Asian Ceramics - AC16-5 Edition

is this your own issue? subscribe online at www.asianceramics.com www.asianceramics.com

AC16-5

BU ILD ING THE FUTUR E BANGLADESH SETS THE PACE

SEE INSIDE

IN FOCUS: Iranian whiteware

Kiln furniture demand cycles Gujarat sanitaryware Plus news, views and interviews

Sa c m Tu r k i s h s ainbito o st s a ry wa re

News

Contents: AC 16-5

! e n o t h ig r e h t e I ra n…t h i s t i m Analysis: Whiteware

We start this issue with a quick apology to all our readers. Because of a freak printing accident in the last issue (AC16-4), the text in the Iranian article became transposed with other text that was already in the issue. As such, for all those of you IRAN A LL SET who were looking forward to reading about Iran, you would have found yourself reading the same article about India’s fine ceramic industry as we had elsewhere in the issue. Consequently, we have opted to re-run the text in this issue, so that you will have the correct, printed version of the article for your archives. The online issue and App issue was amended immediately, and as such you can download the revised digital version too.

Apologies for the error…and thank you to the many of you who contacted us to query what had happened!

OUT FROM T SHADOWHE S FOR A MAJOR PLAYER

Yogender Ma themselves lik looks at how Iran’s for an open sanitaryware , more easily an traded future d tableware sectors are preparin … vers had owe d by g the gig ant ind ustr y

O

ic cer ami of the cou c tile ntry , the san itar y war e and Iran ian cer Iran in the tab not bee n ami region. Iran able to ach lew are pro duc tion c to around ’s imports in pas t few $35 billion ieve its true has from the from the yea rs. Slo Gulf region last year, eco nom U.A the bulk wdo wn in pot ent ial amounte exp ort pot y, of which lack figures from .E. that were imp d dom ent ial due of wer orted via the pro duc ers to inab ility req uisi te cap ital, esti c Dubai, acc e exports Fina nce. Globall Washington-based limi and pro duc t ording to ted lack of ham per ed Institute of diff ere ntia y, the U.A partners the dev elop stat e-o f- the art .E. Internationa tion is alon by one our ind ustr gside Indi tech nol ogy of Iran’s me nt of Western largest trad l y for qui economic a and China. te lon g in the se two sub -seg has e A number deal of pro sanctions the cou ntry me nts of blems dur against Iran expansion of ceramic tile pro Iran's exp ing the pas ducers hav . cau and mod sed Iran ort and imp t few yea ernization However, e gone for a grea rs. in foreign ort exercise in sanitary banks. This and led to the free Embargoes crip t in past few capacity exercise ware and pled producers was zing of Iran both heig yea tableware and crea existing pro limited to a sele sub-segmen rs. ted a sen htened pressure on 's assets investors, ct few. With ducers from ts, this se of inse thus, mak are waiting eas curity amo domestic ing recent mon on the side these domains and ing of sanctions, ng foreign ths , a larg them reluctant to tile produc lines and new entr up clamorin join Iranian e number ers. are expecte ants of foreign pro Currently, d to emu large num g for access to Iran companies jects. In late the ber of MoU 's 80-million exports are a major portion of hav e lined foreign firm s have bee strong mar san largely driv s. Though n signed traders bas ket. A en by re-e itary ware and tabl or foreign between , ed in the eware xports from dom investment, ceramic sector has producers UAE, but resellers be ruled yet to witn estic and but in com the to start buil and out. ess ing days ultimately ding offic easing of sanctions such a mov a MOU Three outs leading to ial supply the port of e cannot a spurt in ecosystem will enable expansion tanding factors are exports.

Dubai, has of the Iran The U.A.E., s in Iran, responsible long bee materials, ian ceramic particularly n an imp for the una inex ortant trad sector: an bated – more than pensive energy e conduit abundance sou for of raw of thirty five half of Iran’s 80 mill rces and a youthfu 20 asian cera . ion inhabita l pop mics nts are und ulation AC 16-5 er the age

www.asiancer amic

s.com

News 4 Inside Asia

VitrA continues to advance.

6 Welcome

Obituary: Ivanno Ligabue.

8 Across The Continent

Openings, closures and industry moves from across Asia.

14 International News Our eye on the international arena.

16 Material Matters Raw materials news and views.

18 Comment & Analysis In China…hope springs eternal.

2

asian ceramics

AC 16-5

20 www.asianceramics.com

News

www.asianceramics.com Features

Looking forward

20 Iranian whiteware

Yogender Malik looks at how Iran’s sanitaryware and tableware sectors are preparing themselves for an open, more easily traded future…

28 Bangladeshi tiles

Jahir Ahmed discusses how the Bangladesh tile industry has emerged from a simple base to become an extremely attractive investment option in Eastern Asia.

38 Gujarati sanitaryware

AC concludes its round up of the Gujarat ceramics industry with an overview of the principal sanitaryware producers in the State.

50 Kiln furniture in focus

Often overlooked, but an essential part of the whiteware producing equation, kiln furniture production and supply is a critical issue for the continent’s ceramic manufacturers. AC looks into the current situation.

Tecnargilla Italy 26-30-Sep Cersaie

Italy 26-30-Sep

The 28th China International Ceramic & Bathroom Fair Foshan 18-21-Oct CICA Annual Meeting

TBA

Ambiente

Frankfurt

10-14 Feb 2017

Cevisama

Spain

20-24 Feb 2017

Indian Ceramics

India

1-3 Mar 2017

ISH Frankfurt

Germany

14-18 Mr 2017

Keramika

Indonesia

16-19 Mar 2017

The 29th China International Ceramic & Bathroom Fair Foshan Apr 2017 Mosbuild

Russia

4-7 Apr 2017

Ecobuild China

China

26-28 Apr 2017

ISH China & CIHE

China

13-15 May 2017

Middle East Stone

UAE

22-25 May 2017

Ceramics China

China

1-4 Jun 2017

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

50

Anaylsis 56 Talking Shop

AC talks to Mr Atalay Gumrah, Executive Vice President Building Products Division of Turkish industrial giant, Eczacıbaşı, about the company’s sanitaryware expansions and its ongoing technical partnership with Sacmi.

58 Insight

Analysis and insight into Australia.

60 The Hunter And The Hunted

William upgrades to an ipad, but still casts his unsympathetic eye over industry issues: this month he asks if companies still value their workforce as much as they should.

www.asianceramics.com

www.asianceramics.com Your favourite magazine is now available at the App Store… download today to see your first sample issue!

Asian Ceramics: now for mobiles, ipads and androids

AC 16-5

asian ceramics

3

Inside Asia VITRA CONTINUES TO ADVANCE The multi-national Eczacıbaşı Group has given its plant in Bozüyük, Turkey, a boost by adding a Sacmi high pressure casting cell consisting of two single-mould AVM150 casting machines for back-to-wall and suspended WCs, cast using a 7-part resin mould. The jewel in this high pressure casting cell crown consists of the pre-drier, which reduces in-WC moisture content quickly (about 1.5 hours on average) in a controlled, homogeneous manner without interfering with adjacent areas. More specifically, the innovative pre-drying control system used in these compact cells successfully reduces a series of production problems typically encountered during the first drying stage; these problems generally appear in the linear zone of the Bigot curve which defines the relationship between relative humidity and percentage shrinkage of the ceramic piece.

Find out more about the company’s views on the sanitaryware industry in “Talking Shop” in this issue.

Welcome

It is with great sadness that we kick-off this issue with the news of the pasing of former ACIMAC leader, Mr Ivanno Ligabue. From a personal perspective, I had always found this gentleman to be one of the most welcoming members of the ceramics industry. When I, as a young editor, went to my first Tecnargilla with the nascent Asian Ceramics tucked under my arm way back in the late 1990s, I will always recall how he gave up so much time to give me an interview for what was then a brand new magazine. His patience, as my questions were superbly translated by Dr Paola Giacomini, simply reinforced his status as a consummate, industrial leader. Of course, others have known him far more than myself;

is this your own issue? subscr

ibe online at www.asiance

www.asianceramics.com

ramics.com

AC16-5

B U ILD ING TH E FUTU R E

BAN GLADES H SETS THE PACE

SEE INSIDE

EDITORIAL Publishing Director Andy Skillen Email: askillen@asianceramics.com Direct line: + 44 (0) 208 123 0196 Fax: + 44 (0) 207 183 7196

ADVERTISING AND DESIGN

IN FOCUS:

Iranian whiteware Kiln furniture demand cycles Gujarat sanit aryware Plus news, views and interviews

Sa i bo ost Tu rki shcm sa nit aryws are

“Ivanno Ligabue had the typical brilliance of a great generation of entrepreneurs coupled with a natural warmth and charisma that enabled him to build authentic human relationships based on respect and mutual esteem. And thanks to his charming, straightforward nature, he would frequently conclude a discussion or institutional event with a joke and a smile.” With these words, ACIMAC director Paolo Gambuli paid tribute to the well-known entrepreneur from Sassuolo who died on Wednesday, June 8th at the age of 67 after a long illness.

The founder and guiding force of the company LB and of ACIMAC, of which he was chairman during 19962000, Ligabue was one of the key players behind the rise of the Italian ceramic machinery industry, distinguishing himself as one of the most capable, brilliant and charismatic entrepreneurs in the Sassuolo district.

CONTACT DETAILS

IVANNO WILL BE REMEMBERED FOR THE ENORMOUS CONTRIBUTION HE MADE TO OUR INDUSTRY’S WORLD LEADERSHIP POSITION,

“Ivanno will be remembered for the enormous contribution he made to our industry’s world leadership position,” confirmed Fabio Tarozzi, chairman of ACIMAC. “We worked together for many years on the association’s executive boards, where he always enlivened discussions with his wit, intelligence and humour. He achieved great business success by being the first to understand that what our customers purchase is an idea for a finished product rather than just a machine. He helped the ceramic industry make a big step forward by focusing on constant innovation and the aesthetic value of products.”

All of us here at Bowhead Media ltd would like to extend their deepest sympathy to his wife Giovanna Ferrari, children Edoardo and Serena and son-in-law Emilio Benedetti.

Advertising Sales Paul Russell Email: prussell@asianceramics.com Direct line: + 44 (0) 208 638 0619 Valerie Adamson Email: vadamson@asianceramics.com Direct line: + 44 (0) 208 133 5273 Production and design Tim Mitchell Email: tim@bowheadmedia.com Direct line: + 44 (0) 208 123 0839

RESEARCH Research Manager Alex Murphy Email: amurphy@bowheadmedia.com Direct line: + 44 (0) 208 123 0839

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 Sri Lanka Rohan Gunasekera rohan@asianceramics.com

Andy Skillen Publishing Director

HEAD OFFICE Bowhead Media Ltd, 57 Oaks Avenue, Worcester Park, Surrey, KT4 8XE United Kingdom

Got a general enquiry? use enquiries@asianceramics.com

6

asian ceramics

AC 16-5

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

www.asianceramics.com

Digital System continues to grow • Ariane Fine Porcelain keeps on growing • Mechanised brick-making to domina “labour-intensive” industries • Summit organized to encourage investment • Toto doubts growth during 2016 • A RCG to expand large format tiles IRAN

Digital System continues to grow The presence of System process solutions on the Iranian market for digital tile decorations continues to show excellent rates of growth, with some of the company’s latest and notable clients including Persepolis Tile, Sadra, Narin, and Yazd Novin.

Persepolis Tile has installed 3 Creadigit machines for formats up to 60x60 cm, as well as an XL model for the decoration of large format tiles, the latter shipped out last February.

The ceramic companies Narin Tile and Yazd Novin have signed agreements for

the purchase of new Creadigit machines in addition to those already in use at their premises. Confirmation of the news came following positive results in levels of production efficiency and analyses of optimisation in the use of consumables, such as inks.

The ceramics company Sadra Tile has requested two Creadigit Standard models to upgrade their lines, which will operate alongside the other System printers already in operation. Also in this case, the request came following a performance analysis of the decoration systems used previously.

All machinery was produced with a highly personalised design in the System manufacturing headquarters in Fiorano Modenese and shipped to the clients' facilities in the production zones between Yazd and Maybod.

Meanwhile the highly specialised technical team from the System Iran branch, trained in Italy at the company headquarters, is ready on site and available to intervene directly on all production systems for assembly of the Creadigit machines, as well as start-up, technical assistance, graphics support and the supply of spare parts.

Iran is an impressive market, for decades seen as an attractive target for the System industrial group. In fact, the Modena company's presence here dates back to 1992. Local presence was strengthened further in 2012 with the opening of the branch, in Tehran, for which a new headquarters is now being set up, to improve and optimise services for clients.

The System Iran branch is now preparing for the Cerafair trade event, specially dedicated to the Iranian world of ceramics and sanitary ware, to be held in July at the trade fair centre of Tehran.

INDIA

Ariane Fine Porcelain keeps on growing Phase two is now under way for Ariane Fine Porcelain, the Indian company belonging to the Umberto Ceramics Group that is, just a few years after its start-up, already one of the most dynamic and cutting-edge protagonists in the country’s tableware sector. Following completion of the first phase of the project - which saw Sacmi play a pivotal role with the installation of a complete tableware manufacturing plant - the Group greenlighted a second investment plan that has resulted in the delivery of a brand new PCM 200 ND, a pressure casting plant capable of executing 30 production cycles per hour; this will allow the company to complete its product range, which caters to the high-end market, especially restaurant and hotel chains.

8

asian ceramics

AC 16-5

This Indian company’s decision to go with Sacmi stems from the multiple benefits of a technology that allows the manufacture of complex products, such as tableware with irregular shapes and edges, with all the assurances one expects from SacmiSama Maschinenbau pressure casting solutions. Once thought of as ‘pioneering’, this Sacmi Group-developed technology has, in fact, proven to be highly competitive for the production of all tableware items, including even the most complex items with customised design and aesthetics.

The advantages of Sacmi technological solutions also include ultra-fast size changeovers and high levels of process automation. More specifically, the supplied PCM 200 ND – like all the machines in the series designed and

built by Sama Maschinenbau, the Sacmi Group company specialising in this field - is characterized by compactness and outstanding automation: all casting and subsequent mould opening/article detachment phases are fully automated, thanks also to the unloading and deburring robot provided as an optional.

The special Sama-designed porous resin used to make the moulds renders the whole process efficient and flexible and allows for the installation of multi-cavity moulds according to size and type of article.

With no less than 35,000 square metres of manufacturing floor space and a plant that can, at full, capacity, produce 15 million pieces of tableware a year, Ariane Fine Porcelain aims to further strengthen its position in the ‘welcome' industry (hotels, restaurants,

retail etc.) both in India and on international markets. The medium-term goals of parent company Umberto Ceramics are, in fact, to export at least 60% of production while, at the same time, offering a highgrade response to demand on the internal market, where most high-end products are currently imported. In terms of output, the aim is to boost production from the current 15 million to 40-45 million pieces a year by 2020, thus opening up further penetration and growth prospects for Sacmi technology in Asia.

News, views and analysis www.asianceramics.com

www.asianceramics.com

ate • LIXIL reaches sanitaryware milestone • Chinese investment sought for ASAKI sees gas price as key to profits • RAK Ceramics continues to invest • MYANMAR

Mechanised brick-making to dominate Handmade brick companies are going out of business, starved of skilled labour and turfed out of expensive premises, industry experts say. Once popular with builders, handmade bricks are increasingly being replaced by machine-made products, particularly on large construction sides.

While customers often prefer handmade bricks, which are bigger and K10 cheaper, the machine-made variety is selling better, said Daw San Thawdar Thein, the owner of Pyi Kyaw, a brick, sand and construction materials shop in Dagon township.

Handmade bricks

disappeared from the market about three months ago,l leaving a clear field for factory-made bricks, whose price has apparently risen.

One reason for the collapse of the handmade brick industry is that Yangon City Development Committee ordered unregistered brick makers off its land, the owners of construction materials companies said.

“Almost all artisan brick makers were operating on city-owned land with no registration. There are more than 200 brick makers in Taikkyi township, but fewer than 20 were registered with YCDC. The city has now

remained the land for farming,” said Daw San Thawdar Thein.

The handmade product is also unpopular with environmentalists because of its effects on soil and the use of fire, she said.

Ko Sai Myo, who owns a building materials shop in Tarmwe township, said rising land prices were to blame.

“Producing handmade bricks takes up a lot of space. You need soil to make the bricks, which have to be fired up, and then you need storage space. Land these days is too expensive,” he said.

Brickmakers started selling up and found alternative work when profits fell, and machine

production became more efficient and profitable, said Ko Sai Myo. “Machinery can produce three times as many bricks as craftsmen. So some of the handmade brick makers went into the machine-made brick business,” he said.

Asian Ceramics

online and on-app... www.asianceramics.com

JAPAN

LIXIL reaches sanitaryware milestone LIXIL Group Corporation (“LIXIL”), a global leader in housing and building materials, products and services, is set to exceed one million units of the innovative SaTo (“Safe Toilet”) brand products in use within July this year. The first SaTo model was developed following funding from the Bill and Melinda Gates Foundation and launched in 2013 in Bangladesh, retailing for an average sale price of under US$2. SaTo products are now sold or in field trials in countries including Kenya, Uganda, Rwanda, Haiti, Philippines, and India, and have helped LIXIL enable access to safe and hygienic sanitation to approximately five million people.

By accelerating the

www.asianceramics.com

development and market penetration of innovative business solutions such as the patented SaTo products that reduce the transmission of disease and odors from traditional open pit latrines, LIXIL’s target is to enable improved access to sanitation and hygiene for 100 million people by the year 2020.

To support these efforts, a dedicated business unit has now been established within LIXIL Water Technology (LWT) to replicate the model and accelerate business development around the SaTo brand.

The business developing SaTo products will be headed by Vice President and General Manager, Jim McHale, formerly head of research and development at LIXIL’s American Standard

Brands and under whose leadership the SaTo products were originally developed. He is also joined by Daigo Ishiyama, Director of Product Design, who previously served as Senior Design Engineer at American Standard Brands in the U.S. and who was co-inventor of the first SaTo model.

LIXIL Group Corporation COO, Kinya Seto said, “As the global leader in the sanitary ware industry, LIXIL has a strong track record of applying our expertise in ceramics and sanitary ware solutions to the needs of emerging markets and help tackle the global sanitation crisis. Through these activities we have an opportunity to make a meaningful social contribution while also tapping into an emerging business 2 segment, and to play a role as a problem-

solver where our global network, expertise and experience can make a difference.”

Jim McHale added, “The innovative SaTo products are affordable, easy to install, and positively impact the lives of millions of people by improving comfort and reducing the spread of disease. By developing SaTo branded solutions as a business targeting long-term growth and profits, we will ensure the sustainability of this initiative, enabling LIXIL to continue expanding access to safe and hygienic sanitation to those around the world.”

The SaTo features a counterweighted trapdoor that fits over the hole in the concrete slab and allows waste to flow through, then sealing shut to keep out flies, other insects and odors.

AC 16-5

asian ceramics

9

News

BANGLADESH

Chinese investment sought for “labourintensive” industries Industries minister Amir Hossain Amu has sought Chinese investment in the priority sectors so the country could have a winwin situation in bilateral economic relations with China.

The minister put the proposal at high-level and bilateral meetings with Chinese officials in Kunming, the capital city of Yunnan province.

The industries minister, while addressing the meeting of the International Production Capacity Cooperation Forum at Kunming Intercontinental Hotel, also named some projects where China could invest.

The National Development Reform Commission (NDRC) organised the meetings on the sidelines of the 4th ChinaSouth Asia Expo 2016. The six-day annual flagship trade fair took place in Kunming in early June.

The main issue of the forum's

meeting was the consideration of building mechanism for bilateral cooperation on production capacity.

At the bilateral meeting with NDRC chairman Ning Jizhe, Amu said that Bangladesh is now ready to offer foreign investors necessary support, including land, power and lucrative investment incentives.

He also told the meeting that Chinese entrepreneurs could make investment in the sectors identified as "high priority sectors" and "priority sectors" by the government.

Among the high priority sectors are: agro-processing and agricultural tools and machinery industries, RMG industries, ICT/software industries, pharmaceutical industries, leather and leather goods industries, light engineering industries and jute and jute products industries.

The priority sectors include plastic industries, shipbuilding

industries, environmentally sound ship recycling industries, active pharmaceuticals, auto mobiles, energy efficient electric goods and cement industries.

Besides, Amu said that China would make investment in installation of a UF-85 (Urea Formaldehyde-85) plant at Natural Gas Fertilizer Factory and a new di-ammonium phosphate factory in Rangadia, Chittagong.

He also proposed that China could install three paper mills on the existing premises of the paper mills in Khulna, Rangamati and Pabna and an effluent treatment plant (ETP) in Karnaphuli Paper Mills Ltd (KPML).

The industries minister told the meetings that China could set up a clinker factory on the premises of Takerghat Limestone Mining Project (LTMP), Tahirpur, Sunamganj and a new leather factory in the existing Dhaka Leather Co.

INDIA

Summit organized to encourage investment A Vibrant Ceramics summit is being organized at the Sabarmati river front in Ahmedabad from December 16-18, 2016 to popularize the ceramic sector of India which is amongst the top 10 global producers and consumers of ceramic tiles.

Together with the support of Government of Gujarat and jointly with Morbi business associations, Octagon Communications and Global Network are organizing Vibrant Ceramics 2016.

The focus of this event will be on knowledge summit, ceramic expo and global B2B meetings.

Delegates from several countries have been invited at the event.

Vibrant Ceramics Expo and Summit 2016 will serve as a unique platform for bringing

10

asian ceramics

AC 16-5

together various segments of the Ceramics Industry including Vitrified Tiles, Wall Tiles, Floor Tiles and Sanitary Ware.

“VCES 2016 shall enable a lucrative networking and investment opportunity for SMEs as well as major players in the industry for its overall development,” said the organizers.

The theme of Vibrant Ceramics is MAKE IN INDIA, SKILLED INDIA, DIGITAL INDIA, CLEAN ( Swachh) INDIA and SMART (Cities) INDIA. According to a report, the global ceramic tiles is likely to reach 18,154.1 million square meters by 2018 signifying a CAGR of 8.9% over 2012-18.

Also, India is among the top 10 global producers and consumers of ceramic tiles, but not among the top 10 global

exporters or importers of ceramic tiles.

The Indian ceramics industry ranks at 8th position in the world and produces around 2.5% of global output. Today, it is among the top three countries globally for tile production and is aiming to develop further. The industry provides employment to 550,000 people, of whom 50,000 are directly employed.

The Indian ceramic tile industry is estimated to be of US$ 3.58 billion of which 40% is organized while 60% is unorganized sector.

Road shows for the success of Vibrant Ceramics Expo and Summit 2016 have been scheduled in USA, Saudi Arabia, Brazil, Oman, UAE, Poland, Latvia, Nepal, Sri Lanka and in some African countries

Savar, Dhaka.

Amu said the other areas where China could invest are insulator and sanitary ware, integrated biogas, bio-fertilizer and bakers' yeast plant, sugar refinery and agriculture machinery and tools factory.

He said Bangladesh and China could also cooperate in the setting up of joint venture with technology transfer and training of skilled workers in high-end product producing industries in textile and leather sectors, which would in turn lead to higher production capacity.

"Because of huge wage hikes of Chinese workers and scarcity of labourers in the labor-intensive manufacturing sector, Chinese enterprises can hire low-skilled and semi-skilled manpower from Bangladesh.

In addition, China can also relocate their labor-intensive industries to Bangladesh," he said.

News, views and analysis Subscribe to Asian Ceramics and get the inside story EVERY issue..

www.asianceramics.com

www.asianceramics.com

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

News

INDONESIA

Toto doubts growth during 2016 PT Surya Toto Indonesia, a subsidiary of Japan-based Toto Ltd., is doubtful its sales will increase this year after a decline in its first quarter (Q1) performance.

The sanitary ware company’s president director Hanafi Atmadiredja said the continued economic slowdown had hampered the company’s sales in Q1 and the figures would not change for the rest of the year.

“Growing our sales in Indonesia this year is a long shot due to the slow economy. People are saving on household furniture expenses,” he said during Toto Indonesia’s general shareholders meeting in Jakarta.

Toto Indonesia’s sales from January to March reached only Rp 538 billion (US$39.56 million), down 8 percent from the same period last year when the company generated Rp 585 billion.

Its domestic sales suffered a year-on-year decline of 7.3 percent to Rp 404 billion, while overseas sales fell 10 percent to Rp 134 billion.

Recognizing that his company was not likely to achieve growth this year, Hanafi aimed to achieve the same sales figures as 2015. “Achieving equal sales to last year would be more than enough for us.”

Last year, Toto generated revenue of Rp 2.28 trillion, a bounce of 11 percent from 2014.

Its domestic sales reached Rp 1.64 trillion, up 5.2 percent from 2014, while overseas sales were Rp 636 billion, up 29.2 percent from 2014.

However, Toto’s profits last year tumbled to Rp 285 billion, falling 3.6 percent from 2014.

Toto Indonesia was established in 1977 by Mardjoeki Atmadiredja, who has acted as president commissioner since 2013. The

company produces household goods like sanitary ware, fittings and kitchen systems. Hanafi said the company’s domestic market share was 70 percent, outpacing competitors like Renovo and American Standard.

With its declining business in the first quarter, in order to equal last year’s figure Toto has placed its hopes on a strategy of increasing product prices.

Hanafi said the approach, which was implemented in April, would not be a boomerang that reduced Toto’s sales throughout the year.

“Cutting prices will not increase sales, because the market is stubbornly low now. So we chose the other way — raising the price of most of our products by 7.5 percent,” Toto’s finance director Setia Budi Purwadi said, adding that Toto’s strong presence was also a key point in the strategy.

Despite its flat outlook this year, Toto Indonesia plans to increase production in following years, which is hoped to increase sales.

To achieve the long-term target, the company is cooperating with construction material distributor PT Surya Pertiwi Nusantara on building a plant in Surabaya, East Java.

The plant, with an investment of $29 million, is expected to finish construction by June 2017. It will have an annual production capacity of 300,000 products, adding 12 percent to Toto’s production volume every year.

Currently the company has three plants located in Tangerang, Banten, with a total capacity of around 2.1 million products annually.

“In the future, this Surabaya plant will also be our main producer, as there is a high possibility of area expansion,” Hanafi added.

INDONESIA

ASAKI sees gas price as key to profits The Indonesian Ceramic Industry Association (Asaki) estimates that production costs in Indonesia's ceramic industry could decline up to 35 percent now the government plans to lower the gas price for industrial usage.

Elisa Sinaga, Chairman of the Asaki, said Indonesian ceramic producers currently pay an average USD $9.1 per mmbtu (million metric British thermal units) for the ceramic production process, considerably higher than the gas prices that manufacturers pay in Singapore, Thailand, and India. This difference makes Indonesian ceramic products less competitive.

The gas price accounts for between 30 and 40 percent of total ceramic production costs in Indonesia. Therefore, stakeholders in the nation's ceramic industry were happy to learn that the Indonesian government planned to lower gas (and electricity) prices

12

asian ceramics

AC 16-5

for industrial usage in its third economic policy package (unveiled in October 2015), one of the series of policy packages designed by the government to boost overall economic growth. However, despite this announcement - and despite low crude oil prices - gas prices remained high in Indonesia's ceramic industry in both Q42105 and Q1-2016.

Through Presidential Regulation No. 40/2016, the government can lower gas prices for industrial usage if these prices exceed the USD $6 per mmbtu mark (this policy is effective per 1 January 2016). Whether the government indeed cuts gas prices in a specific industry will depend on several matters including domestic and international gas prices, domestic purchasing power, and the value-added significance of gas usage in a specific industry. The industries that are eligible to receive such a cut in energy prices include

the fertilizer, petrochemical, oleo-chemical, steel, ceramic, glass, and rubber gloves industries.

Asaki Chairman Sinaga says the lower gas price would not immediately trigger rising ceramic sales in Indonesia because these sales are dependent on a number of factors, including the performance of the country's property sector, overall economic growth, and interest rates for credit disbursement. However, a lower gas price would surely have a major positive impact on production costs of Indonesian ceramic producers.

Currently, production costs in Indonesia's ceramic industry are high - implying output is less competitive compared to ceramic products in neighboring peers - primarily due to the high gas price.

Whereas Singaporean ceramic producers pay USD $3 per mmbtu, Thai manufacturers

pay USD $3 per mmbtu, and Indian manufacturers pay USD $5 per mmbtu, Indonesia's ceramic producers pay an average USD $9.1 per mmbtu for the ceramic production process.

Regarding ceramic sales in Indonesia in 2016, Sinaga expects to see an improving performance supported by government-led infrastructure development and an improving property industry. Sinaga expects ceramic sales to reach between 170 - 180 million square meters in the first half of 2016. Last year Indonesia's ceramic sales were curbed by the continuation of the nation's economic slowdown, the sharply depreciating rupiah exchange rate, and the high gas price. These were reasons for various Indonesian ceramic manufacturers to (temporarily) close their business. In fullyear 2015 Indonesia's ceramic sales fell 30 percent to 360 million square meters.

www.asianceramics.com

News

INDIA

SRI LANKA

RAK Ceramics continues to invest glaze flow feedback control (Mass control) system. This provides manufacturers with personalised spraying parameters (glaze flow rate, spray aperture, misting) to suit the different models being coated.

Completing the order is a bartype conveying system. Bar conveyors ensure automatic loading and unloading of pieces at the 4-position carousel by way of an angular transfer unit with 3 electrical axes; the various working positions are controlled by an encoder and safety limit switches. Handling is invertercontrolled by the integrated production centre PLC. Lastly, the integrated production centre is Ethernet-interfaced to provide Sacmi-Gaiotto tele-assistance services.

TABLEWARE

Automation

Personalization

Developing Technical ceramics

Assistance Extruders Innovation Pressing Research Determined

Know-how Solving

Glazing preparation

Resolute

Drying

Ball mills

Know-how experience passion flexibility

Sanitaryware

3d project Manipulators

Passionate

Firing

Customized solutions

to to to to

Technology

Casting Forming

Key plants

Roller kilns

Direct

Stirrers

Serious

Moulds

Slip preparation

Robotics

Melting kiln

Glazing plant

Forceful

Shuttle kilns

Glazing robots

Tutboblungers

Quality

Finishing Shaping

Filterpresses

Tunnel kilns

TECHNICAL CERAMICS

TILES

Tiles

Case moulds Modelling

SANITARYWARE

thereby growing both topline and bottomline, making for an impressive balance sheet,” he told shareholders in the company’s annual report.

The ceramic tile and sanitary ware industries have been positively impacted by global oil prices falling sharply since the last quarter of 2014, helping the company and the industry to bring down production costs.

Perera said Royal Porcelain aims to commence manufacturing of the largest floor tile of the size 600mm x 1200mm once its new press is operational.

High tariffs on imported ceramic tiles and sanitary ware help provide protection to the local industry, analysts said.

Sri Lanka’s Royal Ceramics group aims to expand production of larger format tiles, which has helped it make higher profit margins as demand grows with a construction boom amid high import tariff protection.

Managing Director Nimal Perera said the group had made investments in the modifications, enhancements, and ongoing development of squaring and glazing lines and polishing lines and expansion project.

The upgrades had been done in Royal Ceramics, and its subsidiaries Royal Porcelain and Rocell Bathware plants.

“Our decision to introduce large format tiles to the local market . . . have already proved to deliver higher margins,

Worldwide

As part of the ongoing process of modernising and automating its sanitaryware manufacturing plants, the RAK Group has installed and started up a new robotized glazing line at its facility in Samalkot, Andhra Pradesh, India.

The new line quickly became operational, about two months after assembly work began.

Tested in October, it has, right from the very first day, provided excellent results thanks to the tried and tested self-learning system on the GA2000 robot, once again demonstrating just how easily and quickly spraying programmes can be set up.

The new glazing line consists of a 4-position carousel with an 8-axis Gaiotto GA2000 robot, interfaced with a

RCG to expand large format tiles

Tableware Pressure casting

support your growth every day create solutions tailored to your needs make your life easier follow you wherever you go

www.setecsrl.it www.asianceramics.com

AC 16-5

asian ceramics

13

News

International News Tile industry reports turnover increase

South Africa

Italy

T

he Italian ceramic tile industry has reported a positive 2015 with a turnover of 5.1 billion euros, 4.1% up on the previous year. Once again this strong result was driven by exports, which grew by 5.1% to 4.3 billion euros, 84.4% of total turnover. By contrast, domestic sales remained virtually unchanged at 799 million euros (-0.6%).

The figures unveiled by Confindustria Ceramica during its Annual Meeting showed growth in Italian tile output to almost 395 million sq.m (+3.4%), produced by 150 companies.

Total sales by volume reached 397 million sq.m (+0.6%), consisting of 80.3 million sq.m of domestic sales (almost unchanged with respect to the 80.8 million sq.m of 2014) and 316.6 million sq.m of exports (+0.9%).

The analysis of the trends in the various destination markets reveals that exports held strong in Western Europe, the main export market for Italian tiles (+1.9% in 2015 following the previous year’s 5.3% growth on the back of two years of contraction). The industry also marked up strong performances in the Far East (+14.3%), the

NAFTA region (+5.9%), the Gulf states and the Balkans (both +5%).

This contrasted with falling sales in Central and Eastern Europe (-17.3%), North Africa and the Middle East (-8.6%) and Latin America (-4.8%).

Another significant figure to emerge from the statistical survey regards investments. In 2015 the sector’s companies invested 351.3 million euros (up 22.7% on 2014 following a 27% increase over the previous year), equivalent to 6.9% of annual turnover. This was the highest figure since the year 2000.

Internationalisation of production The results achieved by ceramic factories located in Italy were complemented by those of the 16 companies operating abroad but controlled by 9 Italian groups. In 2015, the non-Italian production facilities, located mainly in the United States and Europe, produced 82.3 million sq.m (+6.6%) and generated a total turnover of 792.2 million euros (+9.8%), including 58.4% from operations in Europe and the rest from sales in North America.

Italian-owned companies located abroad generated 78.7% of their turnover from sales in the same market as the factory.

Tensions rise over import issues Morocco/Spain

C

eramists in Morocco have threatened to boycott the Spanish market due to the increasing amount of Spanish ceramics imports that threatens the local ceramics industries.

On June 13th, a press briefing was organized in Casablanca where the president of the Moroccan association of ceramists, Mohsine Lazraq, called upon authorities to take charge of the situation.

According to Lazraq, not all ceramics imports are declared, and the industry requires a more strict

14

Brick maker leads way in energy saving

asian ceramics

AC 16-5

control on customs.

Lazraq stated, “When comparing numbers between Spanish exports to Morocco and Moroccan imports from Spain, there is a large gap of more than 1,25 million m² of ceramics that have disappeared.”

According to regional media, members of the Association of Professionals in the sector have declared that they will no longer buy raw materials from the Spanish market, although they currently purchase 60% of their raw materials there. The president

S

outh African brick entrepreneurs are always looking for energy-efficient firing methods in order to carry out their day-to-day activities. A solution needs to be developed, while also taking into consideration the environmental regulations, increasing coal costs, and shrinking profits.

Langkloof Bricks in Jeffreys Bay currently burns waste tyres at 1200°C, to dry the clay bricks.

Thereafter, the bricks are fired with coal in the Vertical Shaft Brick Kilns (VSBKs). Langkloof Bricks currently receive about 25,000 tyres from the Recycling and Economic Initiative of South Africa (REDISA) per month.

REDISA supplies the tyres at no cost to Langkloof Bricks, who is paid a subsidy for every tonne processed.

The company currently uses the VSBK technology, which uses hot exhaust gasses for the gradual preheating of the unfired bricks in a continuous pr ocess. This reduces energy consumption and CO2 emissions by up to 50%, compared to the more commonly-used clamp kilns. According to the International Energy Agency’s 2015 report, the construction industry is responsible for 23% of the country’s greenhouse gas emissions (GHGs), with clay bricks predominantly still being fired in energy-inefficient and highly-polluting clamp kilns.

Langkloof Bricks is committed to reducing their environmental impact. Last year they were awarded at REDISA’s Inaugural Recognition Awards for their work and dedication to minimising their environmental impact through

environmental impact assessments and infrastructure development.

The company currently employs 130 permanent staff and has the capacity to process over 40 million bricks annually.

“At REDISA, when we talk about sustainability, we don’t only focus on reducing carbon emissions - we also think about our impact on other natural resources and how we can increase the life cycle of some of these resources. This is what drives our business and what we would like everyone to implement in their own businesses”, says Stacey Davison, director at REDISA. “Given that the world will be home to 5 billion middle class consumers within the next 20 years, natural resources are being placed under increasing stress to meet housing, product and lifestyle demands. To reduce this pressure, REDISA has realised that waste should be looked at differently - not as waste but as something with value,” says Davidson.

“We believe the VSBK technology has fundamentally improved the way many clay brick manufacturers think about production, from an economic, social and environmental perspective. We also see this as an opportunity to continue to minimise our impact on the environment, by reducing and transforming waste into a resource, in addition to contributing towards energy efficiency, air quality and climate change through the successful implementation of our technology,” says Nico Blake, Executive Director at Langkloof Bricks.

of the Association added, “We have consulted with other supplier countries and as soon as we judge appropriate, we will no longer be supplied from Spain.”

This decision is due to the low prices of imports that trump those of local ceramists, which is an example of Spanish artisans conducting the dishonest practice of dumping. The president of the

Association stated, “If Spanish and Moroccan authorities impose no measures to stop the dumping, we will have no choice but to respond with radical decisions.”

With the risk of losing tens of millions of euros, Spanish authorities are expected to increase measures to help the Moroccan ceramics market reduce Spanish imports.

www.asianceramics.com

a brand to cover the future

BONGIOANNI

Leader in the construction of machinery for the heavy clay industry, with over 100 years of experience, Bongioanni supplies solutions projected into the future. Bongioanni Macchine and Bongioanni Stampi design machinery and production lines for claddings that provide the construction sector with materials characterised by high energy savings, high quality and refined aesthetics. Innovative solutions are tailored to suit every customer’s individual needs. Bongioanni covers all requirements, from raw material to the damp-moulded product, making it possible to obtain constant and high production capacity, respect of working safety standards and the supply of a complete aftersales service.

Bongioanni Macchine S.p.A. Macchine per Laterizio Via Macallè, 36/44 12045 Fossano (CN) - Italy Tel. +39 0172 650511 Fax +39 0172 650550 www.bongioannimacchine.com info@bongioannimacchine.com Certified company. REG. N° 815 UNI EN ISO 9001:2008

Stampi e Filiere Via Salmour, 1/A 12045 Fossano (CN) Italy Tel. +39 0172 693553 Fax +39 0172 692785 www.bongioannistampi.com info@bongioannistampi.com

News

EPA rejects brick industry appeal

NEWS IN BRIEF

United States

T

he Environmental Protection Agency has rejected industry requests to reconsider hazardous air pollutant standards covering the brick manufacturing industry.

The agency rejected a petition filed by the Brick Industry Association, which claimed that reconsideration was necessary for several reasons, including an alleged failure by the EPA to give proper notice that it planned to change its method for calculating the minimum stringency of standards for emissions of nonmercury metals and the allegedly incorrect use of tests conducted below capacity in setting revised maximum achievable control technology (MACT) floor standards.

The regulation, commonly known as Brick MACT, was estimated by the agency to cost industry $64.6 million in capital investments and $24.6 million

in annual compliance costs. In addition to seeking administrative relief, the Brick Industry Association filed a lawsuit in the U.S. Court of Appeals for the District of Columbia Circuit and said it intends to challenge the agency's non-mercury metals standards and other aspects of the rule (Sierra Club v. EPA, D.C. Cir., No. 15-1487, statements filed 1/28/16; 21 DEN A-2, 2/2/16).

EPA Administrator Gina McCarthy informed the Brick Industry Association of the agency's decision in a May 12 letter. The scheduled May 18 publication of a notice announcing the agency's decision will open a 60-day period for legal challenges, which can only be filed in the D.C. Circuit.

Clay Issue to Be Revisited The EPA also issued decisions on petitions for reconsideration of

standards covering clay ceramics manufacturing facilities that were filed by Kohler Co. and the Tile Council of North America Inc. While the EPA rejected most requests for reconsideration, the agency will revisit the rule's stack temperature monitoring requirements in response to a request from Kohler Co., a Wisconsin-based company that manufacturers tile along with furniture, plumbing products and other goods.

Kohler said in its petition that the EPA's final rule changed the parameters for measuring compliance with limits on emissions of dioxins and furans without offering parties a chance to comment on the change. The company is challenging the EPA's clay ceramic manufacturing standards in the D.C. Circuit and has highlighted the stack temperature limits as an issue it intended to litigate.

Anewair-conditioningsystemfor a 5,000 square metre moulding room complete with “spagless” type plaster benches and a predrying area for pieces introduced straight after demoulding is currently being installed at the American Standard Group’s factory in Mexico City. The system was commissioned from Marcheluzzo Impianti, a wellestablished brand in the heavy clay machinery sector which recently expanded its operations into the ceramic sanitaryware market. The system consists of five air treatment units with indirect gas heat exchangers and one high-pressure humidification stage.

The dedicated ventilation and ducting technology is integrated into the casting benches to extract the mist created during the dewatering phase. This prevents moisture from spreading through the room and improves working conditions for operators.

Raw Material News DIATREME ON TRACK TO SECURE APPROVAL Australia // Zircon The environmental approval for what is potentially the Eucla basin in Western Australia’s largest undeveloped zircon project is expected by the end of June.

ASX-listed Diatreme Resources reported that Western Australia’s Environmental Protection Authority (EPA) had issued draft conditions relating to its Cyclone zircon project’s environmental approvals. Diatreme subsidiary Lost Sands had five working days from May 20 to comment on the draft report, following which the EPA would prepare a final report for the Western Australian Environment Minister for the grant of the licence. “Project environmental approval will mark the final step in our flagship project’s derisking process, which has included securing an agreement with the traditional owners, the award of a mining lease, identification of suitable water supplies and the expansion of the project’s

projected mine life following the acquisition of the adjacent Cyclone extended heavy mineral resource,” said CEO Neil McIntyre. In December, Diatreme announced a significantly increased reserve estimate for the Cyclone project of 140-million tonnes, at 2.5% heavy minerals, containing 3.5-million tonnes of heavy minerals with one-million tonnes of zircon. A definitive feasibility study is under way, after a prefeasibility study (PFS) in 2012 delivered positive results.

The PFS estimated that the $223-million Cyclone project could mine ore at a rate of ten-million tonnes a year for ten years, yielding about 147 000 t/y of zirconrich heavy mineral concentrate. Its zircon production was estimated to be 65 000 t/y. The PFS returned a net present value of $194-million and an internal rate of return of 32%, with a payback period of 2.1 years.

ILUKA TO RAISE PRICES Australia // Zircon Iluka Resources Co., Ltd. announced that it will increase zircon sands price to $1,010 per ton since Q3 during the recent Ruidow International Zircon Conference 2016. New price will be increased by $60 per ton up from $950 per ton in Q2. However, it was believed that the real deal price in Q2 was about $50 per ton lower than quoted prices.

As zircon sands has fallen to the low level in 2010, in light of current reduced supply and customer’s falling sands stock, Iluka thinks it is necessary to adjust its sands price.

16

asian ceramics

AC 16-5

Downstream users at the conference said sands price dipped a bit in Q2 and they would wait to see because of current weak demand and purchase wills from their customers.

Industry participants said that sands price could gain a technical correction as long as RBM, the second largest sands supplier, follows suit.

Indeed, in that situation, the lowest prices could actually rise slightly overall and there could be something of a rebound. RBM did not comment on the possibility, however.

www.asianceramics.com

News Anaylsis

News

18

asian ceramics

China slowdown continues to concern

X

ia Xiaokang and Bruno Chen, who both run private-sector companies, are the sort of businessmen that Chinese leaders are increasingly concerned about as economic growth slows.

Beijing is counting on the private sector to invest more in the economy and take up the slack as the government tries to engineer a shift away from largely state-run heavy industry to more entrepreneurial and services-led growth.

Unfortunately, just when China needs the private sector to step up, they look to be stepping back.

“We plan to downsize our business rather than expand,” said Chen, who runs Ningbo Tengsheng Garments Co in the coastal export hub of Zhejiang province in eastern China.

“We cannot feel any improvement in the economy,” he said.

Xia, general manager of Wenzhou Kingsdom Sanitary Ware Co some 400 km (250 miles) from Shanghai, similarly lacks confidence in the economy.

“We have hardly made any fixed-asset investment since last year and we now plan to rent out part of our factory building because it’s too big,” he said.

After March data suggested that economic activity was finally picking up after a long slowdown, April figures released at the weekend suggested otherwise.

Overall investment, factory output and retail sales all grew more slowly than expected.

Private-sector investment for January to April grew just 5.2 percent, its weakest pace since the National Bureau of Statistics (NBS) started recording the data in 2012. More worrying, privatesector investment is decelerating sharply from rates near 25 percent

AC 16-5

in 2013, to just 10 percent last year and now just over 5 percent.

The reason policymakers are so concerned is that private-sector fixed-asset investment, which includes land, equipment and buildings, accounted for more than 60 percent of overall investment in January to April. The sector provides a third of all jobs in China and creates 90 percent of new urban jobs, state media have reported.

“Because the total amount of private investment is relatively large, its continued slowdown could restrain stable growth, and requires a high degree of attention,” the NBS said on Saturday after it released the latest economic data.

The private sector is key to China’s economic future, economists say.

Big Chinese state-owned enterprises (SOEs) hog bank loans and hold most of the country’s fixed assets, but economists say the swarm of mid-sized private companies are the primary source of investment, innovation and productivity growth.

They are crucial for Beijing because such firms are seen as more efficient users of capital, in sharp contrast with the inefficient state-owned sector.

“Weak private investment is a fundamental problem,” said a researcher at the National Development and Reform Commission, the top planning agency. He declined to be identified as he was not authorized to speak publicly to the media.

“We still need to unleash vitality of enterprises and manufacturers to help stabilize the economy.”

Private surveys show downward pressure on wages as factories shed workers.

Chen said his company, with a workforce of 160, exports mostly

to Europe. China’s textiles industry has been hard hit by slackening global demand, which has not been offset by rising domestic demand.

Xia said his clients in Russia and Venezuela have been impacted by falls in their local currencies and conflict in parts of the Middle East have left his customers in that region very cautious. Europe is steady and he was optimistic about Southeast Asia, he said.

“Interest rates are low, but investment is declining, which shows that the overall market – domestic and overseas market – is not good,” he said.

All pain, little gain

Government efforts since last year to stimulate the economy have been designed to cushion slowing growth and limit unemployment.

Economists said the efforts naturally targeted the public sector, but they have done little to resolve the challenges facing private Chinese firms, in particular weakness in manufacturing, where much of the private sector’s pain is concentrated.

Indeed, state-sector fixed-asset investment in January to April rose 23.7 percent from a year earlier.

“Government spending is targeting sectors that advantage SOEs,” said Tim Condon, economist at ING in Singapore.

“So there’s less insulating, less boosting to the private sector in the face of what are pretty stiff shocks.”

While investment has been flowing into services and out of manufacturing, much of the most valuable parts of the services sector – telecommunications for example, or healthcare – are either protected or heavily regulated in favor of state-linked companies.

At the same time weak global demand has taken a particular toll on private Chinese firms.

www.asianceramics.com

Analysis: Whiteware

OUT FROM THE SHADOWS IRAN ALL SET FOR A MAJOR PLAYER

Yogender Malik looks at how Iran’s sanitaryware and tableware sectors are preparing themselves for an open, more easily traded future…

O

vershadowed by the gigantic ceramic tile industry of the country, the Iranian ceramic sanitary ware and tableware production has not been able to achieve its true potential in past few years. Slowdown in domestic economy, lack of requisite capital, limited export potential due to inability product differentiation by producers and lack of state-of- the art technology has hampered the development of these two sub-segments of our industry for quite long in the country.

A number of ceramic tile producers have gone for capacity expansion and modernization exercise in past few years.

However, in sanitary ware and tableware sub-segments, this exercise was limited to a select few. With easing of sanctions, existing producers from these domains and new entrants are waiting on the sidelines and are expected to emulate the tile producers.

Currently, a major portion of sanitary ware and tableware exports are largely driven by re-exports from resellers and traders based in the UAE, but the easing of sanctions will enable producers to start building official supply ecosystems in Iran, ultimately leading to a spurt in exports. The U.A.E., particularly the port of Dubai, has long been an important trade conduit for

20

asian ceramics

AC 16-5

Iran in the region. Iran’s imports from the Gulf region amounted to around $35 billion last year, the bulk of which were exports from the U.A.E. that were imported via Dubai, according to figures from the Washington-based Institute of International Finance. Globally, the U.A.E. is one of Iran’s largest trade partners alongside India and China.

Western economic sanctions against Iran caused Iran a great deal of problems during the past few years. Embargoes crippled Iran's export and import and led to the freezing of Iran's assets in foreign banks. This both heightened pressure on domestic producers and created a sense of insecurity among foreign investors, thus, making them reluctant to join Iranian projects. In recent months , a large number of foreign companies have lined up clamoring for access to Iran's 80-million strong market. A large number of MoUs have been signed between domestic and foreign firms. Though, ceramic sector has yet to witness a MOU or foreign investment, but in coming days such a move cannot be ruled out.

Three outstanding factors are responsible for the unabated expansion of the Iranian ceramic sector: an abundance of raw materials, inexpensive energy sources and a youthful population – more than half of Iran’s 80 million inhabitants are under the age of thirty five.

www.asianceramics.com

Analysis: Whiteware

Ease of doing business

During the past few years, Iranian ceramic producers had to purchase some of the key raw materials at exorbitant prices, due to a lack of legal channels for remitting and reimbursing funds. In addition, they had to pay high interest rates on loans. They had to pay heavy brokerage expenses, as way to bypass sanctions, to transfer money to the import destinations. This had decreased their competitiveness in international markets to some extent, when compared to many of their regional counterparts.

Lifting of sanctions will enable a number of sanitary ware and tableware producers to get access to some of the key imported raw materials and technology in an easier manner, as compared to an year ago period.

Material machinations

Iran is endowed with vast resources of most of the raw materials needed for ceramic sanitary ware and tableware production. In last few years, specilaised raw material processing enterprises have emerged in the country, which have enabled ceramic producers to enhance their quality standards. In fact, country’s raw material availability and high quality standard of raw material puts its ceramic manufacturing industry ahead of other countries in the GCC region.

Currently kaolin is available in abundance from mines located at Abadeh, Gonabad, Koshk-e-Nosrat, Marand, Sarum, Takestan and Zonuz; Feldspar from mines at Azna, Boroujerd, Yazd and Zanjan. Hamadan province is a rich source of silicate. Ball clay and sodium silicate are ample available in province of Isfahan.

www.asianceramics.com

Sanitaryware in focus

Benefiting from one of the lowest production costs in the region, a long ceramic tradition, a large and trained workforce, a strategic location within the Middle East, adoption of stateof-the- art technologies and easing of crippling sanctions has made Iranin ceramic industry as center of attraction for global ceramic industry. Domestic producers, which for long were busy in catering to dpmestic market have started exploring geographically distant export markets. Post lifting of sanctions, Iran, one of the largest and most heavily populated countries in the Middle East has emerged strongest contender for the regional manufacturing powerhouse tag.

The country has a developed and distinct economic structure in a strategically important region with more than 300 million consumers. Construction sites and cranes can be seen almost everywhere in Tehran. Many new buildings are under construction and older ones are being renovated.

AC 16-5

asian ceramics

21

Analysis: Whiteware

Sanitary ware production, consumption, imports and exports in Iran in last 10 years Year

Installed Capacity (Tons)

Actual Production (Tons)

Domestic Consumption (Tons)

Imports (Tons)

Exports (Tons)

2015

168,000

NA

NA

NA

NA

2014

143,000

121,000

126,000

14,200

19,200

2013

135,000

118,000

122,200

12,900

17,100

2012

126,000

106,000

104,900

13,700

14,800

2011

124,000

101,000

104,400

15,500

12,100

2010

116,000

96,000

100,300

18,000

13,700

2009

109,000

89,000

93,500

19,000

14,500

2008

102,000

85,000

94,000

22,000

13,000

2007

97,000

83,000

93,000

27,000

17,000

2005

81,000

67,000

79,000

24,000

12,000

With sanctions lifted, more constructions in commercial and residential sector are expected to give a boost to sanitary ware demand and production. In fact, easing of sanctions against Iran could see the Iranian sanitary ware and tableware become the fastest-growing market in the Middle East and Africa (MENA) over the next five years.

Catered by about 20 large and mid-sized sanitary ware producers, Iranian sanitary ware industry is at a crucial crossroad. Whereas, in last decade, the Iranian sanitary ware industry has transformed itself from ramshackle state backed enterprises to some of the best state-of-the art manufacturing plants, which not only meet a lion’s share of domestic demand, but, have also emerged as significant exporter in the region. Economic turbulence in the region (which has forced sanitary ware producers in the region to operate at low capacities), Iranian sanitary ware producers are in an ideal position to capitalize on the opportunity of meeting the demand of domestic industry, but also increase its footprints in the wider regional market in an increasing manner.

Currently, Iran is largest exporter of sanitary ware to war devasted and under construction markets of Iraq and Afghanistan. Besides, these two markets, Iranian producers export their products to some of the CIS markets. However, with easing of sanctions and increased access to some other key regional markets of GCC countries will be a lucrative option for Iranian sanitary ware producers. Among the GCC countries, Iranian producers have their presence in UAE and to some extent in Oman, which has the closest political relationship with Iran of all the Gulf States.

22

asian ceramics

AC 16-5

The distribution of the Iranian sanitary ware industry’s production costs between the major categories of raw materials, energy and labour amounts to approximately 41%, 17% and 42% respectively.

This cost distribution gives the Iranian sanitary ware industry a strong cost advantage over most of its major international competitors, since most of the required raw materials can be obtained relatively cheaply from domestic sources and domestic labour costs are also comparatively low. Whereas the cheapest Italian sanitary wares sell at about $9.50 per kilogramme, the price of the most expensive Iranian-made products is about $3.00 per kilogramme.

Although the Iranian industry still has difficulties matching its Italian, French, or American competitors in terms of quality, the price advantage should help it overcome this weakness in neighbouring countries. The deployment of more modern machinery and the increased use of some imported raw materials could even open the door for increased exports to more competitive markets in Europe and elsewhere.

Cord Group

Comprising of two sanitary ware manufacturing units, Cord Group is the leading sanitary ware producer in Iran. Chini Cord and Zomorrod Ceram, the two subsidiaries of the company have established themselves as one of the most reputed producers on the strength of their quality products. Chini Cord, the larger of the two companies was established in 1994 in western part of Iran in the city of Kermanshah, the company has an installed capacity to produce 18,000 tons (about 1.35 million pieces) of ceramic sanitary ware every

www.asianceramics.com

Smart Manufacturing Interconnected Automated Solutions

HUMAN AND DIGITAL

Process Analysis Human-Machine Interface Digital Industrial Design

We have explored and observed the world to create a new manufacturing idea, where human knowledge and assets join with virtual intelligence: System 4.0.

The path to digitization takes shape starting from process analysis - the heart of the change underlying “smart manufacturing�.

We have decided to pre-empt the future by developing state-of-the-art solutions, for a flexible, connected and global industry, where man-machine interaction is at the centre of our activities.

FOLLOW US! TECNARGILLA 2016 HALL 1A

www.system-group.it

Analysis: Whiteware

year. Zomorrod Ceram, the second sanitary ware producing unit of the company has an installed capacity of 10,500 tons/ year ( 850,000 pieces) from its manufacturing facility in Hamadan city.

MORE THAN HALF OF IRAN’S 80 MILLION INHABITANTS ARE UNDER THE AGE OF THIRTY FIVE

Golsar Fars

The last expansion in 2011 saw installing a new kiln( supplied by Sacmi). The shuttle kiln features a total volume of 75 cubic meters in its two-deck configuration, and joins a kiln of the same model, which Golsar installed in 2008.

The kiln contains six 6-m-wide cars, each of which can be loaded with up to 40 pieces, such as one-piece WCs weighing up to 40 kg each. In addition, this kiln features a fire-lane system, in which burners located alongside the pieces to be fired are used in conjunction with the main burners placed underneath the loading decks. The incorporation of two vertical lift doors and an automatic car handling system reduces space requirements and simplifies kiln management.

Golsar Fars uses the kiln for the first firing and re-firing of both the normal mix of sanitary ware articles and one-piece water closets, as well as to fire-fix decal transfers onto sanitary ware.

Tableware focus

As the largest in the Middle East region, Iranian ceramic tableware industry could not have asked for better times. Confined to exporting most of their tableware in the region, Iranian ceramic tableware producers are optimistically looking towards European and American markets, after lifting of the sanctions.

Large business delegates of Italian, German and other European nation companies have visited the country in last nine months to explore business and trading possibilities in the Persian gulf. Though, no final announcement have been made, but some of the ceramic tableware producers are considering OEM proposals. Three of the major tableware producers, Asian Ceramics spoke to on this aspect declined to share the details of these possibilities.

Zarin Iran Porcelain Industries

One of the best known porcelain tableware producers, Zarin Iran has made a niche for its products in the domestic and exports markets.

Exporting fine porcelain products to more than twenty countries in premium and economy range, Zarin Iran boasts of the state of the art technology deployed at its plant, which has an installed capacity of 8000 TPA. Winning various awards at national and international stage, Iranian company claims that its Italian A Golestan design is the most famous and recognized design and has played an important part in company’s success. The company claims that focus on the production technology and quality has been the enabling force for the company. The company closely follows the market trends and needs in terms of functionality and design. Zarin Iran has carried out several extensive studies to carry out expansion plans and are waiting for right time for the expansion. The company is expected to take a call on its expansion exercise in next few months.

With its manufacturing located at Isfahan ( also Esfahan), Zarin Iran’s main outlet on the Esfahan- Tehran highway draws a number of visitors and is one of the most visited tableware outlet in the country.

According to Abbas Ali Ghassai, Chairman and Managing Director of the company, “Zarin Iran Porcelain Industries produces 8000 tons/ year fine hard porcelain tableware which is one of the largest actual installed capacity of ceramic tableware in the country.” He further says “High quality of our products have enabled us to successfully penetrate European and North American markets besides catering to our domestic market. Our major export market in the recent years have been; Canada, Germany, Spain, France, Italy, Sweden, The

24

asian ceramics

AC 16-5

Major Sanitary ware Producers in Iran Company

Location

Capacity

Cord Group ( Chini Cord & Zomorrod Ceram)

Kermanshah

24000 TPA

Shiraz

18,000 TPA

Yazd

12000 TPA

Sina Tile and Ceramic Industries

Tehran

14000 TPA

Aras Sanitary ware Industry

Tabriz

8000 TPA

Mina Sanitary ware Industries

Tabriz

10000 TPA

Pars Ceram

Varamin

14000 TPA

Pardis Chini

Tehran

6000 TPA

Negin Ceram

Yazd

6000 TPA

Kasra Ceramic Company

Yazd

6000 TPA

Chininam

Yazd

6000 TPA

Esteghlal

Yazd

4000 TPA

Rose Sanitary ware

Yazd

6000 TPA

Aras Sanitary ware Company

Tabriz

8000 TPA

Golsar Fars Morvarid Sanitary

Netherlands, Russia, Turkey, Ukraine, Azerbaijan, Georgia, India, Saudi Arabia, UAE and Iraq.”

Ashkan Chini

Coming up in the boom years of Iranian economy ( 2000-2007), Ashkan Chini has made a place for itself in Iranian ceramic tableware industry. The company with an installed capacity of 7500 TPA claims to have one of the most technologically advanced plant in the country. Supplied by Sama, German arm of Sacmi Group, the state of the art plant was installed in two stages. The second drier and kiln came into operations in 2009.

According to the technology supplier for the plant “ From a

www.asianceramics.com

www.sitibt.com

Analysis: Whiteware

technological standpoint , Ashkan Chini plant represents a marked level of innovation compared to the usual standards in the area, especially as regards the innovative spray drier processes, iso-static press, pressure casting and fast firing.”

Toos Chini Hard Porcelain

With an installed capacity of 22000 TPA of ceramic tableware, Toos Hard Porcelain is the largest porcelain tableware producer in the Middle East. The company, which commenced operations in 1991 with a production capacity of 4200 TPA in Mashhad. Spread over a total area of 260000 sq. meter and 74500 sq. meter functional premises, the company has the largest fcatory area for a tableware producer in the Middle East.

The company has attained a stable position in tourism and hospitality industry in the world by designing and producing tableware for hotels, restaurants, private organizations, government departments with their exclusive logos. In the last expansion in 2011, Toos Porcelain added bone china in its product portfolio. The company has an installed capacity to produce 4000 TPA of bonechina tableware.

Claiming to have a 25 % share of the domestic ceramic tableware market, Mashhad based company attributes its success to in house design, modeling, printing house and advanced laboratory.

It also claims to have one of the most extensive decal designing and printing department in the Middle East, where its design team carries out studies in order to find out what are the most wanted decals by local and global markets and has created more than 500 of decorative decals.

Maghsoud porcelain

Maghsoud Porcelain, which commenced production of ceramic tableware in 2002 with an installed capacity of 3500 TPA is an umbrella organization for half a dozen other companies. Besides porcelain, the company produces bone China and opal glassware and fireproof glass (Pyrex) tableware with brand names is Iropal & Irex. Installed capacity of ceramic tableware was increased to 6000 TPA in 2008. Sepideh Jam Toos, the glass tableware company of the group was established on 2007 with a production capacity of 70 tons/day comprising a variety of glass ware (white and decorated) which are fully tempered.

Maghsoud use full automatic production line and modern technology, fast firing kiln and iso static press. Dorst & Netech made Iso static press machine, kilns from Heimsoth ( Germany), Glazing machine from Voit and grinding machine from Lippert makes it most technologically advanced ceramic tableware producer in Iran.

Located at Saveh Industrial area of Kaveh, Espidar Porcelain is one of the mid sized tableware producers in the country. The company, which started with a modest 1100 TPA capacity at the time of its establishment expanded its installed capacity by more than double to 2300 TPA in 1996. Streamlining of operations and installation of state-of-the art technology in later years catapulted the company as one of the high quality tableware producers in the country.

Mohammad Jamalian, Managing Director of Espidar Porcelain is optimistic about the great potential of Iranian ceramic table ware industry after lifting up of sanctions, particularly exports. He says “ Iranian producers have the twin advantage of low cost of production and high quality of finished products. With easing of sanctions, Iranian producers will be able to achieve more exports to Middle East and European countries.”

asian ceramics

Year

Production

Consumption

Exports

2014

97,205

65,780

39,398

2013

91,646

64,200

35,211

2012

87,349

63,296

29,156

2011

87,745

66,718

26,345

2010

84,956

66,167

23,076

Major tableware companies in Iran Company

AC 16-5

Location

Nastaran Porcelain

Tehran

Chini Hamid Company

Tehran

Chini Hamgam

Tehran

Milad Chini Company

Tehran

Mahdi Porcelain Company

Yazd

Marjan Porcelain Company

Qazvin

Eshfahan Porcelain Manufacturing Company

Espidar Porcelain

26

Ceramic Tableware production, consumption and exports in Iran

Khazar Porcelain Industries

Esfahan Rasht Industrial City

Hamgam Chini Company

Tehran

Kashan China Company

Tehran

Nour Chini Company

Tehran

HYS Abhar

Tehran

Bargh Avaran Gilan Porcelain Company

Rasht Industrial City

Alborz Porcelain Company

Tehran

Taghdis Porcelain Company

Tehran

Milad Chini Company

Tehran

www.asianceramics.com

Analysis: Bangladesh

SH: a rising star that needs investment?

Jahir Ahmed discusses how the Bangladesh tile industry has emerged from a simple base to become an extremely attractive investment option in Eastern Asia.

I

n the early 1990s, when Dr. Khater Massaad, UAE’s RAK famed former CEO and industrial mineral investment expert, supervised exports of the newly created RAK Ceramics’ exports to the South Asia region, he was convinced that Bangladesh was emerging as a major market for the company. Soon he realized, Bangladesh’s cheaper indigenous natural gas could be ideal for production of tiles and sanitarywares for selling to the deficit domestic market.

The Bangladesh plant’s startup in 2000 experienced a unique success forcing him to stay in the Bangladesh market for ever after his retirement from RAK by promoting two joint venture plants, Star Ceramics Ltd for production of tiles and sanitarywares and Star Porcelain Ltd for manufacturing tablewares. “Bangladesh is a natural choice for ceramic production as it offers every option including a lucratively expanding domestic market.”

Both the Star units of Massaad became two highly successful stars in Bangladesh’s ceramic history. As soon as the Star Ceramics came into stream in 2013 with almost the same initial yearly production capacity of about seven million square meters of tiles and 350,000 pieces of sanitarywares that RAK had. Two years later, export oriented Star Porcelain also had a major debut. Massaad has major investment interests in the two plants that he leads as Chairman.

According to Bangladesh Ceramic Wares Manufacturers’ Association (BCWMA), Bangladesh currently has 20 tile producing units. Total production capacity is about 120 million sq metres per year.

Yet, Bangladesh has to import tiles to meet the deficit market of at least 20 percent. More plants are in the pipeline and waiting for green signal for gas connection. As the domestic gas production and transmission cannot cope with the market demand, the government has initiated import of LNG by setting up private sector LNG terminals.

Ceramic tile consumption in Bangladesh is growing faster by double digit despite slower growth of organised housing and construction sector. With a stable GDP growth of over six percent a year since mid last decade, the market has grown to around half a billion US dollars

28

asian ceramics

AC 16-5

a year as outlook for the next year, 2017, suggests. In fiscal year July 2016-June 2017, Bangladesh’s GDP is expected to expand by about seven percent, compared to six and a half percent of the current year.

As the domestic tile production capacity is rising rapidly, imports of tiles remains more or less stagnant at within US$70 million to US$80 million per year, and may rise to about US$100 million if the current slump in sales of residential apartments reverses with return of growth.

The rising economic trend, in a midst of slower investment situation due to political unrest, remains highly active in export sector, which is a major driver in consumer spending. Bangladesh Minister for Commerce, Tofail Ahmed, is firm that Bangladesh’s export earning will double to some US$70 billion by the next five years.

This indicates return of a stable and steady growth in the housing and building construction sector to push ahead the consumption of tiles. Ceramic is already a recognized high growth industry among the identified major thrust sectors. In five special economic zones, to be set up under the Bangladesh Economic Zones Development Fund, ceramic was given priority as one of the key industry sectors for growth and economic development.

Gas supply

When the gas supply is augmented, the planned tile factories will come up, said the sources in BCWMA. The government is actively working to augment gas supply from the domestic gas fields and with imported LNG. Bangladesh’s new and third seaport, Payra, located in the southern coastal district of Patuakhali and near the beach resort town of Kuakata, is being developed to facilitate, among others, imports of LNG from the Gulf countries, particularly, Qatar. The under construction Payra port is already in operation with some infrastructural facilities installed recently and being used by the coastal ships.

The Payra port, about 250 km from Dhaka, will be connected with the multipurpose Padma Bridge, about 50 kilometres south of Dhaka city, which will be opened for traffic fully at the end of 2018. The 4-lane road-railway Padma Bridge will have natural gas transmission pipeline

www.asianceramics.com

Analysis: Bangladesh

and power grid connector. The full-fledged port activities in Payra will start by 2023, said the Government. Bangladesh’s two other seaports are Chittagong and Mongla.

Like privately owned Chittagong LNG terminal, Payra will also have a privately operated LNG terminal linked with national gas grid. However, Padma Bride with a new road will facilitate gas pipeline up to Payra port from the national gas grid.

Natural gas continues to remain the main factor for viability of a ceramic plant in Bangladesh in competition with ceramic manufacturers of other countries. Bangladeshi manufacturers’ main advantage is based on cheaper gas and labour and protection of domestic industries by the government by imposing a tariff barrier with three digit import duty. The tile and sanitaryware manufacturers have an additional advantage because of deficit domestic market.

But, the cheaper price of the premier quality gas is the number one attraction to the investors in ceramic manufacturing. 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.

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 expand demand.

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 LNG terminal at Moheshkhali to the shore to connect with the Karnaphuli Gas Company systems.

The sources in the government said, Singapore-based Astra Oil and 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. Despite all this development projects, the tile manufacturers believe that they will have to suffer for another one to two years from shortage of gas that will ultimately raise production cost. The government is also raising gas prices frequently.

Besides shortage and irregular supply of gas, the tile manufacturers are worried about increased competition from the imported tiles because of increasing cost of production.

Moreover, they are facing pressure from the government to accept the gradual reduction of protection of the domestic industry, which will weaken competitiveness against the imported tiles.

Taxes and duties

After a long utilisation of tariff barriers on the imported ceramic products, including tiles, Bangladesh’s ceramic tile manufacturers are now faced with the government action of reducing import

www.asianceramics.com

barrier and increasing local tax on the domestically manufactured ceramic products.

Being a signatory to World Trade Organization agreement since January 1, 2005, Bangladesh is under pressure to withdraw existing tariff barriers to protect all existing ceramic manufacturers, including tile, sanitaryware and tableware factories. National Board of Revenue (NBR), under the Ministry of Finance, said the country is currently going through a discriminatory rate of protection.

The country’s Value Added Tax and Supplementary Duty (VAT&SD) Act 2012, due to be effective from July 1 this year. If effective, it will reduce Supplementary Duty on imported ceramic tiles to 45 percent from 60 percent now. It will also increase the duty on local production to 45 percent from 15 percent.

BCWMA is trying hard to convince that the country’s ceramic industry that has invested some US$1 billion in about 60 production units will be at risk as the country has no local raw materials. They also said the current rate is helpful in protecting local industry, and preventing import of substandard products from China and undervoicing. The import restriction should continue for some more years. It is not yet sure, what will happen, but the government plan for gradual reduction is almost definitive, according to the sources in the industry.

BCWMA also wants lowering of customs duty to 5 percent from 10 percent on import of different raw materials for ceramics, and reduction of regulatory duty to zero percent from 4percent on import of printing ink required in the industry and rescheduling of tariff value to prevent under-invoicing during imports. 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 ceramic wares, including tile, tableware, 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,” said Moynul Islam, Vice Chairman of Bangladesh’s leading tableware player Monno Ceramic Ind Ltd and Senior Vice President of BCWMA. Moynul said, “In countries like Turkey and India, they impose higher duty on import from China. Bangladesh needs similar policy,” he argued.

“Tiles and sanitaryware or heavy clay industries might have 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.

Meanwhile, the foreign investors are also lobbying to reduce

AC 16-5

asian ceramics

29

Analysis: Bangladesh

corporate tax. Foreign Investors’ Chamber of Commerce and Industry (FICCI) urged the government to reduce corporate tax in the next fiscal year’s budget, to be effective from July 1, 2016, to attract more foreign investment into the country.

The corporate tax for the companies, not listed in the stock market, should be reduced by 10 percent to 15percent to minimise the gaps between marginal tax rate and effective tax rate, according to the FICCI proposal submitted to the government.

Currently, the corporate tax rate for the non-listed firms is 35 percent in the country. The effective tax rate becomes 45 to 50 percent for the companies because of high disallowances on royalty fee and excess perquisites, it argued.

“The corporate tax rate is very high compared to the other countries including India where the rate is 25 percent,” said FICCI President Rupali Chowdhury, who led a delegation of FICCI that placed their budgetary proposals at a pre-budget meeting with the NBR earlier.

FICCI also urged the revenue board for following actual transaction value of imported goods for customs valuation instead of average price of last three months and sought protection for some local industries, including ceramic, in the backdrop of withdrawal of Supplementary Duty in import of those products under the new VAT&SD Act-2012.

In Bangladesh, over half dozen tile, sanitaryware and tableware plants, mostly tile producing units, are foreign investors owned.

Among them, RAK Ceramics of UAE and Lebanon-Bangladesh owned Star Ceramics are major tile manufacturers. The FICCI move is to make the foreign investment more competitive against other local manufacturers as well as imported products.

Widening gap

How is the import going on in face of challenges from the domestic manufacturers?

Production of tiles is enough competitive and offers maximum guarantee of earning profit and growth as all the local manufacturers are making good profits. But there is little progress in respect of minimizing cost of production and conserve energy and also have little R&D supports to have innovative designs, improved quality, cost cutting efficiency and capacity control in the event of slowdown.

Such weakness made them less interested in exports despite repeated efforts made by the government in keeping gas price at lower level compared to other Asian countries. Reduction of import duties on raw materials and protection of the markets by imposing barriers could not help make the local manufacturers competitive in the free market, where ceramic tablewares proved their mark, while tile manufacturers showed ther interest only in making money at a protected markets and selling the products to consumers at higher prices.

On the other hand, imports still remain a major stakeholder in domestic market as their manufacturers were able to become

30

asian ceramics

AC 16-5

cost efficient and innovative in designs and functionality. Not all imports are shipped from China and India. Up to 93 percent of the annual shipments of the imported tiles are almost equally shared by China and Thailand, according to the research data available with BCWMA and published in house. Despite higher input costs, Thai products are better cost efficient and driven away tiles supplied to Bangladesh from other exporting countries, while Chinese tiles enjoyed their usual market shares for certain qualities and prices.

According to BCWMA, imported tiles have about 20 percent market shares. Industry sources estimate that Bangladesh currently has a market of about 200,000250,000 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 110120 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 a single digit market growth of imported tiles in 2015 and 2016, the import requirement for 2016 may rise to around 200,000 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 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 continuously. Some of those are cheaper quality. Other import sources of tiles are Spain, Italy, Malaysia and others.

Among the tiles which are successfully substituting imports, RAK Ceramics Bangladesh products play a key role. However, the expansion of market demand had minor impacts on RAK for expansion, probably due to its strictness in maintaining particular quality. With setting up of new factories for tiles, the Bangladesh market leader RAK’s market share in value and quantity is gradually shrinking since last several years. The new and other

www.asianceramics.com

Analysis: Bangladesh

local manufacturers were able to create a niche market of their own, showing their ability to beat RAK and snatch market share.

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.

Export move

When almost everyone, including several foreign owned tile operators, are making money at the protected and high growth domestic markets of Bangladesh, a leading manufacturer of tiles and sanitrywares, Great Wall Ceramic Industries Ltd, is going to launch export of tiles. The company’s efforts have brought positive results for which its recent expansions was aimed at exporting a fraction of production. “A potential export market exists for our quality tiles,” Great Wall Managing Director

Shamsul Huda told Asian Ceramics.

Great Wall is going to launch its regular exports to different markets, including neighbouring regions. The company said its export quality homogeneous floor tiles are of 30.5cmx30.5cm to 60cmx60cm sizes. Wall tiles are 20cmx30cm to 25cmx40cm.

Rustic wall tiles, 20cmx40cm size and others. Homogeneous and porcillinito print 30cmx30cm to 60cmx60cm.

The manufacturer’s main machinery including kiln are supplied from Italy, Spain and China. It uses SACMI press, Modena kiln, SITI B&T spray dryer, EFI printing and Keda polishing. Imported rawmaterial sources are, China, India, Malaysia and Thailand.

Digital technology creating new possibilities for tiles industry in Bangladesh said Huda.

He said Great Wall is going to manufacture ‘double charge vitrified’ tiles that prints the pattern with a double layer of pigment, 3-4mm thicker than other types of tiles. “This process does not permit complex patterns but results in a long-wearing tile surface, stain resistant, sturdy and strong, durable and long lasting than low priced tiles imported from China and other regions. The double charge vitrified tiles are maintenance free, bacteria free, joint free, and there is no major color variation compared to other tiles,” he said.

Bangladesh’s organized ceramic tile manufacturers (members of Bangladesh Ceramic Ware Manufacturers’ Association - BCWMA).

Manufacturers

Year of startup

Factory location

Annual production capacity

Markets

Ceramic and porcelain tiles

10 million sq metres

Domestic markets. Plans export.

Products

1. Great Wall Ceramic Industries Ltd

2006

Gilarchala, Sreepur, Gazipur

2. RAK Ceramics (Bangladesh) Limited

2000

Mawna, Sreepur, Gazipur

Ceramic and porcelain tiles and sanitarywares

10 million sq metres

Domestic markets. Plans export.

3. Akij Ceramics Ltd

2012

Trishal, Mymenshingh

Ceramic and vitrified porcelain tiles

10 million sq metres

Domestic markets. Plans export.

4. Mir Ceramics Ltd

2003

Mawna, Sreepur, Gazipur, near Dhaka

Ceramic and porcelain tiles

9 million sq metres

Domestic markets

5. Fu-wang Ceramic Industry Ltd

1996

Hotapara, Sreepur, Gazipur, near Dhaka

Ceramic and homogeneous tiles

6 million sq metres

Domestic markets

6. China-Bangla Ceramic Industries Ltd

2002

Tarabo, Rupganj, Narayanganj

Ceramic and homogeneous tiles

6 million sq metres

Domestic markets

7. ATI Ceramics Ltd

2002

BK Bari, Vawal, Mirzapur, Gazipur

Ceramic and homogeneous tiles

5 million sq metres

Domestic markets

8. Madhumati Ceramics Ltd

1993

Ganda, Savar, Dhaka

Ceramic and homogeneous tiles

5 million sq metres

Domestic markets

9. X Ceramics Ltd

2010

Boherar Chala, Gilaberaid, Sreepur, Gazipur,

Ceramic and homogeneous tiles

4 million sq metres

Domestic markets

10. Hua Thai Ceramic Industry Ltd

2003

Hotapara, Sreepur, Gazipur, near Dhaka

Ceramic and homogeneous tiles

5 million sq metres

Domestic markets

11. Sun Power Ceramics Co Ltd

2003

Hotapara, Sreepur, Gazipur, near Dhaka

Ceramic and homogeneous tiles

6 million sq metres

Domestic markets

12. Dhaka Shanghai Ceramics Ltd

2002

Zirani Bazar Savar, Dhaka

Ceramic and homogeneous tiles

5 million sq metres

Domestic markets

13. Bangladesh Taiwan Ceramic Ind. Ltd

2005

Char Ramjan, Sanaullah, Sonargaon, Narayanganj

Ceramic and homogeneous tiles

4 million sq metres

Domestic markets

14. Star Ceramics Ltd

2015

Riaznagar, Baghasura, Madhabpur, Hobiganj

Ceramic and homogeneous tilesand sanitarywares

7 million sq metres

Domestic markets

2015

Boherar Chala, Gilaberaid, Sreepur, Gazipur, near Dhaka

Ceramic and homogeneous tiles

5 million sq metres

Domestic markets

Dhanua, Sreepur, Gazipur, near Ceramic and homogeneous Dhaka tiles

13 million sq metres

Domestic markets

Heavy clay tiles, roof tiles, pavers, ceramic bricks

30 million sq metres

Domestic markets

clay tiles, roof tiles, Dholipara, Khadimnagar, Sylhet Heavy pavers, ceramic bricks

See Mirpur Ceramic Works

Domestic and export markets

15. Monalisa Ceramics (Bd) Ltd 16. DBL Ceramics Ltd

2015

17. Mirpur Ceramic Works Ltd

2016

18. Khadim Ceramics Limited (KCL)

32

asian ceramics

1962 (incorp) See Mirpur Ceramic Works

AC 16-5

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

www.asianceramics.com

Analysis: Bangladesh STATISTICS OF BANGLADESH TILE SECTOR Stats: 1 Bangladesh ceramic tile sector’s position in financial year July 2014-June 2015. US$1=approx.Taka80.

Product: Tiles.

Number of industries

Annual production capacity

20

120 million sq metres

Investment in million Taka Employments (US$1=approx Tk.80) 17,000

Export in million Taka

Local sale in million Taka

Import in million Taka

Local consumption in million Taka

56

25,260

5,759.2

31,019.2

25,000

Market share in % Local products

Imported products

81.43

18.57

Source: BCWMA and industry sources estimates

Stats: 2 Trade in ceramic tile sector in Bangladesh. US$1=approx.Taka80.

Exports Financial year JulyJune

In million US$

Imports

Local Sales

Domestic market share

In million In million In million Domestic Bangladesh Growth in % Bangladesh Growth in % Bangladesh Growth in % consumption Taka Taka Taka

Local products in %

Imported products in %

2014-15

0.71

56.0

53.33

5,759.2

0.16

25,260.0

36.54

31,019.2

81.43

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

4,743.3

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

30.69

3,842.5

8,681.3

Source: BCWMA estimates

34

asian ceramics

AC 16-5

www.asianceramics.com

Analysis: Bangladesh

Unglazed tile imports HS Code

Product label

Imported value in 2011

Imported value in 2012

Imported value in 2013

Imported value in 2014

Imported value in 2015

690790

Tiles, cubes and sim nes, unglazed ceramics

25,515

30,224

24,892

31,459

25,622

690710

Tiles, cubes and sim <7 cm rect or not etc, unglazed ceramics

311

104

92

7,440

8,502

Sources: ITC, Geneva, calculations (estimated) based on UN COMTRADE statistics and UNSD estimates.

Glazed tile imports HS Code

Product label

Imported value in 2011

Imported value in 2012

Imported value in 2013

Imported value in 2014

Imported value in 2015

690890

Tiles, cubes and sim nes, glazed ceramics

11,220

24,563

31,465

50,832

26,816

690810

Tiles, cubes and sim <7 cm rect or not etc, glazed ceramics

246

24

624

350

1,567

Sources: ITC, Geneva, calculations (estimated) based on UN COMTRADE statistics and UNSD estimates.

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

Total GIIP in TCF

26

39.0

Proved (1P)

Proved + Probable (2P)

Proved + Probable + Possible (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

Bangladeshâ&#x20AC;&#x2122;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.

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

www.asianceramics.com

AC 16-5

asian ceramics

35

Analysis: Bangladesh

A tile maker’s thoughts Bangladesh’s leading tile manufacturer, Great Wall Ceramic Industries Ltd, is poised to become the creator of huge domestic demand and the country’s first ceramic tile exporter to cater the world market on a continuous shipment with a targeted significant year on year growth.

Great Wall’s Managing Director Shamsul Huda shares with Asian Ceramics his thoughts on certain key points stating that his company has been investing heavily to compete in the global market with quality products exploiting the benefit of the indigenous natural gas Shamsul Huda, Managing Director, Great Wall Ceramic Ind. Ltd supplied to the ceramic factories at one of the lowest price in the world that already helped the country’s ceramic tableware industry become an emerging global player.

“The Ceramic industries in Bangladesh have continued to expand since 1958 with the establishment of first ceramic industry, Tajma Ceramic Industry Ltd, manufacturer of tablewares. The industry grew faster to build up a production capacity of some 250 million pieces a year in the following decades with success in tableware exports. With the booming property business in the past two decades the tile and sanitaryware industries joined the spectacular drive of expansion raising the annual production capacity to over 100 million square metres of tiles and about three million pieces of sanitarywares from an insignificant quantity. Growing market demand boosted development of new factories producing high quality ceramic tiles. The tile industry is expanding continuously with its high quality, cost ratio and creative human resource base.

Emergence of Great Wall

“Traditionally, ceramic industry is a labor intensive sector and companies in developed countries experience difficulties in remaining competitive due to rising labor cost and recent global financial crisis.

Bangladesh, being a gas rich and having low-labor cost economy, is perfectly positioned to be a strategic partner in production and supply of ceramic tiles. In a quick span of time, our Great Wall Ceramic Industries Ltd has emerged as the country’s local ‘largest’ and ‘most respected premier tiles brand’ in Bangladesh. The company was incorporated in 2005 and started commercial production in November 2006.

Now we have potential for exports.

“The production capacity of our plant is 24,000 sqm per day. Our company manufactures tiles in a very wide range with aesthetic designed quality products at affordable price.

36

asian ceramics

AC 16-5

Our ‘GREAT WALL’ and ‘CHARU’ brands are exclusive wall and floor tiles with matching border and décor. Our company complies with the quality criteria of Bangladesh Standards and Testing Institution (BSTI) BDS ISO 13006:2006.

“The refined beauties of our tiles are now a popular option for everyday living both in urban, suburban and remote areas of Bangladesh. With Great Wall’s innovative design, the customers get the classic detailing and sophisticated look of tiles, along with the durability and easy care of the branded tiles in the South Asian sub-continent.

“Great Wall’s major machinery and equipment, including kiln, are procured from SACMI and SITI B&T of Italy, EFI of Spain, and Modena and Keda of China. Raw materials are imported mainly from China, India, Malaysia and Thailand.

Bangladesh’s quality and reputation

“As export manufacturer of quality ceramics, Bangladesh has certain reputation. The quality of products has helped Bangladesh to carve a niche in the global market; the manufacturers in this sector are taking risks while diversifying their designs and quality into worldclass standards. Furthermore, the natural gas that is used in the kilns of the Bangladesh's ceramic industry does not contain any sulphur and that is why the country's ceramic products look brighter and shiny.

“Digital technology is creating new possibilities for tiles industry. We are very glad to announce that we are going to manufacture ‘double charge’ vitrified tiles that prints the pattern with a double layer of pigment, 3 to 4 mm thicker than other types of tiles.

This process does not permit complex patterns but results in a longwearing tile surface, stain resistant, sturdy and strong, durable and long lasting than low priced tiles imported from China and other regions of the world.

“This double charge vitrified tiles are maintenance free, bacteria free, joint free, and there is no major

www.asianceramics.com

Analysis: Bangladesh

color variation compared to other tiles. Certainly, it will be a milestone in the history of Bangladesh ceramic tiles industry.

We think, this new entrant product types will be said to be the tiles of the future in Bangladesh.

Collaboration with Siam

“We are also delighted to announce that we have started ‘first’ international standard sanitaryware manufacturing plant in Bangladesh with the assistance of the best consultants from Europe and Asia. The plant is equipped with latest manufacturing machineries with the production capacity of 1.5 million pieces per year under the title of “CHARU CERAMIC INDUSTRIES LTD.” It will be remarkable in the history of Bangladesh sanitaryware industry that we are going to produce one of the most internationally recognized sanitary ware brand in Bangladesh with the technical collaboration of Siam Sanitary Ware Industry Co Ltd of Thailand.

Market demand

“Construction industry growth in Bangladesh coupled with rising demand for new residential structures in emerging domestic markets of Bangladesh due to urbanization is expected to drive market demand for ceramic tiles over the forecast period. Stringent environment regulations pertaining to carbon emissions caused during the production of ceramic tiles has forced market players to increase their R&D expenditure on eco-friendly products, which is likely to open new market avenues in the near future.

“Residential replacement was the largest application, accounting for more than 50 percent of market volume.

Growing demand for durable material coupled with rising awareness towards personal hygiene is expected to augment ceramic tiles demand in residential replacement over the forecast period.

Ceramic tiles today have become an integral part of home improvement.

It can make a huge difference to the way of interiors and outdoors look and express.

“Apart from their decorative looks, ceramic tiles are primarily hygiene products and that is how our broad spectrum of consumers views the product. This is fairly evident from its varied usage from bathrooms and kitchens in average Bangladeshi households to medical centers, labs, booths, schools, police stations, public conveniences,

www.asianceramics.com

shopping malls and numerous other centers.

The country's ceramic industry is now in a very good condition with the spread of housing business in urban, suburban and remote areas of Bangladesh and creativity over another potential market and having fewer competitors. As the construction industry, including residences, shopping malls, government development infrastructures and others, is growing so fast, the ceramic tiles business in Bangladesh is becoming one of the booming and prospective sectors.

The changing living standards, trends and rising disposable incomes of the growing middle class and 30 million units of housing shortage hold out a great potential for Bangladesh tiles Industry.

Government supports

“The government of Bangladesh has also promised to extend all sorts of cooperation to make Bangladesh the hub of ceramic goods production in the world. The government has already drawn a policy to prevent the import of low quality ceramic products having health hazard ingredients.

To discourage import of tiles and sanitaryware items to protect the local manufacturers, some tariff barriers exists in Bangladesh. Local and foreign investors find this highly lucrative to earn a guaranteed return.

“Moreover, the history of tiles business is not very old in Bangladesh. Still mosaic is popularly used in many urban and sub-urban households.

Other substitutes of tiles include wooden flooring or tiles, bamboo flooring, ply board, marble stones and other artificial stones for both interior and exterior usage. Hence, the availability and low cost of substitutes is exerting moderately competitive pressure on the existing companies of ceramic industry.

Local issues, dependency on imported raw materials

“Besides, the industry suffers due to irregular power and gas supply, high tariff on gas, high import duty on certain ceramic raw materials, high Value Added Tax (VAT) of 15 percent on produced goods, two digit interest rate on loan, double wages rate, recent decision of government to postpone to issue license for captive power generation, long waiting for new gas connection and the political unrest of the country.

“In Bangladesh there is shortage of raw materials for ceramic goods and the manufacturers are 100 percent dependent on import of raw materials from overseas.

Close competitors like China and India have their own raw materials. The government should take steps to find deposits of superior quality clay for ceramics in the mine region of northern Bengladesh. Ceramic industry in the country also lacks high level manufacturing and industrial engineering techniques, required machinery and equipment and international standard laboratory for testing and quality control. This sector is in need of research and development efforts to economies on energy cost as well as appropriate and adequate training programs to develop pull of skilled labor.

If the ceramic industry of Bangladesh can overcome the stated limitations, it has every potential to grow and become a big foreign exchange earner for the country.”

AC 16-5

asian ceramics

37

Analysis: Kiln furniture

Often overlooked, but an essential part of the whiteware producing equation, kiln furniture production and supply is a critical issue for the continentâ&#x20AC;&#x2122;s ceramic manufacturers. AC looks into the current situationâ&#x20AC;Ś

L

ight weight concept and use of real functional and kiln furnitures, using ceramic fibre insulation and light weight-low materials have been changing the trend of the market density refractory and introduction of single layer roller kilns. Ceramic of kiln furniture in the ASEAN countries. The ceramic industries are preferring use of low thermal mass kiln cars to improve manufacturers in the region are now more aware of overall efficiency of using kiln furniture like cordierite, including mullite, the kiln furniture requirements and the need of better sillimanite and recrystallised silicon carbide. For quality firing the management of firing factories are avoiding parasitic loads to save money and increase the of kiln furniture during firing, said the efficiency in use of kilns. The ceramic experts. impact of the change is also This has been reducing the load related to the use of energy of less efficient kiln furnitures. The efficient new generation kilns, ASEAN companies are buying light including those of first fired shuttle, weight high yielding materials and tunnel and roller kilns, said the designing quality load with less kiln ceramic manufacturers. furnitujres. They are manufacturing The ceramic industries said, to their own materials in-house to save money and time there are achieve optimum result from firing. many homegrown in-house kiln Such development has impact on furniture manufacturing activities, the market trend. In a situation of while many customised materials slump hit ceramic building materials are also procured from the several markets, the demand for kiln local manufacturers of kiln furnitures, furniture is irregular, but the imports in the ASEAN region. For economic remain strong.

Imerys Kiln Furniture PROCESS. Photocredit: Imerys and quality firing, light weight Industry sources suggest that the kiln furnitures are used by the manufacturers of traditional ceramic demand of the markets for kiln furniture will continue to remain irregular products, such as, tablewares, sanitary wares, tiles, roof tiles and in a cyclic order due to fluctuation of demand for traditional ceramic other heavy clay items. Efficient and economic use of kiln furniture is products. However, the local manufacturers of light weight materials essential to save energy and ensure full quality of firing and life span of and the Chinese suppliers of kiln furniture are increasingly grabbing the the kilns and related materials, they added. market shares, in spite of the volatile situation of the market following In ASEAN ceramicware manufacturing factories, there is a growing slowdown in the Western export markets and slower GDP growth trend of trying to drastically reduce thermal mass of kilns, kiln cars, led lower demand for new houses in the key markets of the region,

38

asian ceramics

AC 16-5

www.asianceramics.com

Analysis: Kiln furniture

Imerys Kiln Furniture SiC setters for tableware. Photocredit: Imerys

Imerys Kiln Furniture cordierite setters for tableware.

Photocredit: Imerys

particularly, Indonesia and Thailand.

Since past several years, China continues to remain the top player by holding the market shares of 3540 percent in the ASEAN markets. The Chinese kiln manufacturers are absolutely in stronger position in all of the ASEAN countries, including that of Thailand, where plenty of kiln furniture are produced by local and foreign manufacturers. Because of competitive supplies by the Chinese companies, ASEAN’s import dependency will continue, said the industry sources.

Import has a double digit growth year on year, in almost all of the ASEAN kiln furniture markets. Vietnam continues to remain a high growth consumer, producer, importer and exporter, as the manufacturing activity, particularly, in sanitaryware industries, is rising steadily. Currently, Vietnam has the largest production base for sanitarywares in the ASEAN region.

Higher growth

According to the estimates made for 2015 by the Geneva based International Trade Centre (ITC) and others, the ASEAN countries imported more than 30,000 tons of kiln furniture of worth over US$100 million under HS Codes 690310 (refractory ceramic goods nes,>50% of graphite/oth forms of carbon etc), 690320 (refractory ceram goods nes,>50% of Al2O3/mx/compds alumina/silica SiO2) and 690390 (refractory ceramic goods nes). Another equivalent quantity is made domestically, both in the kiln furniture manufacturing factories and the in-house facilities of the ceramic manufacturing plants, said the industry sources.

ITC estimates for 2015 showed, more than 80 percent of the imports are made by Indonesia, Malaysia and Vietnam, the three of the four major ceramic manufacturing countries in the ASEAN region. The other major manufacturer, Thailand’s import share was over 15 percent.

Despite a very high level of production of ceramics in Thailand, the country’s lower import is the result of the availability of the products locally in large-scale. Thailand has the largest number of kiln furniture manufacturing factories that include two majors, Imerys Kiln Furniture (Thailand) Co Limited (IKF Thailand) and Patra Refractory Company Limited, while others are smaller SMEs. Thailand was also the largest exporter of kiln furniture with shipment of more than 5,000 tons of worth around US$45 million in all categories, in 2015, according to the ITC. The region’s other major

www.asianceramics.com

exporter, Vietnam, exported over 3,250 tons of worth over US$5 million, mostly under HS Code 690320, during the year. Almost every year, most of the shipments from Thailand go to the East Asian countries of Hong Kong (including China), Japan, Taiwan and South Korea.

In the changing market scenario, the ASEAN manufacturers of traditional ceramics opine that it is time to continuously monitor real data of the firing to maximize efficiency in use of kiln furniture and restructure the firing operations for saving money and, at the same time, to improve quality in production. The ceramic factories are increasingly buying competitive materials from the largest source, China. According to the supplies of kiln furniture shipped from China, the fob price is at minimum average of US$1,500, per ton, rising up to manifold more for quality, according to the types of the products.

It is almost about half of the established Western suppliers, claim the Chinese companies.

Experienced ASEAN ceramic industry researcher, Tran Van Can, based in Hanoi of Vietnam, told Asian Ceramics the suppliers of kiln furniture need to be more customer friendly to supply well tailored easy to handle materials to suit the needs of the customer’s firing.

“The customers need real functional kiln furniture to meet their real requirements,” said Can, who is the Director of Ceratec Centre for Science and Technology and Vice Secretary General of Vietnam Building Ceramic Association (VIBCA) As the ceramic factories are gradually becoming well conscious about their requirements, they check various suppliers of kiln furniture without depending on a particular producer as they did in the past. As a result, many new suppliers in the Asian region, and improved kiln furnitures from China, where Western collaborations have developed new products, sell aggressively to the ASEAN markets.

AC 16-5

asian ceramics

39

Analysis: Kiln furniture

Traditional suppliers or brand items, which usually involve higher cost and dependency, have admitted the market trends as more user friendly and economic. This has resulted in diversification of kiln furnitures’ functionality and consumption of the user industries.

The kiln furniture consumption in the ASEAN countries are becoming more diversified with arrival of new generation kilns. To cope with the changes, and in its efforts to expand business, Asia’s market leader, IKF Thailand, a subsidiary of global ceramic materials market leader Imerys of France, has to look for newer markets outside East and Southeast Asia. IKF is already exporting to other regions, in addition to supply to its major regional target market of ASEAN. However, IKF’s premier market, China, through Hong Kong, continues to be the largest buyer.

Similar situation exists for the other leading global supplier, SaintGobain, which has its kiln furniture production base in USA. SaintGobain, also a French multinational manufacturer, has a powerful marketing arm in the ASEAN region with main operations based also in the regional ceramic materials hub of Thailand.

COMPANY PROFILE: Imerys Kiln Furniture (Thailand) Co Limited (IKF) Location: Ta Luang, Saraburi, Thailand Products: Ceramic kiln furniture for all types of ceramic manufacturing Markets: Besides dominating the Thai domestic markets, IKF supplies its kiln furniture to all ceramic manufacturing countries in the ASEAN bloc region. IKF also exports to all major ceramic manufacturing countries worldwide. It has substantial export markets in East Asia, South Asia and the Middle East including Turkey.

Others: IKF Thailand is Asia-based kiln furniture operation of global leader Imerys of France. It produces both cordierite and silicon carbide in addition to mullite, alumina and zirconia. Imerys Thailand base is its Asia continental operation with headquarters in Bangkok. The Thai base has one of Imerys’ major R&D facilities.

Patra Refractory Company Limited Location: Kokeyae, Nongkhae Saraburi, Thailand Products: Various kiln furnitures, specially, of light weight. Also refractory bricks.

Annual production capacity: 30,000 tons of kiln furnitures and refractor bricks Markets: Domestic and export markets. Outside Thailand, its main ASEAN markets are Vietnam and Indonesia. About 30 percent of its production is exported.

Others: Patra’s kiln furniture products include setters, supports and monolythics and are shipped to export markets worldwide.

Saint-Gobain South East Asia operations Location: Thanonphayathai, Ratchathewi, Bangkok, Thaïland Products: Kiln furniture and other ceramic materials Markets: ASEAN countries, including neighbouring regions.

Others: Saint-Gobain’s South East Asia operations are part of Saint-Gobain Ceramic Materials, based in Worcester (MA), USA, which develops kiln furniture for marketing worldwide.

Beijing Trend Industrial Ceramics Co Ltd Location: Matou, Huoxian Town, Tongzhou District, Beijing, China Products: Ceramic kiln furniture and other related materials Patra kiln furnituring in Thailand. Photocredit: Patra

Markets: Domestic and export markets, with ASEAN region being a major target.

Rise of Asians

Others: Beijing Trend Industrial Ceramics is China’s leading and best known kiln

At least a dozen of Chinese kiln furniture manufacturers are well aware of the demand of the ASEAN markets and they maintain close contact with the buyers to provide tailor made materials at a price much lower than the Western brands. Among them, Beijing Trend Industrial Ceramics Co Limited, based in Huoxian Town of Tongzhou district in Beijing, is the most comprehensive manufacturer and market leader.

With Asia’s largest single-site producing cordierite kiln furniture systems, Beiing Trend said its ASEAN markets will be provided with a diverse range of products. To offer the better flexibility of choosing complex secondary kiln furniture, particularly to the tableware manufacturers, Beijing Trend is expanding its ranges of solutions. It has strong presence in all five major ASEAN markets, Indonesia, Malaysia, Philippines, Thailand and Vietnam.

Beijing Trend’s products are competitive in the domestic and export markets both in terms of quality and prices. Its extruded butts with holes have high standard of flatness and dimensional accuracy. The company claims its extruded butts are now amongst the leading products in the ASEAN, as well as in the domestic market.

Its kiln furnitures are used in almost all sectors of traditional ceramics from potter to heavy clay, but it is mainly applied in the sanitarware

40

asian ceramics

Annual production capacity: 11,000 tonnes of cordierite-mullite products

AC 16-5

furniture manufacturer. It has global partnership with IPS Ceramics/Dyson Thermal Technologies (UK) and EmcoTherm (Germany). It produces kiln furniture and refractory materials for traditional and industrial ceramics and others.

Jiaozuo Beixing Refractory Co Ltd (BRCC) (Silicon carbide (SiC) products factory) Location: Baishan industrial zone, Jiaozuo City, Henan Province, China Products: Kiln furniture and other refractory products Annual production capacity: 20,000 tons of SiC products, which included nitride bonded silicon carbide ceramic plate, oxide bonded silicon carbide, reaction bonded SiC kiln series, mullite ceramic sagger, silicon carbide brick, etc.

Markets: Domestic and export markets, including ASEAN region.

Others: In ASEAN area, BRCC’s main export markets include Thailand, Malaysia and Vietnam, where shelf board, brace, beam and sagger have good demand. It also offers other refractories.

www.asianceramics.com

Analysis: Kiln furniture

manufacturing. The butts’ weight reduction of 35-50 percent and its expansion of load capacity are attractive. The company claims its 33mm thick extruded batt has the same weight as a 23mm thick pressed butt of the same size and it can bear five times the load.

Also a lot of products are supplied from the East Asian countries of Japan, South Korea and Taiwan. India is also an important Asian exporter to the ASEAN markets. Among the long established Western suppliers to ASEAN, Germany and USA are two leading sources, followed by UK, Italy, Austria and others, according to the industry sources.

Local grows stronger

42

asian ceramics

AC 16-5

Location: Dehua county, Fujian province, China Products: Cordierite-mullite kiln furniture for tableares, sanitarwares, tiles, etc.

Annual production capacity: 5,000 tons of kiln furnitures Markets: Domestic and export markets, including ASEAN countries.

Others: In 2014, the Fujian provincial government recognized the manufacturer as provincial high tech enterprise.

Tangshan Imperial-Hero Ceramics Co Ltd Location: Lubei District Tangshan City, China Products: Mullite-cordierite kiln furnitures and silicon refractory materials Annual production capacity: 5,000 tons of mullite-cordierite kiln furnitures

In almost all ASEAN ceramic manufacturing countries kiln furniture are manufactured locally to mainly meet the domestic demand. But the manufacturer like Patra is growing to be a regional operator. It has expanded market shares in Indonesia and Vietnam, which are larger enough to import a good chunk of its planned increased production of lighter kiln furnitures in the coming years.

Located in Nongkhae, Saraburi, Patra has emerged as a leading supplier with considerable influence. It has a full-fledged R&D and marketing research facility to meet the growing demand of the ASEAN markets. Its annual combined refractory production capacity is 30,000 tons to manufacture a lot of pieces of kiln furnitures and refractory bricks.

Patra claims it has been producing its light weight kiln furniture according to the specific requirements of the ASEAN customers. The half a century old refractory operator said it has been exporting well customized light weight kiln furnitures to its vital target markets of Vietnam and Indonesia. It claims the products are competing strongly against the Chinese products.

Patra’s setters, supports, monolithics and refractory bricks, especially, of light weight, are easy to handle and energy saving.

The products have demand in many Asian countries from Japan and Australia to the Middle East and Europe, where the customers use the materials in shuttle and tunnel kiln firing for manufacturing tablewares, tiles, sanitarywares, gift and decorative items, figurines and other kinds of ceramic art pieces. According to Patra’s Deputy Managing Director Phadet Darote, some 70 percent of its production is consumed domestically.

The precise annual demand or size of the ASEAN markets for ceramic kiln furniture in terms of value or quantity is not well monitored by the users or suppliers because of the changing procurement pattern from different local sources. Industry sources suggest that the total market of kiln furniture, refractory bricks and other materials used by ceramic, glass, steel, cement, various metals and other manufacturers is quite large enough for further technological development locally.

Patra lightweight kiln furniture. Photocredit: Patra.2

Fujian Dehua Chuang Jie Kiln Furniture Co Ltd

Markets: Domestic and export markets, including ASEAN countries.

Others: Tangshan Imperial-Hero Ceramics is a joint-venture investment with Tangshan Baiyu Ceramic Co Ltd and Futian-Sanjin Trade & Industry Company.

Jiangsu Yixing Zhongcun Kiln Products Co Ltd Location: Yang'an Country, Dapu Town, Yixing City Wuxi, Jiangsu 214226, China Products: Kiln furniture for tablewares and sanitarywares.

Annual production capacity: About 800,000 pieces of boards or over 5,000 tons Markets: Domestic and export markets, including ASEAN countries.

Others: Jiangsu Yixing Zhongcun Kiln Products Co is a joint-venture foreign investment. It is specialist on refractor boards of carborundum.

Jiangsu Sanheng High-tech Kiln Furniture Co Ltd Location: Yixing Ceramic Industrial Park, Yixing, China Products: High temperature tolerant kiln furnitures for specially electronic ceramics Markets: Domestic and export markets, including ASEAN countries.

Others: Sanheng's main product, the sandwich plate, is a three-ply composite structure plate.

Refmat Corporation Location: Luoyang, Henan, China Products: High temperature tolerant ceramic kiln furniture Markets: Domestic and export markets, including ASEAN countries.

Others: Refmat’s kiln furnitures are mainly of SiC, such as, ceramic tube, corundum, high-alumina, mullite, and SiSiC beam, etc, for the manufacturers of technical porcelain products, including, electrical insulators.

PT BIOTA Indonesia (Foreign kiln furniture makers’ representative for customized supplies) Location: Kebon Jeruk , Jakarta Barat 11530, Indonesia Products: Kiln furnitures, inckuding batt, support, beam, crank, setter, saggar, etc Sourcing markets: All Others: Biota represents various reputable principals from several countries for raw materials, kilns, and kiln furnitures.

Patra light weight kiln furniture

Patra light weight kiln furniture. Photocredit: Patra.3

www.asianceramics.com

IN THE HEART OF CERAMIC Compact | Easy | Reliable Take a look on www.tecnoferrari.it

DECORATION EFFECTS

MULTI-HEAD PLATFORM

QUALITY PRODUCTIVITY

Gruppo TECNOFERRARI S.p.A. con socio unico Via Ghiarola Vecchia, 91 | 41042 Fiorano Modenese (MO) | ITALY Tel. +39 0536 915000 | Fax +39 0536 915045 | info@tecnoferrari.it | www.tecnoferrari.it

Analysis: Kiln furniture

In ASEAN ceramic factories, the rising consumptions of kiln furniture is leading the firing operators to be more energy saving by improving efficiency. ASEAN regionâ&#x20AC;&#x2122;s largest ceramic tile and sanitaryware manufacturer, SCG Group of Thailand, said it is giving extra priority to get good result from the efficient use of kiln furnitures and stop buying materials that do not guarantee to minimize firing cost, consumption of energy and improve the potentiality of the kilns. Other major manufacturers are trying to use more customized local materials. Many new generation kilns are in operation in sanitaryware and tile plants for quality production, yet they use customized local kiln furnitures for efficient firing.

Local manufacturers are gradually improving their products, based mainly on cordierite and mullite. The ceramic industries are using established branded kiln furniture and other imported ones, but giving importance also on the local customised products that ensure economy in total firing operations.

While using locally made kiln furnitures, the local ceramic industries utilizes opportunities to have various solutions and resolve issue of economy in minimizing cost involvement in usage of kiln furniture, by reducing size, weight and amount of kiln furniture and saving space, energy and time, is ultimately making the List of importers for the selected product in tons Product: 690390 Refractory ceramic goods nes 2011

2012

2013

2014

2015

Imported quantity, Tons

Imported quantity, Tons

Imported quantity, Tons

Imported quantity, Tons

Imported quantity, Tons

World

201,030

No Quantity

No Quantity

175,554

148,247

Association of SouthEast Asian Nations (ASEAN) Aggregation

21,785

19,261

29,650

21,649

16,002

Indonesia

5,944

6,725

19,276

7,842

5,394

Malaysia

5,429

4,523

4,245

6,432

5,068

Thailand

2,769

3,180

2,513

2,511

2,130

Vietnam

780

No Quantity

No Quantity

1,664

1,342

Singapore

5,227

2,949

2,213

1,975

1,091

Philippines

1,300

1,772

1,184

1,192

720

Laos

7

61

6

6

173

Myanmar

41

48

59

14

81

Cambodia

0

0

0

0

2

Importers (HS Code 690390)

Brunei Darussalam

288

3

154

13

1

Sources: ITC, Geneva, calculations (estimated) based on UN COMTRADE statistics and UNSD estimates.

44

asian ceramics

AC 16-5

total kiln operation cost-efficient. This will lead to help kiln ensure operation easier and profit-making as viewed by Can. He said the industries want kiln furnitures to be simple and easy to operate.

Sharing settings

The ceramic manufacturers are making efforts to reshape the usage of traditional architectures of kiln furniture settings in firing their products in the kilns under their own recipes, not always familiar to the suppliers of traditional kiln furniture. In Vietnam, said Can, about 30-50 of the required kiln furnitures are procured locally and they include self-made products manufactured in-house. Can said the rest of the requirements are imported. He said, the ceramic industries are no more buying less efficient materials, rather, they are seemed to be interested in sharing experiences in developing materials locally. The high level of consumption of local kiln furnitures is indicative of the trend.

Efficient use of kiln furniture has changed the production environment in many of the ceramic factories. Quality management in kiln operation and setting kiln furniture with less is paying higher dividend in many factories. This has forced the monopoly suppliers introduce efficient, improved and innovative kiln furnitures, said the List of importers for the selected product in tons Product: 690320 Refractory ceram goods nes,>50% of Al2O3/ mx/compds alumina/silica SiO2 2011

2012

2013

2014

2015

Imported quantity, Tons

Imported quantity, Tons

Imported quantity, Tons

Imported quantity, Tons

Imported quantity, Tons

314,592

289,636

292,323

309,006

269,885

Association of SouthEast Asian Nations (ASEAN) Aggregation

5,397

5,953

7,413

10,730

13,065

Indonesia

1,472

1,517

1,904

4,426

4,351

Vietnam

675

No Quantity

728

900

3,139

Malaysia

1,311

2,348

2,351

2,875

2,989

Thailand

1,636

1,670

1,579

1,915

1,958

Singapore

86

180

715

443

451

Philippines

29

193

132

155

139

Myanmar

142

43

1

2

36

Laos

45

1

3

14

2

Brunei Darussalam

1

1

0

0

0

Importers (HS Code 690320)

World

Sources: ITC, Geneva, calculations (estimated) based on UN COMTRADE statistics and UNSD estimates.

www.asianceramics.com

www. AMR4 u.com

Superwhite KAOLIN for TABLEWARE & TILE

SPECIALIZED replacements for BONE ASH

Makingg a Material Difference 369, Conic Investment Building 13 Hok Yuen Street, Hung Hom Kowloon, Hong Kong Tel: (852) 23637813 â&#x20AC;¢ (852) 23637823 Fax: (852) 23637826 Email: enquiries@AMR4u.com

AMR

Analysis: Kiln furniture

industry sources. They said this has made buying of materials a bit irregular from the established kiln furniture suppliers as they are not always compatible with the changed situation when it comes to quick solution and economy.

IKF said they are supporting the customers’ needs in any situation. The said their products are developed, produced and marketed based on customers’ preference and real needs. They provide individual firing supports, shaped parts designed to support the products during firing, and multi parts construction components for industrial kilns, refractory protections for kiln car walls and structures for the ceramic production.

IKF product range includes all types of tailor-made ceramic pieces in cordierite, high alumina porcelain, mullite and silicium carbide, and its Asia operations with various production units, based in Thailand, serve the Asia Pacific region, in competition with its main rivals, Saint-Gobain, and several Chinese kiln furniture operators, including Beijing Trend and others, mainly Chinese, which are basically supplied with technology from UK, Germany, Japan and others.

IKF has strong rivalry with Saint-Gobain in the ASEAN markets.

With Saint-Gobain’s significant global kiln furniture operation run from USA and strong South East Asia-East Asia supply base served from Thailand, both the France based non-metal List of exporters for the selected product in tons Product: 690390 Refractory ceramic goods nes Exporters (HS Code 690390)

World

2011

2012

2013

2014

2015

Exported quantity, Tons

Exported quantity, Tons

Exported quantity, Tons

Exported quantity, Tons

Exported quantity, Tons

270,878

430,885

162,076

165,851

188,512

2011

2012

2013

2014

2015

Exported quantity, Tons

Exported quantity, Tons

Exported quantity, Tons

Exported quantity, Tons

Exported quantity, Tons

351,938

361,620

263,188

248,404

250,722

4,558

5,543

9,446

5,497

5,790

Vietnam

909

No Quantity

741

1,002

3,148

Thailand

1,663

1,581

2,151

2,226

2,184

Indonesia

1,673

3,746

6,173

1,797

199

Singapore

216

75

237

270

162

Malaysia

97

141

144

202

97

Exporters (HS Code 690320)

World Association of SouthEast Asian Nations (ASEAN) Aggregation

Sources: ITC, Geneva, calculations (estimated) based on UN COMTRADE statistics and UNSD estimates.

List of exporters for the selected product in tons Product: 690310 Refractory ceramic goods nes,>50% of graphite/oth forms of carbon etc 2011

2012

2013

2014

2015

Exported quantity, Tons

Exported quantity, Tons

Exported quantity, Tons

Exported quantity, Tons

Exported quantity, Tons

25,088

25,779

No Quantity

15,124

17,679

Association of SouthEast Asian Nations (ASEAN) Aggregation

647

491

471

457

545

47

Thailand

617

475

456

432

419

52

34

Singapore

22

13

9

20

65

68

113

30

Vietnam

0

0

0

No Quantity

59

0

0

0

Malaysia

3

3

6

3

2

Indonesia

5

0

0

2

Exporters (HS Code 690310)

Association of SouthEast Asian Nations (ASEAN) Aggregation

2,137

Thailand

1,100

852

629

1,891

2,396

Malaysia

221

205

311

215

696

Singapore

622

184

190

143

178

Vietnam

21

No Quantity

3

22

Philippines

89

78

17

Indonesia

84

88

Brunei Darussalam

0

1

1,408

1,220

2,436

3,381 World

Laos

2

Myanmar

0

0

Sources: ITC, Geneva, calculations (estimated) based on UN COMTRADE statistics and UNSD estimates.

46

List of exporters for the selected product in tons Product: 690320 Refractory ceram goods nes,>50% of Al2O3/ mx/compds alumina/silica SiO2

asian ceramics

AC 16-5

Sources: ITC, Geneva, calculations (estimated) based on UN COMTRADE statistics and UNSD estimates.

www.asianceramics.com

Analysis: Kiln furniture

conglomerations dominate the world and command the Asian kiln furniture and related other product markets and rawmaterial trade, because of ownership of mines, mineral processing and non-metal manufacturing throughout the world.

IKF with its parent Imerys continues to remain market leaders for its high performance kiln furniture made of quality raw materials and for combining modern technologies, including spray drying, dry pressing and high accuracy in high temperature firing of biscuit, glost, and decoration, enabling tablewares of different types, porcelain, bone china, stone ware, earthenware, etc, have customized solutions. Imerysâ&#x20AC;&#x2122; other important advantages is of its use of cordierite and silicon carbide in addition to mullite, alumina and zirconia. IKF R&D in Thailand also provides an unbeatable advantage.

In competition, Saint-Gobain High Performance Refractories kiln furniture for building ceramics of all types, specially, of floor, wall and roof tiles, provides delivery of advanced SiC rolls for roller hearth kilns and complete kiln car construction for both

shuttle kilns and tunnel kilns.

It delivers complete kiln car construction comprising its LO-MASS superstructures made of premium SiC products, siliconized Silit SK, recrystallized Crystar 2000 and nitride bonded Advancer. Its LO-MASS concept, includes beams, stringers, batts, various supports, multi-lug posts, lav rings, bowl and tank setters, said the company. The multi-lug posts system designed to fit into the kiln car base allows flexibility in shelf height for easy firi8ngh of all items on the same car.

Saint-Gobain claims its LO-MASS kiln furniture system reduces fuel and grinding costs, ware rejection, and maximizes use of kiln volume. The high strength, low mass and thermal properties of bowl and tank setters, make them a superior choice over cordierite setters. They retain their shape over their extended service life resulting in flatter post-fired items, said Saint-Gobain.

It also claims the high thermal conductivity of the SiC based setters reduces bowl and tank stress cracks that occur during firing and cooling.

List of top 20 supplying markets from WTO member countries for a product imported by ASEAN countries, under HS Code 6903 (refractory ceramic goods nes) in value. Unit: US Dollar in thousand Exporters (HS Code 6903) supplying to the ASEAN members countries

Imported value in 2011

Imported value in 2012

Imported value in 2013

Imported value in 2014

Imported value in 2015

World Trade Organization (WTO) Aggregation

120,313

136,888

114,588

118,546

100,893

China

33,390

40,383

40,615

38,414

33,654

Japan

33,375

33,153

19,197

20,968

15,754

Germany

11,875

17,527

11,733

12,134

12,043

South Korea

3,132

7,700

9,882

7,430

8,896

USA

5,480

7,445

6,326

11,943

6,531

India

3,924

5,165

5,872

8,767

4,984

Taipei, Chinese

4,363

4,650

3,879

4,155

4,030

Thailand

2,273

2,640

2,740

3,178

3,010

UK

2,076

2,506

2,390

1,744

1,687

Italy

3,085

2,116

2,221

2,026

1,521

Singapore

1,118

712

1,273

482

1,343

Austria

1,051

1,191

1,618

1,181

1,223

Australia

1,842

2,376

1,585

1,477

1,104

Hungary

136

152

203

233

757

Netherlands

5,566

4,561

721

313

744

Malaysia

1,186

717

808

733

696

France

1,631

508

940

682

574

Canada

195

186

344

428

481

2,001

1,240

505

302

362

232

315

173

317

315

Hong Kong, China Brazil

Sources: ITC, Geneva, calculations (estimated) based on UN COMTRADE statistics and UNSD estimates.

www.asianceramics.com

AC 16-5

asian ceramics

47

Analysis: Kiln furniture

Saint-Gobain highly productive flat-ware fast firing kiln with auto loadingunloading of kiln furniture. Photocredit: Saint-Gobain

INDIVIDUAL COUNTRYâ&#x20AC;&#x2122;S IMPORTS: THAILAND (HS Code 6903 Kiln furniture) List of 21 top supplying markets for a product imported by Thailand. Unit: US Dollar in thousand.

Product: 6903 Refractory ceramic goods nes HS Code 6903 Kiln furniture.

Exporters to Thailand

Imported value in 2011

Imported value in 2012

Imported value in 2013

Imported value in 2014

World

29,230

30,587

26,326

28,942

26,078

China

11,669

9,709

9,674

11,553

9,952

Japan

7,447

9,336

6,169

6,232

6,429

Germany

4,180

4,641

3,250

3,875

3,032

India

933

1,872

2,417

2,538

1,959

Thailand

47

0

0

5

777

Korea, Republic of

587

994

1,573

787

Italy

564

814

708

United States of America

837

809

United Kingdom

582

Hong Kong, China

Imported value in 2015

INDIVIDUAL COUNTRYâ&#x20AC;&#x2122;S IMPORTS: VIETNAM (HS Code 6903 Kiln furniture) List of 14 top supplying markets for a product imported by Vietnam. Unit: US Dollar in thousand Product: 6903 Refractory ceramic goods nes HS Code 6903 Kiln furniture.

Exporters to Vietnam.

Imported value in 2010

Imported value in 2011

Imported value in 2012

Imported value in 2013

Imported value in 2014

World

10,175

9,605

16,407

11,826

16,576

593

China

4,850

5,231

10,787

6,125

7,926

463

487

United States of America

39

53

45

64

3,173

507

939

475

1,828

1,587

1,694

2,227

1,882

729

383

504

396 Germany

700

472

508

1,047

1,049

382

127

12

95

327

Brazil

153

287

171

315

315

Thailand

400

392

648

426

1,024

Taipei, Chinese

711

462

449

439

312

Taipei, Chinese

732

847

1,533

575

662

France

29

133

403

283

199

Korea, Republic of

348

300

353

743

402

Hungary

126

70

104

194

175

Italy

764

406

170

112

144

Indonesia

66

57

43

42

113

India

6

7

35

33

103

Canada

133

123

65

172

103

Malaysia

0

9

81

176

81

Austria

374

92

47

38

74

Indonesia

193

45

43

0

33

Belgium

41

54

56

89

63 0

0

0

0

24

Malaysia

27

38

2

31

60

Netherlands

1

87

0

56

55

United Kingdom

149

0

148

67

24

Hungary

0

5

16

33

17

Japan

Chile

Vietnam

35

5

47

57

53

Sources: ITC, Geneva, calculations (estimated) based on UN COMTRADE statistics and UNSD estimates.

48

asian ceramics

AC 16-5

Sources: ITC, Geneva, calculations (estimated) based on UN COMTRADE statistics and UNSD estimates.

www.asianceramics.com

Analysis: Kiln furniture Patra Refractory Co, Thailand, kiln furniture. Photocredit: Patra

IKF Thailand kiln furniture manufacturer. Photocredit: IKF

INDIVIDUAL COUNTRYâ&#x20AC;&#x2122;S IMPORTS: INDONESIA (HS Code 6903 Kiln furniture) List of 20 top supplying markets for a product imported by Indonesia. Unit: US Dollar in thousand Product: 6903 Refractory ceramic goods nes HS Code 6903 Kiln furniture.

Exporters to Indonesia.

Imported value in 2010

Imported value in 2011

Imported value in 2012

Imported value in 2013

Imported value in 2014

World

17,259

22,866

37,410

39,362

32,569

China

4,621

7,114

9,344

15,305

9,337

Japan

3,902

2,749

6,764

5,278

6,718

Korea, Republic of

511

424

4,858

6,078

4,245

India

874

1,094

1,338

1,921

2,964

Germany

1,581

2,122

7,052

2,541

Thailand

400

871

1,387

Italy

357

764

United States of America

585

Australia

INDIVIDUAL COUNTRYâ&#x20AC;&#x2122;S IMPORTS: MALAYSIA (HS Code 6903 Kiln furniture) List of 20 top supplying markets for a product imported by Malaysia. Unit: US Dollar in thousand Product: 6903 Refractory ceramic goods nes HS Code 6903 Kiln furniture.

Exporters to Malaysia.

Imported value in 2011

Imported value in 2012

Imported value in 2013

Imported value in 2014

Imported value in 2015

World

47,286

37,507

23,737

26,327

22,947

China

7,028

7,754

5,767

5,635

6,803

2,189

Germany

2,866

3,163

3,162

4,001

4,445

1,408

1,303

Japan

20,354

11,118

5,034

5,500

3,923

874

1,122

1,039

United States of America

3,233

4,751

2,532

3,161

1,764

557

643

743

836

Taipei, Chinese

1,815

1,970

1,966

2,064

1,597

1,002

1,227

1,346

761

750

India

1,592

1,325

1,310

2,040

1,254

Netherlands

5,505

4,411

663

112

684

Taipei, Chinese

507

664

520

743

688

United Kingdom

708

820

783

710

599

Austria

74

474

303

600

536

Thailand

881

481

850

807

586

Singapore

472

902

444

835

392

Italy

708

95

223

240

266

United Kingdom

367

574

522

662

248

Australia

142

228

131

213

239

Bulgaria

390

382

484

251

217

Hungary

0

63

10

18

194

159

46

979

131

783

468

343

244

215

Korea, Republic of

782

Malaysia

France

348

150

84

198

130

France

114

1,101

175

287

154

Singapore

163

190

412

66

97

Spain

9

13

6

26

152

Canada

17

38

46

95

75

Czech Republic

17

45

51

36

150

Mexico

24

15

50

75

39

Hong Kong, China

470

898

655

260

145

Austria

114

36

26

56

34

Spain

37

2

7

36

29

Netherlands

25

0

16

0

133

Indonesia

25

11

208

212

14

Sources: ITC, Geneva, calculations (estimated) based on UN COMTRADE statistics and UNSD estimates.

www.asianceramics.com

Sources: ITC, Geneva, calculations (estimated) based on UN COMTRADE statistics and UNSD estimates.

AC 16-5

asian ceramics

49

Analysis: Sanitaryware

Gujarat gains from Swachh Bharat AC concludes its round up of the Gujarat ceramics industry with an overview of the principal sanitaryware producers in the State.

K

nown for their domination in ceramic sector, Gujarat-based producers continue to cement their position in Indian ceramic industry in both the major sub-segments of tiles and sanitary ware industry. While, the state accounts for about 73 % of the total ceramic tiles produced in the country, its contribution in sanitary ware segment is higher at nearly 76 % of the total sanitary wares produced in the country.

Whereas, in the ceramic tile segment, there are a number of organised sector players located elsewhere in the country, in sanitary ware most of the organised sector players are located in the state. Even the organised sector playera, who doesnâ&#x20AC;&#x2122;t have the presence in the state such as Hindustan Sanitary ware Industries Limited and RAK ceramics have expressed its intention to set up a manufacturing base in the state to take advantage of low manufacturing cost. However, due to economic situation and overcapacity in the industry, both these companies have not yet been able to start production in Gujarat.

Indian government initiatives in last two years have lead to huge investment in Indian sanitary ware industry. In fact, the industry as a whole has got a tremendous boost with Prime Minister's drive on much needed improvement in sanitation conditions across the nation. In the first one and a half year period since the announcement, unorganized sector has benefited more than the organized sector players. Gujarat based sanitary ware producers have reaped the richest dividends of the move. In fact, a number of new producers have emerged in the state ( mostly in Morbi) to take advantage of anticipated demand in sanitary ware in coming years due to this project.

50

asian ceramics

AC 16-5

Swachh Bharat Mission

Government of India launched â&#x20AC;&#x153;Swachh Bharat Abhiyanâ&#x20AC;? ( Clean India Programme) on October 2014 with a five years programme to accelerate the efforts to achieve universal sanitation coverage and to put focus on sanitation in India, which aims to achieve Swachh Bharat by 2019. This has motivated the people for better hygienic clean life style especially in rural India. This mission is expected to create a huge demand for sanitary ware products in next three years. Due to their low production cost and low selling prices, unorganized sector players based in Gujarat are likely to be benefited most because of the move.

Progress report

Indeed, some fifty-two per cent of citizens find their city cleaner 600 days after Prime Minister Narendra Modi launched tbe Swachh Bharat

www.asianceramics.com

Analysis: Sanitaryware

(Clean India) initiative, a countrywide survery has found.

"At 600 days, Swachh Bharat is making progress but civic sense awareness and municipal engagement and effectiveness remain a critical challenge," LocalCircles, which conducted the online survey of over 40,000 citizens, said.

Twenty-three percent of citizens said availability of public toilets had improved, against only 12 percent who had found an improvement a year after the drive began.

Fifty-percent felt civic sense awareness was the most important driver for improving cleanliness, while 40 percent felt municipal engagement and effectiveness was needed for better cleanliness.

Responding to the question: How is your city since the launch of Swachh Bharat on October 2, 2014, 11 per cent said it was much cleaner while 41 percent said it was somewhat cleaner. However, 40 per cent said there was no change while eight per cent said things had gotten worse.

Responding to the question on the availability of public toilets, a huge 64 per cent said there had been no change, while 13 percent took the can't say route.

The Epicentre: Thangadh

Located about 160 Kms away from the state capital, Ahmadabad, Thangadh is the undisputed hub of sanitary ware production in the state. With more than 250 sanitary ware producing units, this small town currently accounts for about 60 % of the total ( on volume basis) sanitary ware produced in the country.

Commencing production in 1980â&#x20AC;&#x2122;s and gaining momentum in Indiaâ&#x20AC;&#x2122;s post economic liberlisation period, sanitary ware production of this dusty town has surprised the industry and observers alike.

Many of the units, which started producing sanitary ware as cottage units in 1990â&#x20AC;&#x2122;s have graduated to reputed medium scale producers by increasing the scale and scope of their production. Many more are evolving on the same pattern and are likely to emerge as medium sized producers in next few years. In fact, some of the largest exporters of ceramic sanitary ware units are located in Thangadh.

www.asianceramics.com

Leading sanitaryware manufacturers in Gujarat Company

Installed Capacity

Ariston Ceramics

650,000 pieces

Arihant Ceramics Industry

400,000 pieces

Mangaldeep Ceramics

400,000 pieces

Uday Ceramics

475,000 pieces

New light Ceramics

350,000 pieces

Silver Ceramics

200,000 pieces

Dodhiwala Pottery

450,000 pieces

Marvel Ceramics

300,000 pieces

Amic Ceramics

375,000 pieces

A One House

200,000 pieces

V B Naryana & Company

425,000 pieces

Saffron Sanitary ware Company

275,000 pieces

Paragon Ceramics

350,000 pieces

Sunstar Ceramics

375,000 pieces

Raghuvir Ceramics

300,000 pieces

Dalwadi Ceramics Works

325,000 pieces

Antique Ceramics

400,000 pieces

Rainbow Ceramics

250,000 pieces

Smruti Ceramic Industry

225,000 pieces

Ashirwad Ceramics Pvt Limited

400,000 pieces

AC 16-5

asian ceramics

51

Analysis: Sanitaryware

Besides, the main Thangadh town, villages in the proximity such as Tarnetar, Jamawadi, Lakhamachi, Devadia, Aamraparve, Navagaon, Songarh & Abhaypur, Jamawadi, Abhaypur, Aamraparve, Navagaon & Songarh have sanitary ware producing units. Sanitary ware producing units in Thangadh can be classified in three categories, large ( producing 1500 or more piece a day), medium ( 600-1200 pieces per day) and small ( less than 500 pieces). Currently there are 21 large, 48 medium and about 190 units in the small scale, producing sanitary ware for domestic and export markets. In total , these units produce anywhere between 170,000- 190,000 pieces of sanitary ware per day. Besides these, there are about 50 units, which don’t have firing kilns, and are engaged in producing green pieces of sanitary ware for large and medium sized players in the cluster, who later on fire these products.

A few years back, the general perception about Thangadh based producers was that these producers could only produce the most basic products only. However, the town based units have proved the skeptics wrong by increasingly producing high value added designs and products in recent years.

True that till a few years back, a major part of their production was based on the principle of lowest cost production and many of these units had survived by copying the products of other brands and selling them under of brand ‘Hindustan’. But, with the gradual embracing of state of the art technology, many of the units have started producing top notch quality products. The number of new units producing more than 1000 pieces has steadily increased in last few years. These newer units have adopted modern technology and quality control methods to increase the quality of finished products.

Bigger units in the town have been able to develop in house team of technicians, which have developed in house technology to produce sanitary ware products at very competitive costs. In last two years, some of the units have expressed their intention to acquire European technology. However, it would take a few more years for these units to embrace state-of-the –art technology from European technology providers as currently they feel that their current arrangements are best suited to Indian industry and cut throat competition.

Anchor Sanitary ware

Largest and areguably most popular sanitary ware producer in Thangadh, Anchor Sanitary ware is one of the best success stories of Indian sanitary ware industry. Owned by former President of Thangadh Ceramic Association, Suresh Sompura, the company also owns at least six medium scale sanitary ware production plants in the town.

Anchor Sanitary ware has been operational for more than 40 years produces around 2000 pieces/ day. The company is one of the most technologically advanced producers in Thangadh. Its other manufacturing units produces between 1500 to 1700 pieces of sanitary ware pieces per day. Cumulatively, all anchor subsidiaries produces 12,000 pieces of sanitary

Big players move in

Three of the five multinational sanitary ware producers in India have chosen Gujarat as their manufacturing destination in the country.

For Duravit, Kohler and Japanese company, Toto, choosing the manufacturing location was not much of a challenge as all the three companies had zeroed on the state much before their actual entry in the country.

RAK Ceramics and Roca ( the company acquired business of an already running company, Perryware) are the only two multinational sanitary ware producers , who are no operating from Gujarat.

52

asian ceramics

AC 16-5

In fact, state of the Gujarat was the first destination for first foreign sanitary ware producer ( Duravit) in the country. Later on Kohler and Toto followed it by setting up their manufacturing base in the country.

Duravit India

Duravit India Private Limited, a wholly owned subsidiary of Duravit AG, one of the most reputed global producers of sanitary ware is based at Tarapur (120 km away from Ahmadabad) in Gujarat. The company, which was set up in 2008 commenced commercial production in 2010. Set up at an initial investment of Rs 120 crore, the company has an installed capacity to produce 500,000 pieces of high quality of ceramic sanitary ware.

Though, at the time of inception of its commercial production, Duravit India’s Managing Director has announced to double the installed capacity by 2012, however, the company hasn’t increased its installed capacity as of yet.

Currently, the company produces high end sanitary ware products for domestic and international markets. Though, the company commenced production in 2010, but Duravit has been present in the country since 2003. In the intervening years, the company has been able to develop robust distribution channels and strategy.

Organised sector sanitary ware producers in Gujarat Location

Installed Capacity

Operational since

Tarapur

500,000 pieces

2010

Euro Ceramics

Kadi

700,000 pieces

2006

Cera Sanitary Ware

Kadi

3.0 million pieces

1981

Jhagadia

1.5 million pieces

2009

Halol

500,000 pieces

2014

Company Duravit India

Kohler India Toto India

Kohler India

Located at Jhagadia ( near Vadodra) in the state, Kohler India’s 1.5 million pieces/ annum sanitary ware production plant is the largest production facility of multinational producers in the country. Set up in 2010 with a $100-million investment, Kohler is counted among the most reputed producers and suppliers of sanitary ware in the country. .

The company claims that “Availability of skilled labour, friendly business environment, support from the state government, good logistic connections and overall cost efficiency, were the prime reasons for choosing Gujarat as production base.”

According to Kohler Inc CEO, David Kohler, “India is a dynamic country and the fastest growing economy. India is one of our most important markets strategically. The US, China and India will be the three most important markets for us in the future. We are focused on building our position here. Although India is not the third largest now, it figures among the top ten markets for us.”

Commenting on plans for India, David Kohler says, "India is one of our fastest growing markets and we have a lot of expectations from the country."

"We are definitely looking at continuing and increasing manufacturing for our key markets USA, Europe, Africa from India. We have designed here number of products based on the needs of the Indian market and we are actually now exporting those products in other countries."

www.asianceramics.com

Advertiser feature

Thoughts on Iran: a heavy clay insight from Bedeschi…

The travel notes of an experienced machinery sales representative offer a fascinating combination of adventure, culture, folklore and experience, as opposed to a one-dimensional focus on technology. Visiting Iran is always a pleasure and a thrilling experience. Iran straddles a unique identity in today’s world, through the amalgamation of European, Arabian and Eastern influences while maintaining its unique identity. This country has a vast and rich culture that spans hundreds of centuries, from the Neolithic age to the present. This has enabled Iran to intertwine a unique blend of cultures and civilizations, thus leaving a heritage of inestimable value.

The use of clay bricks in Iran goes back several thousand years, even predating the Greek and Roman civilizations, as depicted through the discovery of major archaeological remains from that period.

Production of clay bricks in Iran is still an artisanal business, often integrated within sites that house agricultural activities or clay quarries. Farming and brickmaking operations are performed by the same workforce on a seasonal basis, as performed in several developing countries. For instance, during one of my visits to Iran on behalf of Bedeschi around three years ago, I stopped in the Golestan region situated in the north-eastern side of the country. This region is typically characterized by alternating flat and hilly terrain. Here I visited a brickwork, in which a new brick and roof title plant had been proposed. However, a static ring kiln was still operational on a seasonal basis. Iran is a very large country extending 2500 Kilometers from north to south, and is made up of 31 regions of varying climatic conditions. The entire northern region and the central highlands have a continental climate similar to that of central Europe, whereas the southern and central regions have a much higher temperature. The morphology of the terrain and the climatic conditions and greatly influenced the construction of buildings.

Buildings in the south contain flat terraced roofs that are similar to those present in the Arab countries, whereas those in the north have a strong European influence. Moreover, the higher quality of clay in the north has also favored the brick industry in the areas like Tabriz and Yazd. These cities border Azerbaijan and are home to around sixty ceramic companies.

Bedeschi’s association with Iran dates back to the year 1956.

Mr. Guglielmo Bedeschi fondly describes the travels of a former Bedeschi technician Mr. Romano Baldovino.

Mr. Baldovino travelled to Lebanon by sea and then to Iran’s capital Tehran by road.

During this period, the constriction of first Hoffman Kiln in Iran was commencing. This marked the start of Bedeschi’s collaboration with the Tehran Public Administration for urgent maintenance of existing brickworks.

Subsequently, a number of German and Italian companies built plants in several different regions of the country. Following the 1979 revolution, in cooperation with the Housing Foundation (a section of the Ministry of Public Works and Transport of the

www.asianceramics.com

Tehran public administration), a programme to renovate and mechanise the brickworks in Tehran was launched. The aim was to reduce pollution and address the problem of child labour in the sector. The Hoffman Kilns plant was running on highly polluting fuels like heavy oil and made extensive use of unskilled labour in all stages of the production process.

Throughout the following years, Bedeschi continued to be involved in a number of projects in the heavy clay, mining and cement industries.

Unfortunately, Iran has seen a drastic reduction in international trade since 2012, especially with European countries. This has unfortunately held back their technological development. To respond to the most urgent domestic needs, the heavily populated and industrialized region of the Isfahan area, was used to manufacture automated machines, dryers, and provide spare parts. During this period, several brickworks have started using natural gas, reorganized their preparation and production departments and installed locally built chamber dryers.

Following the recent international agreements, Industrial trade is due to resume from 2016 onwards. Italy is set to enjoy major trade benefits as a longstanding privileged partner of Iran. The market offers new and interesting prospects, as there are relatively few plants using advanced technology and capable of operating efficiently at an Industrial level (such as chamber of tunnel dryers, tunnel kilns and automation). The 2,500 brickworks in Iran are for the most part very small and operated on a season basis. In the future, these are likely to be merged to form a smaller number of modern facilities. Iran’s construction industry is predominantly focused on the residential sector with the aim of reducing the severe housing deficit caused by the increased urbanization. The population is predicted to increase from the current 80 million people to 100 million in 2040-2050. As a result, the constructing new houses is a top priority, alongside developing the urban infrastructure such as, shopping centers, offices, hotels etc. Simultaneously, it will be imperative to remodel many of the older building that are in a dilapidated condition.

Drawing from more than sixty years of experience in Iran, Bedeschi will certainly benefit from the new opportunities offered by Iranian market to build a number of modern plants equipped with fully automatic tunnel kilns. One notable example is the Honan Sofal project, which is a plant with a production capability of 600 tons/ day. It is under construction 200 kilometers from Tehran and owned by the Zanguie family, a longstanding manufacturer of bricks under the Azharshal brand name.

This modern turnkey plant achieves outstanding flexibility by using the latest technologies. Clay preparation is performed using a storage silo with automatic extraction, while to semi-continuous drying and firing in a tunnel kiln are controlled by a computerized system. A wirelessly controlled program allows for remote monitoring of the entire system. All loading and unloading operations are performed by completely automated systems.

AC 16-5

asian ceramics

53

Analysis: Sanitaryware

According to Kohler Kitchen & Bath, India-Sub Saharan Africa Managing Director, Salil Sadanandan, around 50% of the company's sales in India comes from projects business, where Kohler has pact with luxury flat builders and hospitality sector. "Project business is very important for us. We work with some of the leading developers, not only in residential but commercial and hospitality. 90% market today is the new building and only 10% is remodelling," he says.

Toto India

Last multinational sanitary ware entrant in Indian market, Japanese company Toto entered in India in 2014 by setting up a 180,000 sq meter plant in Halol, Gujarat, that has an installed capacity to produce some 500,000 pieces of sanitary ware every year. Japan’s largest maker of sanitary ware — including high-tech toilets that do everything from spray and dry bottoms to eliminate odors — spent about $58 million on the factory.

Toto, whose products are already used in a number of premier properties across the country, opened the manufacturing facility in India to expand in the fast growing market. The group chose Gujarat as the location for its new plant some three years ago, while current Indian prime minister, Narendra Modi was still chief minister of the state.

Toto’s president says he considered opening the facility in several different Indian locations – including Gurgaon near the capital, where many multinationals are based – but settled on Gujarat because of the positive business environment.

Commenting at the commencement of operations at Gujarat plant, Madoka Kitamura, President and Representative Director, TOTO Ltd. said, " TOTO has continued to draw on advanced manufacturing technologies developed in Japan to provide local customers with the very best in hygienic plumbing equipment. Now that we have the capacity to manufacture TOTO sanitary ware here in India, at the heart of Western Asia, we will be able to supply TOTO manufacturing technology throughout the country, as India continues to develop. We are committed to developing our business in partnership with the local community, so that we can establish roots here in Gujarat and earn the affection of people throughout India, now and in the future. " According to Madoka Kitamura “(Toto) got excellent cooperation from the Gujarat government. At that time (we) didn’t know Mr Modi much but when (we) started interacting with Mr Modi (we) felt that not only Mr Modi but all the staff working below them, were all working with the same kind of policy, the support and excellent service.”

According to Mr. Kitamurea, the three year project was relatively speedy, compared with his experience in other countries – an interesting comment, given India ranks almost in the bottom half among the countries in the World Bank’s ‘Doing Business survey.

Cera Sanitary ware Limited

Cera Sanitary ware, which had made a modest beginning in early 1980's by putting up a manufacturing facility of 0.3 million pieces per annum of sanitary ware, has grown over the years to become one of the largest sanitary ware producers with an installed capacity of 3.0 million pieces.

Cera is the third largest sanitary ware company in India and has a 20% market share of the organized segment. The company is engaged in the manufacturing of ceramic wash basins, wash basin pedestals, bidets, water closet pans, flushing cisterns, urinals and similar sanitary fixtures etc.

Located at GIDC Kadi, District, Mehsana, Gujarat, the company’s state of the art plant has undergone several capacity additions and de-bottle-necking exercises on recent years. The company has been experimenting in more than one ways involving technological advancement and improvising process parameters to optimize so to

54

asian ceramics

AC 16-5

achieve a well balanced plant capacity.

“After the launch of Swachh Bharat mission by the Central government, the demand for sanitary ware has increased exponentially.

We are meeting the demand by outsourcing, as we are running at 100 per cent capacity utilisation,” Bharat Modi, Strategic Advisor to Cera Sanitary ware. Amid high demand, Cera has to outsource about 20 per cent of its capacity.

“Considering the potential in the Indian market and the company also exploring new markets in West Bengal and Odisha, we felt the need to keep our capacities ready to meet the future demand,” Modi further adds.

Morbi- New Obsession

Morbi, which is known for 70 % of India’s total ceramic tile production is emerging as second important hub of sanitary ware production in the state. In last three- four years, about 70 small and medium firms have ventured into sanitary ware production.

Among these 70 odd units, about 20 are owned by the existing tile producers based in the town, while rest 50 are new start ups by new comers. Asian Ceramics spoke to about half a dozen new comers in the sanitary ware segment to know about the reason for this sudden rush in sanitary ware manufacturing in the town better known as India’s ceramic tile capital.

Jignesh Patel, owner of town based Neo Ceramics, a new entrant in sanitary ware production told, “ We have commenced sanitary ware production in Morbi to take advantage of favorable manufacturing conditions in the vicinity. Almost all the raw material, which are available in Thangarh are available in Morbi. The town has a better infrastructure in terms of gas availability, electricity and ancillary services needed for sanitary ware production.”

Jignesh further adds, “ A large number of units, which have started producing sanitary ware in last two years have been set up to take advantage of huge export potential of low cost sanitary wares to the Middle East, African and East European countries. Since, availability of all the key ingredients for sanitary ware in and around Morbi makes it one of the lowest production base in the state, a number of producers have joined the bandwagon in the town.”

Speaking to Asian Ceramics, Bharat Kanoria of Eagle Ceramics, another Morbi based sanitary ware producer told, “ Thangadh based sanitary ware producers have had great success in producing sanitary wares at very completive prices. We realized, that given all the requisites needed for sanitary ware production, we at Morbi can emulate their success. As compared to Thangadh based producers, we are better equipped with producing and marketing sanitary ware in domestic and international markets.”

Sanitary ware producers in Morbi Company

Location

Installed Capacity

Bell Sanitary ware

Morbi

375,000 pieces

Coto Bathware

Morbi

400,000 pieces

LalPar Potteries

Morbi

275,000 pieces

Neo Ceramics

Morbi

375,000 pieces

Delphi Ceramics

Morbi

300,000 pieces

Priya Ceramics

Morbi

350,000 pieces

Eagle Ceramics

Morbi

300,000 pieces

Samay Sanitary Ware

Morbi

300,000 pieces

Sun Ceramics

Morbi

350,000 pieces

Hirani Ceramics

Morbi

275,000 pieces

www.asianceramics.com

Talking Shop

Talking Shop

VitrA: an

appetite for growth AC talks to Mr Atalay Gumrah, Executive Vice President Building Products Division of Turkish industrial giant, Eczacıbaşı, about the company’s sanitaryware expansions and its ongoing technical partnership with Sacmi.

AC: Can you describe the current status of the company’s production capacity, and how this has changed over the last 2 years? (please include capacities by factory location) Atalay Gumrah: Eczacıbaşı Building Products Division operates globally and owns a total of 15 manufacturing facilities in 4 countries: 9 spread out over Germany, France and Russia, and 6 in Turkey.

Combined, these factories produce an average of 5 million ceramic sanitary ware (300,000 in Russia) and 37.5 million m2 tiles in several production sites in Turkey, Germany, France and Russia every year.

We are currently investing for a substantial capacity increase in our sanitaryware business.

AC: What have been the principal driving factors in developing this capacity? What has made VitrA move to take a more prominent global role?

AG: We are the first company to produce industrial ceramic sanitary ware in Turkey which is a country having a huge heritage of ceramics.

Our continuous appetite for operational efficiency, coupled with desire for innovation, was the drivers of growth. Adding relable quality and modern design attributes to our business have been well percieved by our customer base both nationally and internationally.

We developed a wide range of products and an extensive distribution network, and currently export to more than 75 countries. We have become a globally recognized supplier of bathroom products and tiles through acquiring the Engers Keramik, Villeroy & Boch Fliesen and Burgbad, alongside our core brand VitrA. Our existing capacity drives from the strong demand not only from our domestic market but also from international business partners as well as our proud heritage.

AC: Is the VitrA strategy underpinned by taking a greater share of the existing global sanitary ware market, or is it about expanding at the right pace to take up the opportunities presented by growing, new markets? (Or is it a combination?)

AG: Actually it is a combination of both because every market has

56

asian ceramics

AC 16-5

www.asianceramics.com

Talking Shop

different dynamics.

The way we see our business is a matrix of geographies and product categories where we try to maximise the value of the overall business.

AC: When expanding into new markets, or growing capacity there, what are the main challenges you face at presenting the “brand”? Is there a need to be supercompetitive on price at the outset, or do you target each market by aiming to raise customer expectations to the level of your products?

AG: VitrA is a globally recognized brand for its reliable quality, quick response times on product development in bathroom products and tiles. Althoug the price is one of the main attributes of any B2B operation, we are not only competing with price. VitrA is standing on its innovation, design and sustainability capabilities coupled with high quality and flexible production competencies.

AC: Where are you seeing the most growth at the moment, and what main areas are you targeting in the next 2 years?

AG: Obviously we will be growing in our main markets by gaining market share from competition. In Russia we will expand our capacity within 2 years as we benefit from our local manufacturing capabilities which brings us a substantial cost advantage, combined with European high quality output from a brand new factory.

On top of this Middle East, India and neighbouring countries will be the areas where we will invest more to our sales and marketing activities.

AC: Would the UK’s removal from the EU affect you in any way, and, in general, are you concerned about the potential destabilizing effect on the whole EU market if that was the case?

AG: UK is one of our strong markets, whether UK is within the EU or not we will continue to support our customer base in the UK. I also believe Europe is more strong now after many economic ups and downs in the last ten year and I do not see a big destabilisation in European market.

AC: Do you consider the Middle East and Central Asian markets as an area where you have an historical trading advantage as a country, and therefore do you think this is a region you could become dominant in?

AG: Turkish business has a natural adventage in Central Asia and Middle East. We are already a dominant player in mid/mid up segments of those markets and our distribution network is continuously growing in the region. The biggest difficulty is to manage uncertainities on those geographies. I believe we are good at managing it compared to the competitiors.

AC: Has the removal of sanctions from Iran meant that the country has become a major opportunity in the region, or do you feel that the emergence of the country as a large-scale exporter could become an issue?

AG: We are monitoring the developments in Iran. In the short term we

www.asianceramics.com

believe Iranian industry will focus more on the restructuring of the country, updating their current manufacturing framework to satisfy increasing expactation of rising middle class in Iran. That is why I do not see Iran as a large scale exporter before the end of the decade.

Also high custom duties prevent outsiders to grab a big market share in Iran, providing a good platform for local producers to enjoy.

AC: What plans do you have to install additional capacity in overseas markets, in terms of direct production? Would you imagine building new factories or taking over and expanding existing facilities would be your preferred strategy?

AG: Our primary focus is to expend our capacity where we already produce, for this we benefit from the experience and scale. There are several geographies that we are following for a potential production investment but it is not our priority for now.

AC: Finally, from a technical perspective… You have a longstanding relationship with Sacmi, and of course that has been one of the drivers behind your continued success. Can you provide details of your investments in Sacmi technology to date, and what plans you have to expand this into other areas moving forward?

AG: Historically Sacmi has been a good, reliable and trustworthy solution provider for VitrA. We did not only bought machinery from Sacmi but also we developped lots of projects together. Especially in the field of pressure casting there has been very successful joint projects.

Both VitrA and Sacmi are keen in innovation and operational efficiency, that is why we have lots of commonalities both in sanitaryware and tile businesses.

AC: What for you is the key determining factor in deciding on what type of technology to purchase? Is it fuel/labour saving that is most important, or is it because you wish to expand the type of product you make and the speed at which you can make it?

Where does Sacmi fit into this equation?

AG: There is not one parameter in deciding on technology. Cost of labor, cost of energy, ease of products on the production mix are carefully analysed by our investment teams to identify ideal layout with ideal machinary. Experts in Sacmi are acting as consultants on our option, because they have wide experience in different geographies with different companies and their previous aplication gives that accountability. More we ask, more we learn from them. I believe working as partnership rather then buyer-seller relation is the key factor. If our performance is good with the advises of our partners we believe more in them and we invest more into their technologies, their products. If we are open to them to explain our pain points, they are more eager to find solution. That is how together we identify the technology choices.

AC 16-5

asian ceramics

57

Insight

AUSTRALIA Total glazed tile imports (sq metres)

Total unglazed tile imports (sq metres)

58

asian ceramics

AC 16-5

Total glazed tile imports from China (sq metres)

Total unglazed tile imports from China (sq metres)

www.asianceramics.com

Total sanitaryware imports (no. pieces)

Total sanitaryware imports from China (no. pieces)

Leading santitaryware import sources (2015, sq metres)

Leading glazed tile import sources (2015, sq metres)

Leading unglazed tile import sources (2015, sq metres)

www.asianceramics.com

Total imports of refractory bricks (Kg)

AC 16-5

asian ceramics

25 59

Hunter and the hunted

Our Most Valuable Resource, Honest.

Dear Diary,

another ceramic company lose valuable The following article was prompted after watching yet h shoddy treatment of its most valuable staff and jeopardise its performance and future throug resource.

Department was re-branded as Human Sometime back in the darkest 1980's the Personnel since. I don't know when it actually Resources and things have not been quite the same igm Shifts if I recall correctly. Basically, happened – it was before Blue Sky Thinking and Parad nnel' looked after the 'people' in the for our younger readers there was a time when 'Perso fired. But that wasn't enough and so company – recruited, trained, promoted...hired and be a difference but before I explain what it Human Resources was born. There is supposed to beings to be a resource much as iron is supposed to be I'll simply say that considering human it creates a mentality of treating people ore is a resource or timber is is deeply impersonal and effectively manage staff and have them as things and takes away the empathy necessary to and their benefit & progress. work to the best of their abilities for the companies it was concerned only with basic I'm told that Personnel is an old, archaic term and that more 'tactical'. The relationship between employee issues and management, lets say it was the most basic aspects of this the employer and the employee is most important and relationship are only considered. gic - it is concerned more in planning On the other hand Human Resources is more strate ated. As if Personnel isn't. than execution. It is supposed to be more goal orient be a lower level and basic and Human I honestly don't see why Personnel is considered to vely interchangeable; a change was Resources more comprehensive. The terms are effecti s importance and in doing so I suggest made for changes sake to try to elevate a department s - people. that a fundamental error was made in the attitude toward nt employees in the company – very In the past there were distinctions between the differe managers, directors and so on. In recent hierarchical structures; workers, staff, supervisors, sometimes to flatten organizations times the policy has been to flatter organizations (and sive and experienced (usually quite completely!) – one aim of this was to take out expen always with the best of results it has senior) middle managers and 'empower' the staff. Not 'staff' and 'worker' have been replaced to be said. In even more recent times the words like and tech companies might even describe with terms like 'associate' (Wal Mart) and start ups and change the world. In my mind the people it employs as rock stars who inspire people elves from responsibility; of creating though this is evidence of the employer distancing thems rating to make the company or coope ow an image that we are all our own little bosses someh only go in one direction. gains and corporation successful though most of the advantages to of trying and rces resou So in combination this change to seeing people as to loyalty less feel that minimize responsibility has led to insecure work forces hy for their needs and empat less feel and see they se becau for who they work less loyalty to them too.

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

60

asian ceramics

AC 16-5

www.asianceramics.com

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

Hunter and the hunted

tho

s t h g u

ni a p m o c d a b d n a d o o g T h e re a re

es

and its something the industry really I see these changes effecting Asian ceramics companies enced and competent ceramic experi of surfeit needs to consider. Especially as there is hardly a there is plenty of competition join to ry indust ive workers and staff. Ceramics is not the most attract for the human resource. a major multinational company I was struck There are good and bad companies. Recently visiting ive technical facilities the staff had at their by the professionalism of the staff and the comprehens and trained and managed â&#x20AC;&#x201C; very much a disposal â&#x20AC;&#x201C; quite clearly the people were well educated posters on the wall and photographs on the feeling of a team that was striving for success. Even was involved in and committed to the that team happy a of the notice board conveyed the image activities. But I've also visited companies very latest quality practices, charitable works and social a very dismissive attitude to staff who ask where staff were taken for granted. An SME I know has Because this company has benefited in ions. for pay rises or want to review their terms and condit attitude that if staff aren't happy they can the past from cheap and abundant labour they have the could but that's not the case now and anyway leave and be easily replaced. Maybe in the past they pment costs, they have invested in misses the point that they have incurred training and develo if they think that new staff will be ially Espec a resource and now are happy to let it walk away. for long service payments or trigger some avoid will leave cheaper and that allowing people to I've heard of staff not paid on time, weeks or other contractual obligations. At the very worst though and bosses. months late and even physically assaulted by managers ant to have a good education and import indeed The ceramic industry is somewhat strange. It is to have a strong technical ments depart tion produc and cal it certainly helps for staff in the techni benefits from experience. There is a great background and training. But it is also an industry that it and done it before and know what will and deal to be said for having employees who have seen ng talent rather than treating it as disposable. retaini won't work. It is an industry that that thrives on can be easily replaced. that ts widge as An industry that shouldn't see its staff nies to undervalue their people. The compa cause that ning combi I think there are two factors to chy be a case of The Big Boss and first is the tendency in Asian companies for the hierar gods and emperors and everyone else elves The Big Bosses Chosen Ones to consider thems but today when business is going past the in model ssful to be serfs. Maybe this was a succe local companies in competition with to be driven by international trade agreements putting international ones it isn't. to Human resources is the idea that the Secondly, and following from changing from Personnel from aggressive corporations that Valley, Silicon and Ups industry can learn from American Start workers relying on food stamps and crying profit from driving down their costs to the point of having not have cool offices with bean bags or falling asleep at their desks. The ceramic industry does simply recruit another coder when one not can ry and work from home policies. The ceramic indust dollars more. burns out & leaves or gets an offer to move on for a few old 'Emperor' model or the very new very the either unlike that er We really have to consid needs to have its own model. Put simply 'Start Up' variant the ceramic industry is unique and expect loyalty and devotion in one can't we are not a sports team of superstars and we direction if it isn't reciprocated.

Until next time, Your humble servant

William Hunter

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

62

asian ceramics

AC 16-5

www.asianceramics.com

Silvia Spitaleri, Polytechnic School - University of Palermo (Industrial Design Laboratory III, Degree in Industrial Design)

BOLOGNA, 26 - 30 SEPTEMBER 2016 promoted by CONFINDUSTRIA CERAMICA

in collaboration with

CERAMICA CONFINDUSTRIA organized by

show management

Promos srl

free ticket online: www.cersaie.it/onlinebooth

The Largest and Major Ceramics Industry Exhibition in the World with 100,000sqm Exhibiting Space !

Date: June 1st - 4th, 2017 Venue: Canton Fair Complex, Guangzhou

Hosted by China Ceramic Industrial Association Organized by Unifair Exhibition Service Co., Ltd.

+86 - 20 - 8327 6369 / 8327 6389 overseas@ceramicschina.com.cn

www.ceramicschina.com.cn

In the next issue...

AC16-6 Features include

• Iran in focus: the heavy clay options • Cost control in Asian tiles • Middle East sanitaryware: evolution or revolution?

• Asian Tableware: a change in focus is this your own issue? sub

scribe online at www.asian

www.asianceramics.co

AC16-6

is this

? subscribe your own issue

online at www.

asianceramics

ceramics.com

m

.com

amics.com

is this your ow

www.asiancer

AC16-6

n issue? subscr

www.asiancer

ibe online at ww

w.asianceramics

.com

A N EW B EG IN N ING W A NE G N I N N I G BE A N EW B EG I N N I NG AC16-6

TH E HEAVY CLAY IN DU

amics.com

STRI ES OF IRAN

SEE

INSIDE S OF IRAN IE R T S U D IN Y A L C Y TH E H EAV

AGL: a Guja rat majo r

SEE INSIDE

TH E H EAVY C LAY IN D USTR IE

IN FOCUS:

S OF IRAN

SEE INSIDE

AG

a rat m L: a Guj

ajo r

Cost control in tiles Middle-east sanit arywa re Asian tableware: a top 20 Plus news, views and interviews in tiles AGL: a Gujarat major Cost control are w ry ta ni sa st ea edl id M are: a top 20 Asian tablew interviews s and lus news, view

S

P

US: C O t F a N I s ee U

C ICA

I N FOCUS:

Cost control in tiles Middle-east sanitaryware Asian tablew are: a top 20 Plus news, vi ews and inte rviews

PLUS: news, views, analysis and much, much more!

CAN YOU AFFORD TO MISS OUT?

CONTACT US TO SUBSCRIBE TODAY, OR USE THE FORM IN THIS ISSUE:

T: + 44 (0) 208 123 0839 E: enquiries@asianceramics.com

www.asianceramics.com

ULTRA-HIGH QUALITY OF THE SLAB SURFACE

UNLIMITED EXPANSION OF DESIGN POSSIBILITIES

BELT CLEANING WITHOUT MACHINE DOWNTIMES

DIGITAL DRY DECORATION FOR AN INFINITE RANGE OF EFFECTS

The continua+ compaction belt is always moving with respect to the ceramic powder. So unlike the steel plunger in a traditional press, it never gets dirty and always ensures the pressed slab has a perfectly flat and glossy surface.

Thanks to Sacmiâ&#x20AC;&#x2122;s ddd (digital dry decoration) technology, continua+ lets manufacturers maximise digital design potential, providing innovative aesthetic effects that would be unattainable with any other type of system.

continua+ can be used to manufacture porcelain ceramic slabs and tiles in a wide range of thicknesses and sizes, customised both on the surface and in-body.

The aesthetic effects range is practically unlimited. www.sacmi.com