said Mallawaarachchi. “Sri Lanka faces shortages of good clay, especially china clay. The tile industry is facing a big problem in getting ball clay because of government regulations that restrict mining in areas like paddy fields. So you have to look for a material which on the one hand will not increase costs, and on the other is available continuously without supply interruptions. Most people are looking for alternate materials because of these reasons.”

Given difficulties in sourcing ball clay Mack Tiles has begun using red clay in their body mixtures. “We are using red clay in our body so we can compensate for ball clay with red clay and

44

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have proven good results,” says Thajitha Perera.

Red clay is a viable alternative for ball clay and does not affect the strength of tiles. Right now Mack Tiles uses about 4% red clay in the body composition but Perera believes they can go up to 10% of red clay in the tile body.

Average floor tile prices in Sri Lanka are about Rs180 for 30cm x 30cm tiles, Rs 270 for 40cm x 40cm tiles and Rs975 for 60cm x 60cm tiles. Cheaper imported Chinese tiles are around Rs550600 for 60cm x 60cm tiles, albeit of lower quality. Good quality imported tiles are around Rs1,100 – 1,200 for the 60cm x 60cm size. Local manufacturers complain a lot of imported tiles are undervalued.

Nimal Perera of RCL believes that rising production costs in China and the depreciation of the rupee against the US dollar and other currencies will help to control imports, especially cheaper tiles from East Asian origins that local manufacturers find difficult to compete against. However, he notes that the flow of imported tiles continues unabated despite their rising costs.

“Imported tiles are also growing which shows the Sri Lankan tiles sector requirements are growing and that the construction sector is not affected,” he said. “If you take import for the last two months, they equal as our total national production and are sometimes more than local production of ceramic tiles.”

Jayasekera of Lanka Tiles said the impact of the import duty changes proposed in the budget are yet to be seen and will depend on how Customs value imported tiles. “There are no anti-dumping laws in Sri Lanka and people can declare any value for duty. Our lobbying is based on one principle and is not only for ceramic imports,” explained Jayasekera. “We consistently said if there is any downward revision of import duty applicable to finished goods imports, not only ceramics, then that must be coupled with the introduction of anti dumping laws. It is of paramount importance that the government brings in laws to control price dumping of imported products. Quality dumping, there are other mechanisms to take care of it like Sri Lanka Standards.”

Local tile manufacturers say that if tile imports become more of a challenge in the future, if tariff protection is reduced, they too will import and sell, using their existing warehousing and distribution networks and brand image. They warn of job losses if tile plants are forced to close because of more competition from imports and loss of sales for local clay suppliers.

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Analysis: Heavy Clay

global ups and downs for brick Who, where, when, what: an overview of how things have been shaping up for the global heavy clay industry in the past few years and a look ahead to what’s likely to come in the next few years.

Americas Hot Spot North: USA

While demand and revenue in the US heavy clay sector fell during the recession due to a slowdown in the building markets, the industry has turned around between 2010 and 2015 seeing a steady growth of 2.9 per cent per annum. This turnaround has been driven by increases in new housing construction projects and the value of non-residential building construction also considerably boosted demand. There are now 393 businesses operating employing just over 20,000 people and in the last financial year revenue for the entire sector was $6 billion.

Over the next five years, both revenue and profit performance are expected to stay on the up, which will largely be supported by steady improvements in demand for products from the growing construction sector. Construction spending is forecast to grow from $1 trillion in 2015 to $1.3 trillion in 2018. So the US is definitely the winner of the continent’s hot heavy clay spot.

Hot Spot South: Brazil

South America’s heavy clay sector is dominated by Brazil. With annual sales exceeding $6 billion, Brazil’s heavy clay manufacturing accounts for 4.8% of Brazil‘s construction industry and supports

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around 300,000 direct and 900,000 indirect jobs. According to IBGE/Federal Government, there are 6,903 companies operating today with revenue in excess of than $4.6 billion a year. Every month, more than four million clay partition blocks and structural blocks, as well as 1.3 billion roofing tiles are manufactured.

Black Spot North: Canada

In Canada, just four companies manufacture 99 per cent of Canadian made clay brick, namely Hampton Brick, Hanson Brick, Jazbrick and Shaw Brick. The market is sluggish as demand from the construction and steel manufacturing markets has been weak, leading to very small growth over the past five years of just 0.6 per cent and revenue of only $506 million in 2014. The weak growth is also partly due to the declining popularity of clay products in the country’s construction projects as cheaper and more durable substitutes such as concrete steal market share.

Rising import growth has also negatively affected industry growth and is expected to keep revenue growth in check over the next five years too. As a result, brick makers are relying on the demand from the US to keep things ticking over; however it seems unlikely that Canada’s heavy clay industry decline can be prevented in the long run. So, the north of the continent’s black spot definitely goes to Canada.

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Analysis: Heavy Clay

Black Spot South: Uruguay

Things are expected to remain the same, get a little bit worse or in a very few market sectors, including construction, to see miniscule improvements that are not worth getting excited about.

GDP value is forecast to fall by around $12 billion by 2020 while unemployment is only expected to drop by 0.6 per cent in the same period. It’s not likely that it will be somewhere that’s needs to be on the heavy clay sector’s radar for some time to come.

Africa Hot Spot North: Egypt

Now that the political situation has stabilised, things are predicted to improve rapidly for Egypt’s economy between now and the end of the decade. GDP is expected to grow between three and four per cent every year while inflation should drop by three per cent over the same period. The value of construction output has got a very cheering forecast indeed with the sector expected to increase by $765 million from 2015-2020.

Hot Spot South: Tanzania

While it hasn’t been a big market in the past, things look to be on the turn for Tanzania. It’s GDP is growing at about seven per cent a year and is set to continue on this upward trajectory, reaching a value of $224 billion by 2020. Unemployment should drop by seven percent while wages go up by 9.6 per cent. Creating the perfect conditions for construction investments in residential, retail and industrial buildings, as well as infrastructure. In fact, the World Bank has just approved an $80 million investment to help develop job creation across the country’s private and export sectors.

Black Spot North: Algeria

Since mid-2014, Algeria has been severely hit by the crash of international oil prices. The outlook between now and 2020 is not great with the country’s deficit expected to grow and the government planning to introduce some harsh austerity measures to try and reign in its rising debt. At the same time inflation is going up, as is unemployment; with both of these problems being exacerbated by a private sector struggling to grow due to the business climate being marked by difficult access to credit, a complex regulatory environment, and time-consuming procedures to set up a business in the first place. All this adds up to a construction sector that is only going to grow its output value by $21 billion in four years so not great opportunities for heavy clay manufacturers in this African black spot.

Black Spot South: South Africa

Another African black spot is South Africa with everything here forecast to pretty much stagnate over the next four years. GDP is not going to significantly grow, nor fall; unemployment levels will remain about the same (currently at 25.50 per cent); construction output is only expected to grow by $108 million by 2020. Definitely not a hot spot for heavy clay companies in the foreseeable future.

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Asia Hot Sport North: Bangladesh

Plenty of opportunities for heavy clay industries to take advantage of Bangladesh’s healthy economy. GDP is growing by around six per cent per annum for the past decade and this is set to continue, with its value forecast to grow by another $88 billion in the next four years. With this rapid growth and millions of people being lifted out of poverty every year, comes rapid urbanisation. With rapid urbanisation comes multiple construction opportunities with new homes, offices, hospitals, transport hubs, shops and restaurants needing to be built to meet the needs of the population flocking to the cities for work.

Hot Spot South: Malaysia

A true South-East Asian success story, Malaysia’s economy has been growing steadily with barely any stumbles for over two decades. GDP is growing at around six per cent and unemployment is at just three per cent. The World Bank is setting up an office in Kuala Lumpur to make the most of the opportunities this rapidly growing country offers. Good news for heavy clay manufacturers as the construction sector is growing fast too. Double digit growth between 10 and 20 per cent seen for the past five years and major residential and commercial building projects, along with the development of affordable and high-rise housing, are set keep this going over the medium term.

Black Sport North: Mongolia Despite a couple of decades of strong growth and a busy time in the construction sector, Mongolia’s fortunes are on the reverse. GDP growth is set to fall, from the seven or so per cent its sat at for a good while now, to just three per cent in 2016. The construction projects that were initiated in the good times are nearing completion and the opportunities for new ones to get off the ground are going to be pretty slim. Credit is tightening and the outlook for the next few years is weak and slow growth.

Black Spot North: Japan

With less than 2 per cent growth forecast for the construction sector between now and 2019, there’s not a lot of opportunities, or building, going on in Japan. Much of the construction sector’s output between now and then is focused on rebuilding and refurbishing existing sporting facilities ahead of the 2020 Summer Olympics in Tokyo, projects which were downsized shortly after the country was awarded the Games. GDP growth is also expected to be low during the same period and unemployment figures are not expected to improve either.

Europe Hot Sport North: United Kingdom

In the UK, times have been tough indeed for heavy clay manufacturers. The Brick and Tile Manufacturing industry crumbled during the extended economic downturn. Volatile construction

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Analysis: Heavy Clay

activity sparked a collapse in key downstream building product markets to the detriment of demand for bricks and tiles. The industry is almost completely dependent on the construction sector, particularly residential housing construction and these projects have been thing on the ground.

National building projects, both residential and commercial, endured a difficult period over the past five years, contracting sharply early before recovering in later years as the results of government intervention and economic recovery stimulated conditions for brick and tile manufacturers to make a recovery. Industry revenue increased by 3.1 per cent in 2014-15 to reach £889.2 million; and in 2014 the sector produced more than 1.8 billion bricks for the first time since 2009.

There are 202 businesses operating in the UK employing just over 7,000 people and the forecast for the next five years is looking a lot healthier as the construction sector picks up pace again, growing by 5.3 per cent in 2015 and expected to exceed that every year for the next few.

In fact, things are looking pretty rosy and the construction industry is expected to grow by 23 per cent by 2018 and contributed £12 billion to the UK economy from 2014-2015. This can largely be attributed to confidence in the market as the Conservative government took office for another term.

Hot Spot South: Macedonia

With the GDP expected to grow every year from now until 2020, reaching a value of $12.3 billion by then and increasing by 8.9 per cent over the next four years and the cost of living expected to drop, consumer confidence and spending power is on the up. Consequently, many residential and construction projects are planned that will keep driving the manufacture and import of heavy clay products, making sure Macedonia stays in the hot spot.

Black Sport North: Iceland

Things are not looking great for Iceland’s economy or opportunities for heavy clay manufacturers wanting to sell their wares there. Forecasts show that over the next four years unemployment, the cost of living and inflation will all keep on going up while the GDP annual growth rate and consumer confidence ratings will fall. A combination that means it’s not going to be a hot bed of construction and refurbishment projects, although there are a few opportunities expected to materialise in the tourism sector during 2016.

Black Spot South: Italy

The Italian economy has really struggled to recover after the

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financial crisis and this has been having a knock-on effect for the country’s heavy clay sector. Although Q3 2015 saw the economy grow by 0.2 per cent and unemployment fall to 11.5 per cent, the construction industry that the heavy clay sector is heavily reliant on has yet to get back on its feet properly.

Construction output in Italy increased 0.40 percent in September of 2015 over the same month in the previous year but it has averaged -0.49 percent from 1996 until 2015, reaching an all-time high of 13.80 percent in January of 2007 and a record low of -25 percent in February of 2012.

Things don’t look that rosy for the foreseeable future either with GDP growth rate not expected to reach one per cent before 2020. So the southern Europe black spot goes to Italy.

Construction output

Europe is in the top and bottom spots and on the one hand is leading the global construction sector with all of the top fiver performers on the continent but in contrast it also has four out of five countries in the list of the worst performers.

The latest figures for 2015 when going to press show that the country with highest Construction Output is Macedonia, followed by Slovakia then the Netherlands. The poor perfo rmance with the lowest are Luxembourg, Slovenia and Estonia.

Top 5 countries with the highest construction output Country Macedonia Slovakia

Latest Output Rate 132.4% (Aug ’15)

Previous Output Rate

Growth

24.1% (Jul ’15)

108.3%

26% (Sept ’15)

9.8% (Aug ’15)

16.2%

10.2% (Sept ’15)

8.7% (Aug ’15)

1.5%

Finland

8.7% (Aug ’15)

7.6% (Jul ’15)

1.1%

Hungary

8.1% (Sept ’15)

-6.1 (Aug ’15)

14.2%

Netherlands

Bottom 5 countries with the lowest construction output Country

Latest Output Rate

Previous Output Rate

Growth

Luxembourg

-13.2% (Aug ’15)

8.9% (Jul ’15)

-22.1%

Slovenia

-12.5% (Sept ’15)

-15.5% (Aug ’15)

3%

Estonia

-7.3% (Q2 ’15)

-3.4% (Q1 ’15)

-3.9%

Australia

-3.6% (Q3 ’15)

2.1% (Q2 ’15)

-5.7%

Portugal

-3.2% (Sept ’15)

-1.4% (Aug ’15)

-1.8%

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Analysis: Heavy clay

Re-building the future China shapes its bricks for new tomorrow Sun Xiangyuan (President, China Bricks and Tiles Association) talks to AC about the challenges facing the country’s brick and roof tile sector as we enter a difficult 2016.

W

ith downturn of down- stream industries, reduction of investments on infrastructure and overcapacity of industries, China’s brick and roof tile (hereafter referred to as brick) industry is entering a “New Normal” and facing huge challenges. Restructuring, transformation and upgrading of the industry are the trends of the times. From the point of view of the development, adhere to the product quality, leading technology and brand concentration, adhere to the road of internationalization and adhere to the technology innovation, green and low carbon, and environmental protection, which are the right directions for the transformation and development of the brick and tile industry. Chinese Brick and Roof Tile Industry Association should seriously consider the situation, embrace reform and innovation, carefully analyze industry trends, give full play to the industry's “leading, coordination, service and function”, and lead the enterprises to set up new development ideas and expand new work space.

with that of last year and total product value amounts to RMB 32 billion with total profit RMB 4.6 billion (14.4%). According to statistics of scaled brick enterprises (annual turnover >RMB20m.), growth of main business income decreased by 11.4%, main business cost decreased by 12%. Costs in sales, administration and financing decreased by 4.8%, 15.5%, 7.7% respectively and total profit decreased by 13.07%.

Bricks and tiles industry will face various challenges in 2016.

Current situation

Emission issues

Affected by the downturn of real estate industry, the brick industry made a little progress in 2015. Due to the brick products surplus caused by weakened demand of construction market, some brick enterprises stopped production or even were on the edge of collapse.

Newcomers of the brick industry came from other industries, such as coal and electric power and lack of professional techniques and experts. It is very difficult for them to make right judgments and solve problems in the production, which greatly affected their productivity. Some other enterprises which could merely operate normally lacked technical support to fulfill the strong willingness of technology upgrade and transformation which could improve the production technology, product variety and product functions. The brick equipment manufacturing enterprises also faced troubles in the market. Some of them encountered problems with cash flow because their clients asked for delay delivery although the deposits had been made. Some encountered problems in the administration, which resulted in fund chain break. Some enterprises have been transferred to other industries.

The brick industry encountered decreases in output, product value and profit in 2014 and 2015 compared with the previous years.

According to statistics, the total output of bricks was 800 billion pieces (converted to standard brick), decreasing by around 10% compared

52

asian ceramics

AC 16-2

Falling demand

Since the beginning of this year, with downfall of real estate industry, reduction of government investment on infrastructure, weak urban construction market, and popularization of frames and shear wall in new rural reconstruction, the demand for sintered bricks was reduced sharply. Weakened market, low price and sales difficult exist generally.

After the Spring Festival in 2015, the association made a survey on 163 brick enterprises in Hunan, Hubei, Shandong, Shanxi, Hebei and Henan, only 19 out of them were prepared to fire and the rest were still selling stocks.

Most brick enterprises have emitted waste under no formal regulations for many years. This situation will be contained by recent policies issued by the government, such as “Standard for discharge of atmospheric pollutants for brick industry” and “Limitation of energy consumption per unit product of sintered wall manufacturer”, and atmospheric pollution control plan made by the State Council.

Particularly, brick production enterprises are required to install desulphurization and dust removal devices to reduce the emission of sulfur dioxide and particulate matter. This process will be supervised by environmental protection system. If the standard requirements are not met businesses shut down is inevitable. Meanwhile, some local governments are carrying shut down solid clay brick kilns. In 12th, March, under administration of Hebei provincial government 62 brick kilns were removed in Shijiazhuang, Tangshan, Langfang, Baoding, Cangzhou, and other places, and prepared to remove the soli brick kilns within one year. Brick enterprises must take effective measures to ensure production standards.

Energy problems

Construction systems and structures, as the downstream industry of brick industry, determine brick products market, as well as the development of the brick industry. As the energy saving standards

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Analysis: Heavy clay

continue to improve (in 2012 Beijing city had already claimed to reach a energy saving rate of 75%), development of brick products must focus on sintered hollow brick, hollow block, self-insulation brick and insulation block to meet market demand for energy-saving, Otherwise they will be eliminated out of the market.

Technical dilemmas

For technical developments of the industry brick equipment must go first. China brick industry has already made great progress in equipment level compared with that of the 20th century. However, R & D of extrusion performance of vacuum extruders has made little progress, and the shaping theories of worm conveyor and core grid are still limited to groping on technology of cellular brick and low pressure extrusion of last century, lack of innovation and breakthrough.

Meanwhile, due to lack of large-scale production practices and market applications practice, the research, test and application of extrusion performance of vacuum extruders has made slow progress.

Moreover, mess in construction of kilns and dry chambers also restrict the improvement in the quality and production techniques of highly porosity hollow bricks.

Re-positioning the industry

As China’s economy has entered the “new normal”, the brick industry is coming to the critical period of structural adjustment. Faced with the grim economic situation of the industry in 2015, the brick industry should be guided by the principles of "innovation, promotion, transcendence, and leadership ", insist on “containing new added production capacity and economic downturn” and closely around the main line of structural adjustment, transformation and upgrading to achieve deepening structural adjustment to the depth turning. The industry should stick to main contradiction and bottleneck restricting the development and the "three new" innovation to lay foundation for structural adjustment to the depth turning. The industry should stick to industrial structure adjustment and accelerate the pace of domestic mergers and acquisitions and capital "going out" to achieve the adjustment of industrial layout and increase the utilization rate of resources. The industry should closely link to energy saving and emission reduction, innovation mechanism and establishment of service industry chain to promote the vast majority of enterprises to meet the standards. Establishment of development pattern in the new normal, based on not only reality, but also innovation, should be the strategic positioning of the industry.

Bottlenecks

Under the impetus of wall materials innovation and construction energy-saving, through the joint efforts of the whole industry, the brick industry has made remarkable changes in equipment, technology and products. However, the whole industry is still in the development stage of slow extensive type. As an important part of traditional products of building materials, the pace of development of the brick industry is far below the industries of cement, glass, ceramics and other products. The gap is mainly expressed as that the industries dominated by small enterprises, the structure and quality of products should be optimized and promoted, Development of new energy saving sintered products was impeded by poor market cultivation and landmark breakthrough in technical innovations hasn’t achieved.

To break through the bottle neck, growth rate, variety and function of sintered hollow bricks should be promoted and applications of self-thermal insulation brick,thermal insulation block, decorative brick, decorative board, paving brick and roofing tile etc.in the construction field should be popularized. The technology level of equipment

54

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AC 16-2

should be promoted, intelligent setting robots, 750 and 900 extruder with high quality and large size, monolithic kiln and other new production process should be popularized, and the automation level of production lines should be improved.

The main tasks of structure adjustment of the brick industry are two aspects. As far as products are concerned, structure of products is developed in the direction of "green building materials", and variety and function of products meet requirements of "green building". In terms of industry structure, enterprises are in the direction of extensive development, total production capacity increases and number of enterprises decreases year by year. The responsibility of enterprises is to meet market demand and sustainable development. Focusing on sintering, waste utilization, energy saving and emission reduction, enterprises should accelerate technological progress, improve product quality and improve production and application system to promote industrial structure adjustment and upgrade.

To promote structural adjustment, it is important to get support from relevant government departments for formulation of relevant policies, to timely analysis and master economic operation of the industry and to provide support to introduction of relevant policies and measures.

Under the guidance of the government departments, access system of sintered brick industry should be formulated and implemented as soon as possible to raise the entering threshold of the industry. On the basis of three types of enterprises, directory of industrial structure adjustment is made to encourage competitive enterprises and products and to limit and eliminate backward production processes and products. It is necessary to provide support to competitive enterprises for their large-scale development and mergers and acquisitions, and to strive for formation of some key enterprise and large enterprises groups with good quality products, scaled production and advanced technology and equipment in the brick industry

Solving and saving

Energy saving and emission reduction are always the eternal theme of brick industry. In view of development of the situation, a new energy policy will be fully end coal era, instead is to encourage the use of new energy. The production processes, such as “internal firing” and “once setting in drying-firing” which the brick industry has been proud of, should meet with the situation. With the promotion of new energy policy, the key tasks of the brick enterprises are to further improve the technology content, control energy consumption of unit product, save energy, reduce coal consumption and raise the level of process technology. At the same time, make full use of the policy of comprehensive utilization of resources, research, develop and promote brick making technology and equipment using urban sludge and river silt. Saving energy, reducing energy consumption and clean production will become the three major elements of new technology revolution for brick production.

Innovation the key

Development of the brick industry is seriously restricted by lack of technical innovation and new product development capabilities and disconnect between product standards and construction applications. Support to technical research and development should be strengthened. It is suggested that the government give policy and necessary financial support to the key technical projects of energy saving, waste utilization and environmental protection which drive development of the brick industry. We need to track and research international advanced technology and equipment of brick production, and on the basis of reference and digestion, to carry on technical transformation of traditional brick enterprises. Training of enterprise

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Analysis: Heavy clay

management and technical personnel should be strengthened and technical innovation capability of enterprises and technical levels of employees should be promoted. Seminars on development and technological innovation of the brick industry, , including exchanges of new products, equipment and production practice, should be organized to strengthen the analysis on worldl advanced level and to promote development and progress of the brick industry.

Cross industry and disciplinary alliance of enterprises, universities and research institutes should be organized to solve disconnect among production, designing and construction, and manufacturing of mechanical equipment, which restrict development of the brick industry. Research and Development of comprehensive utilization of resources, and of energy saving and environmental protection products should be strengthened to promote green and sustainable development of the brick industry. Technological transformation of traditional brick enterprises should be accelerated and the enterprises will be led to produce products of quality building materials. Mature technology of other industries should be greatly introduced into the brick industry, such as advanced design concepts of manufacturing industry, advanced technology of wear manufacturing and repair, robot of optical, light mechanical and electrical integration in automation industry, and the energy saving and waste heat utilization of advanced kilns in thermal industry.

A 5-year plan

The actively promoting working items of the brick industry in the "12th Five Year Plan" period were basically completed. The items include production and application of the sintered brick/block, power generation technology of waste heat of coal gangue sintered brick tunnel kilns, energy-saving inverter technology renovation project, utilization of construction waste resource, harmless treatment and utilization ability of sludge and garbage from urban sewage treatment plant, key industrialization demonstration projects, R & D of complete set of equipment for the brick industry and development of new energy saving insulation wall and roof tile materials which laid the foundation for compilation of the 13th Five-Year Plan of the brick industry.

Determination of development goals of the brick industry’s "13th Five Year Plan" should be based on the characteristics of the industry, change in mode of development, industrial transformation and upgrading, manufacturing and production services simultaneously, service system for energy-saving and emission reduction and green development. Therefore, actively promote sintered bricks/blocks made by advanced technology and equipment to ensure construction of green and energy saving buildings is an important part of the building materials and brick industry’s "13th Five Year Plan". It is also the penetration point for turning breakthrough in aspects of development mode, resources allocation, development layout, industrial structure and industrial equipment level.

In order to further promote the development of the brick (wall materials) industry, the relevant government departments recently issued a series of policies and measures.

The State Council issued the "The energy saving, emission reduction and low-carbon development action plan for 2014-2015" in May 2014.

For green construction it requires to promote actively energy saving and low carbon construction and carry out green building action.

In February 2014, Ministry of science and technology, and Ministry of industry and information technology issued "The energy-saving and emission reduction technology special action plan for 20142015". For key targets of green construction sector, it puts forward “Focus on breakthrough of new energy-saving insulation integrated structure system". In March 2011, National Development and Reform Commission issued "catalogue for the guidance of industrial structure

56

asian ceramics

AC 16-2

adjustment", to encourage the development and production of "new energy saving and environment friendly wall materials”. In December 2008, Ministry of Finance and State Administration of Taxation issued "VAT policy on the comprehensive utilization of resources and other products notice". It puts forward value-added tax preferential policies for some new wall materials. In April 2013, China Building Materials Federation jointly with the China Bricks and Tiles Industry Association and other professional associations jointly formulated “The new wall material products catalogue” and “The wall materials industry structure adjustment guidance catalogue”. It is emphasized that sintered cellular block, heat insulation block, composite heat insulation brick and block, paving brick and sintered roof tile are key products for development. These policies are based on the core of building industrialization, and promote the modernization of the construction industry, and strengthen the support to the production of construction products and expand the development space for structure adjustment, transformation and upgrading of the brick industry, and promotion of product quality and function. On the occaision, the whole industry should push on development and promotion.

New standards

Production of bricks and tiles must meet the construction requirements. In promotion of application of sintered blocks in constructions, technical application regulations are very important, and the construction units can’t use this kind of products until the corresponding technical regulations are improved. Otherwise, the products with good functions can only be beam the shelf. To solve this problem, the Brick Association and Research Institute of Building Materials, Chinese Academy of Architectural Sciences have jointly prepared the industry standard “Technical Regulations of Sintered Thermal Insulation Blocks Applications”. The project was approved

by Ministry of Housing And Urban-Rural Development and started to compile. On this basis, the association continues work closely with those who use the products in the formulation and revision of application standard and the relevant construction specification, so that our products can better meet the needs of the construction industry. We need to expand the market and promote the application of brick and tile products especially sintered insulation bricks and blocks in products in the construction industry.

Quality hopes

Product quality is the fundamental element for survival and development of the brick enterprises, but also the key to healthy development of the sintered brick industry. Some existing problems, such as mechanical properties, durability and thermal performance of sintered products should be solved. As one of the key indexes to evaluate the quality of sintered brick, mechanical property directly affect the bearing capacity of the wall and the safety of buildings.

Poor durability will also be a hidden trouble regarding the safety of buildings. According to the national supervision and spot checks of building materials products for wall, roof and road construction materials in 2013, the results show that some enterprises in the implementation of the new standards are seriously lagging behind. In this regard, enterprises need to pay high attention to the problems, strictly implement technical requirements of the new standards, improve product design and produce quality products.

The implementation of newly revised standards, such as “Sintered Cellular Brick and Block”, should be strengthened. The enterprises who do not implement new standards and whose products do not meet the standards should be exposure by media and seriously dealt with by local governments and quality supervision departments in accordance with the relevant provisions.

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Analysis: Tiles

Evolution not revolution the development of China’s tile sector As China’s tile industry enters a new phase of controlled development, AC examines how the industry has shaped itself in the last two decades and what challenges lie ahead.

Output

From 1995 to 2014, the annual output of ceramic tiles in China has grown for six times, from 1, 583.98 million square meters in 1995 to 10,229.54 million square meters in 2014. During the 20 years the output declines compared with those in previous year appeared in 1996, 1998 and 2001 only, decreasing by 14.33%, 13.44% and 10.31%, respectively and the output in the other years grew at a fast speed. Especially from 2003 to 2011, the output of ceramic tiles has kept double-digit growth and didn’t slow down until 2012. Till 2014, the output of ceramic tiles in China has broken ten of billion square meters for the first time to 10,229.54 million square meters (see table 1).

Output of ceramic tiles during 1995-2014

Exports

The export of ceramic tiles has ushered in a period of fast increase in both value and the volume since 2000. In 2001 and 2002 the export volume achieved the growth of 118.96% and 135.05% respectively and the export value grew by 101.3% and 109.68%, which continued throughout 2013. But in 2014 the export volume and value suffered negative growth again, dropping by 1.71% and 1%, respectively (see table 2- table 3).

Export of ceramic tiles during 1995-2014 Year

Export volume (m.m2)

Growth rate (%)

Export value (USD m)

Growth rate (%)

1995

181.3*

74.33

50

50

44.79

70

40

Year

Output (m.m2)

Growth rate (%)

1996

262.5*

1995

1,583.98

65.16

1997

17.85

79

12.86

1996

1,357.07

-14.33

1998

19.87

11.32

68

-13.92

1997

1,841.85

35.72

1999

17.86

-10.12

58

-14.71

1998

1,594.23

-13.44

2000

24.26

35.83

77

32.76

1999

1,946.12

22.07

2000

2,018.50

3.72

2001

53.12

118.96

155

101.3

2002

124.86

135.05

325

109.68

2003

206.47

65.36

522

60.62

2004

317.18

53.62

840

60.92

2005

420.73

32.65

1,206

43.45

2006

543.73

29.2

1,709

41.83

2007

590.07

8.52

2,131

24.7

2008

670.90

13.7

2,711

27.22

2001

1,810.43

-10..31

2002

1,868.53

3.21

2003

2,388.32

27.82

2004

2,962.51

24.04

2005

3,5

18.14

2006

4,0

14.29

2007

5,010

25.25

2008

5,755

14.87

2009

685.47

2.17

2,862

5.57

867.20

26.51

3,851

34.56

2009

6,427

11.68

2010

2010

7,575.66

17.87

2011

1015.28

17.08

4,764

23.71

2011

8,701.41

14.86

2012

1086.21

6.99

6,352

33.33

2012

8,992.60

3.35

2013

1147.78

5.67

7,893

24.26

2013

9,689.79

7.75

2014

1128.10

-2.0

7,814

-1.0

2014

10,229.54

5.57

*kt

58

asian ceramics

AC 16-2

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Analysis: Tiles Import of ceramic tiles during 1995-2014

Year

Import volume (m.m2)

Growth rate (%)

Import value (USD m)

Growth rate (%)

1995

160.6*

126.2

47.80

32.8

1996

159.7*

-0.56

37.25

-22.07

1997

9.09

1998

7.04

1999 2000

48.59

30.44

-22.55

27.71

-42.97

4.26

-39.49

18.32

-33.89

3.19

-25.12

16.35

-10.75

2001

2.08

-34.8

11.76

-28.07

2002

1.84

-11.54

12.33

4.85

2003

1.72

-6.52

12.61

2.27

2004

1.73

0.58

15.37

21.89

2005

1.82

5.2

20.29

32.01

2006

2.19

20.33

27.85

37.26

2007

3.12

42.47

48.67

74.76

2008

2.95

-5.45

49.49

1.68

2009

2.82

-4.4

52.67

6.43

2010

5.74

103.55

72.40

37.46

2011

6.04

5.23

92..96

28.4

2012

5.18

-14.24

77.05

-17.11

2013

5.04

-2.7

80.67

4.7

2014

5.36

6.35

92.49

14.65

*kt

Capacity

According to the survey, “The long march of ceramic industry IV-- field investigation onf ceramic tile production capacity and development of production regions”, there have been 3,440 ceramic tile production lines in China (excluding western roof tiles), with the total daily production capacity of 45,036,000 square meters. The daily capacity in Guangdong was 13,288,200 square meters, growing by 18.86% compared with 2011 and took up 28.6% of the total domestic capacity.

The daily capacity in Fujian was 5,595,000 square meters, increasing by 28.21% and took up 12.6% of the total. The daily capacity in Shandong was 5,218,900 square meters, increasing by 4.05% and took up 11.7% of the total, The daily capacity in Jiangxi was 4,608,900 square meters, growing by 38.99% and took up 10.5% of the total. The daily capacity in Sichuan was 2,667,500 square meters, growing by 6.3% and took up 6% of the total. The daily capacity in He’nan was 2,220,000 square meters, increasing by 82.57% and took up 5% of the total.

Based on the statistics, the annual production capacity of Chinese ceramic tiles on operating for 310 days can be up to 13,961.16 million square meters, growing by 29.19%, with an increase of 3,154.87 million square meters compared with 2011. (See the relevant tables)

Consumption

According to the statistics of “Report of China Ceramic Production Capacity 2014 + White Book of China Ceramic Tile Industrial Development ”, after decades of development

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and several rounds of transfer, ceramic tile industry in China has a national blossom everywhere, except in Beijing, Tianjin, Hong Kong, Macao and Taiwan. There are 1,452 ceramic enterprises in the other 29 provinces (cities and regions)in total and 3,621 production lines (including 181 western roof tile lines), with the daily capacity of 45,036,000 square meters (excluding that of western roof tile, the same below).

Up to 2014, among the ceramic production regions, ten regions such as Zhaoqing and Foshan in Guangdong, Jinjiang in Fujian, Zibo in Shandong, Gaoan in Jiangxi, Qingyuan in Guangdong, Linyi in Shandong, Jiangmen in Guangdong, Jiajiang in Sichuan, Faku in Liaoning have each daily production over one million square meters. The 10 regions ranked the top ten in domestic ceramic tile industry and became the important parts in forming the map of ceramic tile industry in China. According to statistics, there are 786 ceramic enterprises and 2,191 production lines in the 10 regions, with the daily capacity of 25,057,000 square meters and accounting for 55.64% of the total capacity.

Around 2008, ceramic tile and sanitary industry formed a pattern of “three Shan-two Jiang-one Hai”, in which the important ceramic tile production regions are Foshan in Guangdong, Zibo (Boshan) in Shandong, Jiajiang in Sichuan and Jinjiang in Fujian, and Shanghai (including nearby Jiangsu and Zhejiang).

And in the top 10 list of 2014, besides Foshan in Guangdong ranked at the second place, Zhaoqing with the daily capacity of 3,926,000 square meters, Qingyuan with the daily capacity

Production capacity of ceramic tiles on province Rank

Province

Daily capacity (km2/d) 2014

2011

Annual capacity* (m.m2/y) 2014

2011

Growth of annual capacity (m.m2/%)

1

Guangdong

13,288

11,180

4,119.34

3,465.68

653.66/18.86

2

Fujian

5,595

4,364

1,734.45

1,352.84

381.61/28.21

3

Shandong

5,219

5,016

1,617.86

1,554.90

62.96/4.05

4

Jiangxi

4,609

3,316

1,428.76

1,027.99

400.77/38.99

5

Sichuan

2,668

2,510

826.93

777.95

48.98/6.3

6

Henan

2,220

1,216

688.20

376.96

311.24/82.57 407.34/310.64

7

Guangxi

1,737

423

538.47

131.13

8

Liaoning

1,576

1,381

488.41

428.02

60.39/14.11

9

Hebei

1,548

845

479.88

261.95

217.93/83.2 155.53/50.74

10

Hubei

1,491

989

462.06

306.53

11

Hunan

992

680

307.52

210.65

96.88/45.99

12

Shaanxi

805

719

249.55

222.89

26.66/11.96

13

Shanxi

678

487

210.18

151.09

59.09/39.11

14

Yunnan

521

300

161.51

93.00

68.51/73.67

15

Xinjiang

375

209

116.25

64.85

51.40/79.25

16

Anhui

285

204

88.35

63.24

25.11/39.71

17

Zhejiang

274

144

84.79

44.64

40.15/89.93

18

Guizhou

232

169

71.92

52.39

19.53/37.28

19

Chongqing

214

75

66.34

23.25

43.09/185.33

20

Gansu

209

95

64.79

29.45

35.34/120

21

Inner Mongolia

167

143

51.77

44.33

7.44/16.78

22

Ningxia

90

111

27.90

34.41

-6.51/-18.92

23

Heilongjiang

66

8

20.46

2.39

18.07/757.14

24

Jilin

64

38

19.84

11.84

8.00/67.54

25

Shanghai

50

118

15.50

36.43

-20.93/-54.75 -19.53/-66.32

26

Jiangsu

32

95

9.92

29.45

27

Qinghai

18

18

5.58

5.58

0

28

Tibet

15

8

4.65

2.48

2.17/87.5

Total

45,036

34,859

13,961.16

10,806.29

3,154.87/29.19

*on 310 operating days per year

AC 16-2

asian ceramics

59

Analysis: Tiles

of 2,481,000 square meters, and Jiangmen with the daily capacity of 1,664,000 square meters were in the top 10 list as well, ranking the first, sixth and eighth, respectively, after years of development. We can see that even under the situation of the transfer out of most ceramic enterprises from Foshan and fast development of production regions in other provinces, Guangdong no doubt is still in the dominant position in ceramic industry.

In addition, after years of transformation and upgrading, three big production regions including Jinjiang in Fujan, Zibo in Shandong and Jiajiang in Sichuan ranked the third, fourth and ninth, respectively, in the survey of 2014, with the daily capacities of 3,273,000 square meters, 3,086,800 square meters and 1,561,500 square meters, respectively. As one of the most important regions accepting transferred enterprises from Foshan, Gaoan in Jiangxi flourished from 2007 and became the fifth largest production region, with the daily capacity of 2,616,400 square meters. Linyi in Shandong and Faku in Liaoning ranked the seventh and the tenth, respectively, with the daily capacities of 1,972,100 square meters and 1,178,500 square meters.

Production capacity of various ceramic tiles Ceramic tile

Number of lines

Daily capacity (k.m2)

Interior wall

786

13,410

4,156.98

4,425.17

29.79

Polished

837

12,534

3,893.29

4,144.47

27.90

Annual capacity (m.m2) 310 days

330 days

Percentage of capacity (%)

Exterior wall

589

6,477

2,007.72

3,137.25

14.34

Rustic

498

5,311

1,646.41

1,752.63

11.80

Fully polished

318

3,255

1,008.99

1,074.08

7.23

Micro crystalline

65

437

131.75

140.25

0.94

Panel

9

54

16.80

17.89

0.12

Wear-resistant

71

880

272.83

290.43

1.96

Small floor

79

996

308.61

328.52

2.21 3.71

Others* Total Western roof

188

1,669

517.24

550.61

3,440

45,036

13,961.16

14,861.88

181

17,561**

5,444,003*

5,795,229*

*Others including terracotta panel (16 lines), skirting tile, split tile, square tile (8) etc. ** k.pcs

Number of ceramic tile enterprises and production lines Rank

Province

Number of production lines

Number of enterprises

2014

2011

Growth (No/%)

2014

2011

Growth (No/%)

1

Guangdong

1,062

1,079

-17/158

223

214

9/4.20

2

Fujian

554

489

65/13.29

246

201

45/22.39

3

Shandong

512

555

-43/7.75

199

314

-115/36.62 19/16.52

4

Jiangxi

342

226

116/51.33

134

115

5

Sichuan

241

276

-35/12.68

147

136

11/.8.09

6

Hubei

114

70

44/62.86

49

38

11/28.95

7

Henan

112

96

16/16.67

68

47

21/44.68

8

Liaoning

102

90

12/13.33

55

53

2/3.77

9

Hebei

89

62

27/43.55

51

38

13/34.21

10

Guangxi

86

26

60/230.77

47

18

29/161.11

11

Hunan

74

49

25/51.02

27

16

11/68.75

12

Shaanxi

48

48

0/0

31

29

2/6.90

13

Shanxi

46

41

5/12.20

31

27

4/14.81 4/33.33

14

Yunnan

39

28

11/23.29

16

12

15

Zhejiang

39

24

15/62.50

10

8

2/25

16

Xinjiang

29

21

8/38.10

19

16

3/18.75 3/15.79

17

Anhui

26

18

8/44.44

22

19

18

Jiangsu

18

12

6/50

14

15

-1/6.67

19

Gansu

17

6

11/183.33

15

7

8/114.29

20

Chongqing

17

9

8/88.89

8

8

0/0

21

Guizhou

14

12

2/16.67

13

10

3/30.00

22

Inner Mongolia

14

13

1/7.8

10

5

5/100

23

Ningxia

8

7

1/14.29

3

3

0/0

24

Shanghai

7

13

-6/45.15

2

3

-1/33.33

25

Jilin

5

4

1/25

6

6

0/0

26

Heilongjiang

3

1

2/200

3

3

0/0

27

Hainan

1

1

0/0

1

1

0/0

28

Tibet

1

1

0/0

1

1

0/0

29

Qinghai

1

2

-1/50

1

1

0/0

Total

3621

3279

342/10.43

1,452

1,364

88/6.45

60

asian ceramics

AC 16-2

www.asianceramics.com

Talking Shop

Talking Shop

Africa: the end of China’s rainbow?

Wang Yinchuan, a leading light at one of China’s leading tile companies, discusses his recent trip to Africa and the prospects for constructing a tile factory there…

The African market is experiencing everything that has previously happened in China’s ceramic market: huge population benefits, abundant resources and a large ceramic tile market has not yet impacted by European tiles. The African market that China’s ceramics enterprises participate in will be the next emerging market with one billion people.”

“My most recent trip to the continent was a two-month visit from October 2015. In particular we looked at raw materials and estimated the possibility of establishing plants in Kenya, Tanzania, Ghana and Nigeria.

However, we still feel that, generally speaking, the economic conditions in Africa are still relatively backward. The economic situation there is similar to that of the 1970s in China.”

“One key point is a lack of real-estate projects. Of course, in many countries, this is not surprising as the economies are still very backward. Furthermore, rurally, residents generally live in small bungalows with no fencing walls or exterior walls. The rich also build houses instead of buildings. For example, a house of tribal chief is less than three meters high and has cement ground without using ceramic tile paving.

In Africa, lots of constructions are decorated with paint, which has more advantages than ceramic tiles.”

“Of course, the gap between the rich and the poor is huge in Africa, although there are still a lot of buildings in the capital city of each country. When you look at many average-middle-income houses, we found that most floors were decorated with 300 x 300 (mm) small-size floor tiles. Exterior wall tiles are also used, but yellow paint is the main material for decoration. As such, in many of these markets, the prospects for providing high-grade tiles in accordance with Chinese or European or American standards, does not look that enticing at the moment.”

Upscale developments

“Most of the relatively upscale locations in Africa are projects like the United Nations buildings, the five stars hotels or luxury restaurants and the government buildings, most of which are decorated with rustic tiles.

Hotels run by Chinese people usually choose large-size polished tiles.

In the capital city of Kenya, there are four or five large hotels opened by Chinese. They all use large-size 800 x 800 mm polished tiles, produced in China. Indian restaurants are decorated with rustic tiles. Local people mostly choose 300 x 300 mm rustic tiles for their upmarket homes”

So are rustic tiles the way forward?

In public places, such as squares, supermarkets, shopping malls and other places, rustic tiles are mainly. Main products sold in African market are 300 x 300 mm and 400x 400 mm colourful glazed rustic tiles.

The proportion of small-size interior wall tiles is also large. Unlike the situation in China, the sales of polished tiles and glazed tiles are not very large. The sales volume of polished tiles is only amounted tens of

62

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AC 16-2

millions of RMB per year.

“In China, there is preference of imitating stone or leather for rustic tiles. However, African people prefer colourful rustic tiles rather than such style. They emphasize color collocation and the pursuit of the antique taste.

What about distribution channels?

“In Africa, ceramic tiles are sold in large supermarket-style stores, which are usually located in an independent building as a company. In China various enterprises of brands settled in the same building of ceramic mall. In Africa, it is common that a trading company sells a brand independently and they only sell their own brand in the whole building. They are well developed on this aspect.

How are Chinese tiles penetrating the market?

“Many Chinese ceramic tiles are exported to Africa. Using us as an example, in Kenya our sales revenue each year is more than RMB300 million. The sales in other countries like Ghana and Tanzania is similar. Of course we are just one Chinese enterprise. There are other enterprises with sales over tens of millions RMB, though they are smaller.”

“Chinese ceramic enterprises are involved in wholesale as well as construction projects in Africa. Each sector of logistics, projects and distribution network has Chinese in charge. Now Chinese ceramic tile enterprises mostly develop business in capital cities of African countries and they don’t know much about the market in other cities.

Would you consider j-v factories in the countries you visited?

Are there possible partners?

“Yes, but only a few. There are two ceramic enterprises owned by a local and an Indian respectively in Kenya now. There are more ceramic enterprises in Nigeria and Among them, two are constructed by Chinese, two by Indian and others by Nigerian entrepreneurs. In total there are 10 to 20 enterprises. The production lines there are usually small with the capacity of 20,000 to 30,000 square metres.

So is India the main competitor for China in Africa?

“Yes. Africa is still relatively poor, so expensive European products still only account for a small market share. Small-size 300 x 300 mm floor tiles, which we sell at RMB1.2 per piece in China, can be sold at RMB5.3 per piece in Africa. The price is acceptable to them. However, the European ceramic tiles are sold at US$5 to 6 per piece, so that they are rarely used except for national-level buildings. For example, we went to the University of Nairobi where they used small-size floor tiles for the president’s office. In the whole teaching building, some classrooms with good conditions are paved with floor tiles while others like the labo-

www.asianceramics.com

By EBI Ltd & HIMG速

Talking Shop

ratory are paved with cement floor or paint.”

“The tiles used in construction projects are mostly Indian or Chinese products. Small-size tiles produced in Indian plants are the same kind of glazed rustic tiles we produced in early 1990s to 2000s. We visited an Indian exhibition hall in Africa, a three floor building. The annual sales amount is over RMB200 million. Our enterprise has five floors. Our annual sales amount is over RMB300 million. The two mentioned above are the biggest ceramic enterprises there.”

What about raw material sources?

“The quality of feldspar is good. Indeed, the quality of feldspar in China is lower than that in Africa since our ceramic enterprises have overexploited and used up huge amounts of feldspar resources for production. Ghana has abundant feldspar resources with good whiteness. The temperature for firing tiles is 1,200 to 1,300 ℃ in China, while it is about 1,150 ℃in Africa.”

“African countries are also rich in clay resources, such as Tanzania, Ghana and Kenya. However, the quality of clay is not very good, and the clay can only be used to make low grade tiles. This kind of clay can be used to make polished glazed tiles, rustic tiles and interior wall tiles, but it’s not good for polished tiles. Requirements for making polished tiles are relatively high and the degree of whiteness is demanded. But if we do not pursue the whiteness and use other color clay in making polished tiles, we can also have good effect. After all, Africa is rich in laterite resources.”

Does this mean a body-colour change?

“I think, some people will certainly make polished tiles with the red body combined with polishing technology, because of the low cost. Presently few people dare to try because polished tiles made in this way have problems with the tune of color and pattern. If the dry granulation technology is mature, the cost will be lowered since we can use laterite or shale alone in producing tiles.”

How do you assess the energy situation?

“In Nigeria, near the west coast of West Africa, oil and natural gas resources are rich. They use natural gas to generate electricity in their own factories. In East Africa, there are coal mines in Tanzania, and South Africa's coal is transported by sea to East Africa. Yes, there are problems in many countries and a power shortage in general, but work is underway to turn this round. For example consider Africa’s largest wind power project in Turkana Lake that is launching in Kenya.”

plant in Tanzania. The Chinese kept a good relationship with the government at first. But later local residents could not stand the pungent odor and they complained, so the factory, which cost over US$100 million, was closed by the government.”

Do you consider security an issue, and are people welcoming Chinese investors?

“As you would expect, the local people treat Chinese with hospitality, and Tanzania has plenty of potential in that regard. However, there are always worrying stories. For example, j in Nigeria a purchasing manager of a Chinese ceramics enterprise was kidnapped, and they spent more than RMB20 million to get him back.

“However, Chinese companies going into Africa need to adapt to local customs. I would say that the resentment that can exist is largely because Chinese people like to ‘show off’. We have to learn to integrate and not be insular.”

“The security issue does affect your choice of investment location, however. Nigeria is a great choice to build a factory as it is the largest economy, but security is weak and competition becoming fierce. Ghana lacks raw materials as do many other in Western Africa, making Tanzania our preferred bet. Indeed, one company from Wenzhou is preparing to build a factory there.”

What would be the best products to bring out?

“If we were to invest, we would produce two series: one is small-size floor tiles of 300 x 300 mm and 400 x 400 mm. 500 x 500 mm and above are not in consideration. The other is small-size wall tiles of 250 x 330 mm and 300 mm x 450 mm. 300 x 600 mm will not be considered.

There may be no market for large-size wall tiles.

As for equipment, all plant owners, from Bangladesh, Vietnam and India, as well as China, transport equipment from their own countries.

We would sign contracts with Chinese equipment enterprises before we go, and let them send equipment after all parts are finished. That way, customer service and installation are also done by the Chinese people.

Positives Real estate

Ceramic tiles are mostly used for public buildings (shopping malls, hotels and other), construction projects and high-end residential areas.

Housing for dwelling is mostly bungalows. Cement and paint are of advantage.

Ceramic tile market

Tiles are sold in supermarket.

Small-size rustic tiles and interior wall tiles are the mainstream. Rustic tiles of rich color and patterns are preferences.

Polished tiles and large-size tiles are not popular.

Raw materials

Feldspar, clay and laterite resources are rich

Expect breakthroughs in dry granulation technology to reduce the cost of the laterite tiles.

Energy

Oil and natural gas are abundant. China has an energy aid program for Africa

The entire continent is lack of electricity power.

Human resource

There is an advantage in labor costs. Ordinary work can be done by local workers, with average monthly salary of RMB700-800.

Technicians need to be employed in China.

Land

Land for industry can be bought while mine land is only for rent.

No preferential land policy at present.

Land transfer procedures are troublesome. Usually it takes three months to a year.

Environment protection

Good relations with governments are helpful.

If residents complain, the factory will face the danger of being shut down.

Security

Ordinary people treat Chinese with hospitality.

Frequent incidents of robbery happened to Chinese. Professional security teams are essential for establishing factories in Africa.

What about labour costs and polices?

“We employ technicians from China. Other workers are local, and the wage is low, around RMB700 or 800 per month. The highest is no more than RMB1,500. The driver we hired was graduated from Nairobi University, and his salary was RMB2,400 per month.”

“When we look at support from regional governments, my opinion is that the situation is very different to that experienced in China. For example, the land is private property in Africa and the governments are not helpful with resolving that ownership issue. So, if we want to buy land to build a plant, we need to talk to the owner himself, negotiating the price and find a lawyer to help us drafting a contract. Land transfer procedures are very troublesome. It needs three months at least, some even need over a year. When it comes to raw materials, then the mines cannot be purchased, just rented.”

What about environment issues?

“This is not uniquely African, it is a global topic and it will not be ignored anywhere. At first, we thought that the environmental protection requirements in Africa would not be very strict but we noticed that in one African cement plant we visited, we simply could not see any dust.

It seems that if there are complaints from local residents, your factory will be shut down right away. For example, there is a Chinese chemical

64

asian ceramics

AC 16-2

Negatives

www.asianceramics.com

§

Advertiser feature

F FOUR ARMS CAROUSEL C

Porcelanosa, Colorker, Grespania, Keraben Grupo are the latest confirmations from the Spanish market for the ceramic automation designed by System.

The MULTIGECKO selection line by System imposes itself as a classification system at PORCELANOSA. In 2014, after installing the first MULTIGECKO system in the floor and wall tile plant, the manufacturer from Villareal confirmed the purchase of two additional units for its porcelain plant. The last one will allow it to operate by producing 600x1800 and 1200x1200 mm formats.

Colorker uses Check Point by System (check on raw items) in all its enamel factories. The Spanish manufacturer noted that artificial vision during the enamelling process helped produce better quality products, thereby avoiding issues in the manufacturing area. In 2015 the manufacturer fitted this equipment in all its enamel factories, as it believed they were essential to keep up its manufacturing excellence.

In 2016 Grespania will launch its System plant consisting of the GEA 2.0 25.000 press, a decoration line with the Creadigit digital system, a kiln, a cutting line, a handling and storage system and a gluing and packaging system. Production will be based on the 1000x3000 mm and 1200x3600 mm formats, items 3, 6 and 10 mm thick.

System Ceramics, a company that makes industrial machinery for the ceramic sector, activated a new unit of its modern Creadigit digital printing system at Keraben group.

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Insight

THAILAND Minimum wage (US$/day)

Gas prices for the ceramic industry

Ceramic tile output and domestic market (m. sq metres)

Tableware and sanitaryware output and domestic market (m. pieces)

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AC 16-2

www.asianceramics.com

Economic Projections 2012

Ceramic exports (US$m.)

2013

2015

GDP (billion US$)

366

420.1

404.8

396.2

Real GDP growth (%)

6.5

2.8

0.9

2.7-3.2

GDP per capita (US$)

5,385.00

6,293.00

6,041.10

5,892.60

Exports (billion US$)

225.9

225.4

224.8

216.9

3.1

-0.1

-0.3

-3.5

219.9

218.7

200.2

189.2

8.8

-0.2

-8.5

-5.5

6

6.7

24.6

27.7

Current account balance (billion US$)

-1.5

-3.9

13.1

18.8

Current account to GDP (%)

-0.4

-0.8

3.3

4.8

Export growth (%) Import (billion US$) Import growth (%) Trade balance (billion US$)

Inflation – CPI (%)

3

2.2

1.9

(-0.7)-(-0.2)

Number of Foreign Tourists (million people)

22.3

26.5

24.8

30

Growth in Number of Foreign Tourists (%)

16.1

19.2

-6.54

21

Ceramic imports (US$m.)

CICT members by number

Leading sanitaryware export destinations (no. pieces)

Total sanitaryware imports (no. pieces)

www.asianceramics.com

2014

AC 16-2

asian ceramics

57 67

ASEAN’S DEDICATED CERAMIC EVENT

�eturning for its �fth edition, KERAMIKA continue to be the dedicated market place for the ASEAN ceramics industry to congregate in the largest ceramic producing countryin ASEAN and one of the largest ceramic consumers in the world, Indonesia.

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Organised by:

Marketing enquiries, Pre-registration, Publicity & Media Requests and Partnerships: Ms. Kartina Lydiawati P: +6221 2556 5032 E: Kartina.lydiawati@reedpanorama.com

Co-organised by:

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Co-located with:

Media Partner:

Hunter and the hunted

Less Haste; More Speed.

Dear Diary,

was to be presented at the American Many years ago I was asked to prepare a paper that company I worked for wanted something the but brief a of Ceramic Society. There wasn't much parts of sanitaryware, tile and about the future of the ceramic industry – or at least the I was not far sighted enough to describe tableware that were pertinent to our USA business; no 'fast firing' was all the rage – or that d a shift to digital and 3D printing. At the time it seeme this was 'many years ago' Given it? isn't e relativ is should we say 'faster firing' since speed to spend time going through back there was no internet to use for research and so I had firing kilns since I was and still am not issues of ceramic magazines trying to find out about spoke with a kiln manufacturer or two, I an authoritative voice on firing ceramics. As I recall as to contact a company in London of far so went even asked people in our organization and s on a variety of subjects. It took me all places that specialized in searching out technical paper presentation and I was conscious a long time to put together enough material for a 15 minute enough. Apparently it was fairly ting interes or that in my ignorance it might not be substantial things faster would be the major firing simply that idea well received but looking back now the impact on the industry is at best naive. sites and such like on business practices Last month I wrote about the impact of the B2B web how the pace of business has changed about and whilst discussing this with a client we talked I wrote that paper. when as span same over the last twenty years – about the involved. For weeks before a trip it what and d planne was travel ss I remember how busine overseas company offices would be travel agents would be consulted for flight options and and meeting dates confirmed by call asked to book hotels. Customers contacted by phone to customers, colleagues and line post) or fax (by sent fax. Itineraries would be typed out and An advance from accounts since mostly managers. Foreign currency exchanged at the bank. y and that most sacred and desired piece we didn't have enough money to cover the trip anywa a bit of a headache.

All ed. of plastic – the company AmEx card was obtain a real challenge; customers to see, be could It fun. was But going on a business trip – that do, weird food to eat, weather at extreme complaints to handle, presentations to make, trials to worth it. For a start once out of the temperatures to deal with....but make no mistake it was hand phones, no pagers – I think I No office you were pretty much unreachable and alone. had to be input on a public pay digits odd twenty all ca, had an AT&T number for use in Ameri a call to check with 'home office' if any phone plus password and the customer number to make ce anything had happened that needed change to the itinerary had to be made or if in my absen . Then it would be a case of hiring a guess I god my attention – like a declaration of war or act of a chain hotel like a Holiday Inn or such. car or getting a driver or cab and eventually arriving in been left and better than that – when Oh the excitement of finding out if any messages had faxes being pushed under the door. Which lying in bed late at night the sound of an envelope of g to fax back out replies and make calls mornin would mean a call by the business center in the delayed because of a diversion due was flight your to rearrange details of the trip. And when a night trying to work out to bad weather the joy of having to sit in a hotel bar for through flight timetables the best rerouting to get back on schedule by thumbing and travel agents, 'I need aries and going to the foyer to make more calls to secret where?' . This is all is Paul's y...St. to be in Chattanooga on Friday, LA Sunda

*The views expressed in this piece reflect those of the author, and not of the magazine or its staff

www.asianceramics.com

AC 16-2

asian ceramics

69

Hunter and the hunted

so much time you would be essentially before getting to the customer and doing any work. For per customer interaction was pretty cost the and it was nt unavailable. It wasn't really very efficie high. But hey – it was an adventure.

Compare that to now. How different it is.

'FIRST REMINDER' emails. I received Yet another thing on the list of things that irritate me is remind me he was waiting to a reply to one recently from a customer who had the audacity to to reply to correctly. I had of course sent a question that needed a certain amount of research would investigate the situation and get a holding email advising him I had received the email, ' email less than 24 hours later NDER 'REMI a sent back to him as soon as possible yet he g I fired off a mail to a UK supplier – the cheek of it. Yet I'm just as bad. This Monday mornin ct. I then checked when I'd made the reminding him I was still awaiting the quote for his produ I'd given the guy 5 hours to get back to nd request – 5pm Friday my time. Allowing for the weeke le. me with a response. A bit unreasonab ed dramatically; first we had pagers and Yes, compared to a few years ago things have chang digital cameras and now smartphones. Its then mobile phones and lap tops and then email and ble and cost effective work by sending profita got to the point where I can do some of my most raphs from my phone whilst I photog and quotes ct clients a Dropbox link to files and produ flights and hotels and they'll send me walk the dog. I can use an online web site to book my e and do I need to book a car? The a reminder when to go to the airport,if my flight is on-tim and photographs of a fault in the ting customer sends me an MPEG of the equipment opera in Vietnam and forward the test cians techni the with ware. I have a teleconference on Skype cools down enough to drink. Fast results to India and I've done all of this before my coffee speed of communication and the massive firing? That hasn't changed our industry much but the unication certainly has. comm amount of data that can be transferred during that No brakes on me… was email, text messages and file And it isn't going to slow down either. Where before it discussion. I have several groups group exchanges business is moving into instant chat and projects. Colleagues and friends in c specifi and clients set up on Whatsapp for colleagues and stand those that don't. We also receive China do business on QQ and WeChat and don't under and night. Have we reached the limit these messages and demands at all times of the day industry veteran (as we call old people An about how fast we can share views? Is it working? he started business travel he would when as ain still working) told me that I shouldn't compl line at any hotel he was booked into and have to make an appointment to use an international welcome the convenience. would send order confirmations by telex, that I should it comes to differentiating from an when That is all well and good and surely an advantage to production and new projects es chang where ry other supplier but we do work in an indust shame if we lost opportunities because of can take months or from inception to fruition. It'd be a impatience or unrealistic expectations.

Until next month, Your humble servant William Hunter

*The views expressed in this piece reflect those of the author, and not of the magazine or its staff

www.asianceramics.com

AC 16-2

asian ceramics

71

Advertiser feature

Marazzi Group Italia adopts new digital technologies from Projecta Engineering Marazzi Group has installed the two latest new digital systems from Siti B&T Group member company Projecta Engineering at its facilities in Fiorano and Sassuolo (Italy): G5, the new generation of digital decorating machines launched in June 2015, and Evo7 (Hybrid Model).

The G5, which has been installed in the Fiorano factory, is the first completely modular digital decoration system. It covers the entire glazing process and further improves all digital technologies developed to date.

The G5 has a printing width of 915 mm and 6 colour bars equipped with the new SEIKO printheads.

An Evo7 (Hybrid Model) with a printing width of 1120 mm and 6 colour bars, also fitted with Seiko printheads, has been installed in the Sassuolo facility.

With these latest-generation installations, Projecta Engineering has further strengthened its close collaboration with the Marazzi Italia Group, underscoring the importance of technological innovation as the key to success and competitiveness in the market.

Evolve technology wins over the Kerama Marazzi Group Formigine, December 2015 - Projecta Engineering, partner of Siti B&T Group, consolidates its collaboration with Kerama Marazzi through the installation of eight new digital machines at the group’s facilities in Russia.

Two special EVO8 “slim” machines, equipped with eight colour bars for the digital decoration of small sizes (10x10cm and 8x28cm) on two rows and one special EVO8 “slim” machine for printing on mosaics, have just been set up at the facilities in Oriol.

The machine for printing mosaics is a completely new innovation in the field of digital decoration. In fact, it is the first Projecta machine to provide this type of printing process and the Kerama Marazzi Group has chosen the consolidated Evolve technology for this type or printing.

Two EVO7 machines with a printing width of 350 mm for the

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AC 16-2

double firing line and an InkTester I/70-2 to check the printing heads after ultrasonic cleaning, have also been installed at the plant in Oriol.

At the factory in Malino on the other hand, two EVO8 machines with 6 colour bars and the new Seiko RC1536 print heads have been installed.

By the end of 2015, a total of 33 digital Evolve series machines will have been installed at the Kerama Marazzi Group’s facilities in Russia.

These results are without doubt an endorsement of the excellence of the technology offered by SITI B&T Group, which continues to invest in Research & Development in order to deliver innovative, reliable and quality technology, and thereby strengthening its position as a trusted partner for all ceramics companies.

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AC16-3 Features include

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• Gujarat p1: changing tiles, changing times • Building blocks: heavy clay markets in ASEAN is this your own issue? sub www.asianceramics.co

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TILE S: TH E PR E SSU R E OU NTS TI LE S: THREM TSIeLe EUS s a:tTH E PR E SSUS E SAU R E KPER R AEMSI K MOU NT MOU NTS IN S IDE: JAK ARTA t a s Se e U AC16-3

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THE FUTURE OF DIGITAL PRINTING IS HERE

KNOW-HOW

TECHNOLOGY

OPPORTUNITIES

ELECTRONICS

SOFTWARE

The Sacmi Imaging division has developed an in-depth understanding of ceramic digital printing file processing.

A special team identifies the properties of the inks and the most suitable wave forms to maximise sharpness of the droplet and so achieve the highest possible definition.

Tr i e d a n d t e s t e d incorporation of Xaar technology is now joined by the new Dimatix option, guaranteeing full satisfaction of production requirements.

All-proprietary design and production of control electronics. Real-time data transmission.

The control software is developed on the shared Sacmi programming platform to ensure optimised handling of upgrades a n d i n te r- sys te m communication.

Thanks to Sacmi know-how, the new DHD-X and DHD-D printers with Xaar and Dimatix technology offer all the advantages of digital printing, specially enhanced for ceramics. www.sacmi.com