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GLOBAL CEMENT INDUSTRY. KNOWLEDGE.
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ISSUE 39
JULY / AUGUST
LEADERS Q&A
Hans Karlander CEO of Thomas Concrete
CW Research
White cement: a promising outlook through 2022
Refractories Market
Italian cement market
The shift from quantity to quality
A challenging evolution
The information you need to make the right decisions.
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STAFFBOX How paradigm shifts are shaping the cement industry
For the 39th issue of CemWeek Magazine we coveredinsightful industry’s key trends with a special focus on the white cement and the global refractory market, and an indispensable interview with Hans Karlander, CEO of Thomas Concrete Group. Our conversation withthe President and CEO of Thomas Concrete Group, Hans Karlander, the Swedish key supplier of ready-mixed concrete,resulted in an enlightening debate. Topics such as main economic challenges, new markets, new plants, as well as the company sustainability practices were some of the issues that guided this interview. While we are always keeping up with the actual industry movements and current scenarios, it is equally crucial to keep up with new currents of the leading industry sectors. With consumption growth expected to surpass that of gray cement, the white cement market has occupied a prominent place in this issue. CW Research examines the configuration of the industry and decodes the drivers behind the increasing popularity of the premium construction material as a relevant trend in the industry. Like in the white cement sector, CW Research noticed a change in the global refractory market. As the industry moves towards a paradigm shift, where quality surpasses quantity, CW Research analyzes figures and trends, and shapes the outlook of a sector that is poised to reach almost 40 million tons by 2021 providing to this issue a strong analytical facet. This issue also features an important analysis with respect to the evolution of cement and clinker FOB prices in the Med Basin and Persian Gulf – Arabian Sea regions. Aside from monitoring fluctuations in pricing, these price assessments explore traders’ expectations and opportunities when faced with challenging outlooks. Whether we are in a turbulent moment for the industry or in a calm and stable time, we always feel the urge to provide relevant news about its main indicators, such as the latest facts and figures on cement volumes, energy prices, and relevant people in the business, regional developments, equipment, and construction projects. This issue followed this urge and became an essential collection of visions, detailed outlooks and an insightful industry’s state of the art.
ROBERT MADEIRA CEMWEEK PUBLISHER HEAD OF CW GROUP RESEARCH
Luísa Azevedo Editorial Coordinator
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CW Analytics
contents FEATURES 4 Leaders Q&A: Hans Karlander Hans Karlander, Thomas Concrete Group CEO, gave an exclusive interview to CemWeek Magazine to discuss important topics in the industry 10 CW Research: White cement growth to accelerate in the next five years A broad trend analysis of the white cement market in between 2012 and 2022 18 CW Research: Refractories market: a shift from quantity to quality CW Research has performed an analysis of the market, making a description and forecast of past and future trends in refractory trading 24 Sustainability and developments in cements The production ofcement is responsible for 3-5% of total global carbon emissions 28 Country Snapshot: Italy: a struggling adaptation to a new market reality The reconfiguration of the cement industry is helping pave the way towards a stable future 30 CW Research: Persian Gulf and Med Basin CW Research’s Cement and Clinker Price Assessments are monthly price markers, offering end-user centric FOB / CIF / CFR pricing information for prompt deliveries of cement and clinker 32 Country Snapshot: Tunisia: increasing exports and housing support a growing cement market Tunisia reinforces its position as a major cement exporter
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DEPARTMENTS 1 EdiTor's letter How paradigm shifts are shaping the cement industry 3 numbers in brief 1Q2017 cement Ex-Works prices tempered by increased competition 34 research Cement Volumes Cement Energy Markets 38 people People on the move
48 Construction & building materials by bmweek.com Construction and building materials update 50 Petcoke Market update from PetcokeWeek.com Petcoke industry news update
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regional reports 40 Europe, Middle East & Africa 42 South-East Asia 44 Asia Pacific 46 Americas 2
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52 Equipment Equipment and notable projects 54 cw group meeting agenda CW Group’s upcoming events 55 BUZZ Top 20 CemWeek and BMWeek stories
numbers in brief
1Q 2017 cement ex-works prices tempered by increased competition Chinese cement ex-works price increases more than 20 percent year-on-year, while global ex-works price decreases during the quarter.
For the quarter ended March 31, 2017, cement manufacturers struggling with overcapacity continued to see negative pressure on exworks pricing, particularly on a year-on year comparison. In Saudi Arabia, overcapacity is expected to linger as construction activity is not expected to rebound. CHART: Ex-works cement prices (national averages) 1Q2016
120
4Q2016
1Q2017
100
US
Philippines
Colombia
Pakistan
Saudi Arabia
China
Source: Company quarterly reports, CW Research
On the other hand, Chinese manufacturers were able to raise prices by as much as 20 percent year-on-year, owing to a strong construction environment. Though with USD 2 / ton less expensive than its 1Q 2016 level, the average ex-works price of US cement manufacturers remains one of the most expensive in the world, namely 65 percent more expensive than that of Chinese manufacturers. CHART: Ex-works 1Q 2017 YoY (%)
1Q2017 YoY -47.0% to -23.0% -23.0% to -16.4% -16.4% to -9.8% -9.8% to -3.1% -3.1% to 3.5% 3.5% to 10.1% 10.1% to 16.8% 16.8% to 30.0% 30.0% to 35.0%
Source: Company quarterly reports, CW Research
Other significant changes occurred in Indonesia, where prices dropped by more than 18 percent due to growing market competition owing to new market entrants. In Egypt, ex-works prices fell by more than 46 percent year-on-year, pressured by the devaluation of the Egyptian pound. The Russian recovery from the crisis has started to reflect on cement prices, which have been steadily growing to almost USD 60 per ton. www.cemweek.com
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Leaders Q&A
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Thomas Concrete Group
CHIEF EXECUTIVE OFFICER
With more than 60 years of history, Thomas Concrete Group has a strong focus on environmental responsibility. The company, still owned by the Thomas family, operates in the US, Germany, Sweden, Poland and Norway.
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Leaders Q&A
H
ans Karlander, CEO of Thomas Concrete Group , gave an exclusive interview to CemWeek Magazine to discuss topics such as the company’s main economic challenges, new markets and new plants, as well as its sustainability practices
Q: Thomas Concrete Group is a company with more than 60 years of market. Nowadays, how do you describe the role and the main focus of the group?
A: We are a family-owned international Group doing business in a very competitive and cyclical market. Hence, we need to be better than the large global stock market companies mainly focusing on their raw material business and seeing readymix concrete as a channel. We also need to be better than the small local readymix companies that we compete with. In short, we have to be as efficient and professional as the large and as flexible and entrepreneurial as the small.
Firstly, we are working hard on improving our profitability so that we can continue reinvesting in e.g. plants, trucks, people, repairs and maintenance. Reinvestments that we were not able to do during the very challenging years, after the financial crisis in 2008. Secondly, we are building one team and one Group, supporting and inspiring each other and learning from each other. We believe we are better off for the future if we stick together and make sure that we continue to run and serve our customers locally but make use of the competence, financial robustness and sharing costs between plants, regions and countries. We look upon ourselves as team Thomas. Thirdly, we are investing a lot of time and efforts in building a stronger customer focus in the entire organization. We are a non-integrated Group, and independent from the raw material suppliers
I believe we have highly competent and knowledgeable people in team Thomas Our vision is to be perceived as the best in our industry. Every day we have to earn our customers’ faith and earn the reputation of us being the concrete specialists. Our main focus in the group can be divided in three areas; 6
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and independent from the contracting companies. Hence, we need to be great in customer service and in communicating our product offer.
Q: During the last two years, sales have increased by over 50 percent. What is the secret of Thomas Concrete to have grown so fast? A: There are no secrets
really. During many years, we have had a long-term perspective to our business and we are carefully investing in areas we believe are important to the Group for the future. All of us in the company have an ambition to every day serve customers in the best way possible. We have high-quality products and reliable services, and I think that our customers see and appreciate that we are a very committed team.
The construction market in Sweden is relatively strong right now I believe we have highly competent and knowledgeable people in team Thomas and there is a lot of passion and engagement in what we do. This is very important for any company that wants to be successful, independent of size. You know, sometimes
the simple things of business can be forgotten if companies grow from being a small little shop around the corner to being a large global stock market company. Regardless of size, you will have to think long term, have engaged people and satisfied customers. We are on an inspiring journey of developing our Group for the future. Many and very good activities have been done during the last few years and today we are acting in a more modern way. In spring 2015, we launched a brand development project. Today we have the same name and brand identity in all our companies. This has given an internal injection of energy and boost, to continue moving forward and developing our way of doing business. At the same time, we have to be humble and admit that the construction market is significantly better today than a few years ago. The combination of a growing market and the very many improvements done and ongoing is a good blend.
Q: How do you describe the ready-mixed concrete market in Sweden?
A: Generally the ready-mix market in Sweden has been dominated by one of the big global raw-material companies also running ready-mix and the two largest contractors that also have their own readymix company. We are the only independent company that is of the same size as they are. Compared to other countries, there are also very few suppliers of cement in Sweden. So it is easy to conclude that our company has a challenging industrial position. We compete with our main supplier and at the same time we compete with two of our biggest customers. So for us there is no option, we have to be perceived as the best in our industry. The construction market in Sweden is relatively strong right now. The residential sector has grown and also infrastructure projects are substantially more frequent than a couple of years ago. However, the competition in the ready-mix concrete market is tough and the margins are fragile. Sustainability and environmental aspects are high up on the agenda in Sweden, as in most countries around the world. We as an industry have to take a bigger
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Leaders Q&A responsibility and improve our way of working in order to become more environmentally friendly. But it also means that the concrete companies in Sweden need to be better in explaining the advantages of e.g. ready-mixed and pre-casted concrete vs wood. I would say that concrete is widely sustainable. It is a proven and natural, beautiful and creative material. Concrete absorbs CO2, it is 100% recyclable, strong and durable and it is locally produced. On top of that, it does not burn and it does not mold. I think the political direction and media coverage in Sweden today do not give a relevant and fully true picture of what ready-mix concrete actually stands for. In residential construction every material should be used for its own merits, not because of political decisions or political guidance based upon questionable facts.
Q: Thomas Concrete Group operates a total of 147 plants and is the largest independent supplier of ready-mixed concrete in its
markets. Most of the group's plants are located in Europe, so what are the expectations for the European market?
A: Well, Europe is a big and complex market. Whereas many countries in southern Europe were hit badly in the financial crisis in 2008, the northern countries have been in quite good shape the last few years. Therefore, the construction market has been very different from south to north.
I would say that concrete is widely sustainable The political arena in many of the European countries has changed a lot during the last few years. Brexit has caused many concerns and the results of several national elections have been a surprise to many. However, I believe that the European economy, despite the difficulties, is on the right way and also most statistics show this. Actually, for our company, I am more concerned about what happens outside Europe and what the implications this might have on the overall European market, since much of the European business is linked to export. In the near future, we expect our business in Sweden, Germany and Norway to develop in a relatively positive way. But unfortunately we forecast that our business in Poland will continue to struggle also during the autumn.
Q: In 2015, Thomas Concrete Group acquired assets of Coastal Concrete in an American company and in 2016 purchased three more concrete plants in North and South Carolina. How did operations in the US fit strategically into the company?
A: We have been in the US since 1985 and the overall strategy is the same today as it was at that point. As a family-owned Group we believe it’s good to be in two continents in order to split opportunities and risks. From a risk point of view, maybe it was more important a few years ago since the world nowadays is tighter together and market development is more linked. Still, we strongly believe it is a strategic advantage to be in the USA and Europe. The acquisitions made recently in the USA have all been natural bolt on plants, expanding our rings that we already serve. So it gives us a greater possibility to serve our customers in the south east. We have our main office and most administration in Atlanta for the USA market and by growing our size and volumes we increase efficiency and can reduce our costs per yard further. I hope that our customers in the USA perceive us as a local American company and with the robustness and competence of an international Group.
Q: Sustainability is an increasingly relevant concern for the industry. Several articles mention that the ecological characteristics of concrete make it a construction material of choice for that purpose. As a company in the sector, how does sustainability fit into your vision? A: Sustainability is and has been important to
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Thomas Concrete Group since a long time. Safety and health of everyone in team Thomas is crucial. It goes without saying that, since the company was established in 1955, we have shown great care for the people in the team and what is commonly known as human rights. As a Swedish Group, this is something we take for granted, but also realize that we have to continue to nurture and work towards.
The environmental aspects of sustainability are clearly part of our strategy
The environmental aspects of sustainability are clearly part of our strategy. Our internal mission statement is “to be the closest to our customers and together actively contribute to building a sustainable society”. I think this says very clearly what we see as our task. We continuously develop our product offer to become more environmentally friendly. In the USA, we are e.g. offering our customers “Thomagreen”, a unique readymixed product produced with CarbonCure
technology. By the end of 2016, over 1000 tons of CO2 had been prevented from affecting the environment with the help of Thomagreen. In Sweden, we e.g. launched a unique pre-casted product for double walls “Thomas Miljöstomme” (Thomas environmental frame) with 30% lower CO2 effects compared to ordinary precasted walls. We are continuously working to reduce our use of fresh water and fossil fuel. In several regions we let our drivers take lessons in eco-driving. Every day we strive hard to recycle concrete residues and waste water in order to gain a circular economy on our raw materials.
Now, it is imperative that we use the fruits of the recovering market to reinvest and build for the future. Internally, we are talking about responsible growth and making us, as a team, stronger than ever before, so that we are prepared when the market potentially gets softer. It is unfortunately not a question of if, but when, the next downturn comes. But right now the construction industry and readymix market in the USA look very positive and the forecasts are promising.
So for us, sustainability is not only about our vision but rather how, step by step, we can become better and help our customers improve. Showing that we care, for us people and for the environment, is crucial.
Q: What are the main expectations that Thomas Concrete Group has for the industry in North America? A: Our expectations are high. As most players in the American construction industry we had very tough times during several years, after the massive downturn in 2008. The market is now much stronger and volumes are growing. During the tough years we did not have the possibility to invest enough in e.g. people, plants and trucks. But we decided to stay in the market and make the best out of the situation.
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FEATURE
cw research
White cement demand outlook driven by increasing purchasing power
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A broad trend analysis of the white cement market in between 2012 and 2022, including figures for capacity, production, international trade, end-users, and consumption.
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FEATURE
W
hite Portland cement, as a more expensive alternative for grey cement, has its own regional patterns and endusers. CW Research has prepared an analysis on this commodity, which includes an extensive look into installed capacity, production, trade, and consumption trends across all global regions in the past, present, and future (2012-2022).
in the segment. Those are Cementir Holding, LafargeHolcim, Çimsa, Cemex, HeidelbergCement, JK Cement, RAK White Cement, UltraTech, Saudi White Ceent, and Adana Cimento. Turkish companies are growing fast, with Çimsa on the track to becoming the third largest producer worldwide, as a new plant will initiate operations before the end of the year, and after Adana Çimento launched its own new factory in early 2017.
Capacity and Production For 2016, CW Research estimates that a The global average utilization rate in the white cement industry is currently at around 64 percent. Between 2012 and 2017, global white cement capacity grew by a CAGR of two percent, with Eastern Europe and CIS showing the largest increment.
World white cement production - 2017E North America La�n America E Europe & CIS Western Europe
China remains the country with the largest worldwide capacity for white cement production, with a share of 25 percent of the total, followed by the Middle East, with eighteen percent. Actual production percentages differ slightly, with China achieving 27 percent while the Middle East stays at seventeen percent. In terms of manufacturers, roughly 60 percent of all white cement output is produced by the ten largest companies
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Since 2014, key mergers and acquisitions in the cement sector have been consolidating the international white cement market. The fusion between HeidelbergCement and ItalCementi, concretized in October 2016, is probably the best example of that. During the process, Cementir, through its subsidiary Aalborg, was able to secure two white cement plants in Belgium, formerly belonging to HeidelbergCement. Also last year, the company acquired the Italian manufacturer Sacci that, among other assets, owned a white cement plant.
Africa Asia ex-China Middle East China 0.0%
5.0%
China Africa La�n America Source: CW Research
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10.0%
15.0%
Middle East Western Europe North America
20.0%
25.0%
Asia ex-China E Europe & CIS
30.0%
International Trade White cement tends to be produced in places that provide good access to raw materials and offer low production costs. Henceforth, factories don’t always coincide geographically with final markets, creating the opportunity to a high volume of international trade. The main importing region is North America, with the United States absorbing large quantities of white cement from Canada and Mexico, and smaller quantities
Some 60 percent of all white cement output is produced by the ten largest companies
from China, Europe, Turkey, and Egypt. Interestingly, the region is the only in the world where bulk imports represent more than 50 percent of the white cement influx. This is made possible by the economy of scale, the United States being such a large market, and by good port infrastructures. Some domestic companies have become used to repacking imported white cement and selling it under their own brands. To the contrary, regions like China and Africa handle the vast majority of their white cement influx and outflow in bags.
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FEATURE In the Middle East, most of the trade is done within the region. New additions in capacity are expected to turn the flow of imports towards a more interregional pattern; however, those are still dependent on a recovery in oil prices, a main driver for investments in the region. Turkey is the main exporter in the Middle East and is expected to consolidate its position, with additional capacity planned for the near future.
The expanding gap between production and consumption in the U.S. is the m
North America
Meanwhile, in Brazil, the construction of new production lines will provide for self-sufficiency, thus reducing the need for imports from countries like Mexico. This will return Latin America to its traditional status of net exporter.
Canada
US
Western Europe is the leading exporting region in the world
Mexico
Latin America
Western Europe is the leading exporting region in the world, with Eastern Europe and CIS trailing ever closer. Spain and Denmark command a large part of the exports from inside Western Europe, with their destination being mainly other European countries and the United States, and, to a less extent, Africa and Latin America.
Bags
At the global level, white cement is overwhelmingly traded via sea routes, which account for 93 percent of all internationally freighted volume. The remaining seven percent is carried through land.
Big Bags Bulk
Source: CW Research
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main driver for imports (2017)
E Europe & CIS
Western Europe Denmark
Spain
Russia
China
Turkey Egypt
Saudi Middle Arabia East Asia ex-China
Africa
%
93%
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FEATURE Consumption Between 2012 and 2017, worldwide white cement consumption increased by a CAGR of 1.2 percent. The global economic crisis and muted recovery, a low price environment, and economic and political uncertainty in some key markets are significant drags on the growth of white cement demand. During that period, consumption of white cement rose faster in North America, where demand escalated by eight percent in the United States alone, and in Latin America, with Mexico’s intake jumping thirteen percent. Traditionally, the Middle East is a large consumer of white cement, thanks to a high spending capacity and a demand for materials with insolation properties. However, the fall in oil prices led to a decrease in that spending capacity, which in turn reduced investment on public and private projects. In Saudi Arabia alone, white cement demand decreased by five percent over the last five years, while in Egypt it came down by four percent. In 2017, China will continue to be the largest consumer of white cement, with a total global market share of 27 percent. It is followed by the Middle East with 19
percent, and Asia excepting China with thirteen percent, Western Europe with eleven percent, Africa with ten percent, North America with nine percent, Latin America with seven percent, and Eastern Europe and CIS countries with six percent.
In the Middle East, demand is expected to recover by 2022 White cement has a wider range of end consumer segments compared to gray cement. In 2017, CW Research projects masonry will continue to absorb the largest amount of white cement, with a share of 62 percent, followed by architectural precast, with 31 percent, and pool coating, with just three percent. White cement use in masonry is more prevalent in Africa, where the segment represents around 80 percent of total demand. Western Europe and North America are the only two regions where architectural precast dominates over
Regionally growth FROM 2017-2022
2022F E Europe & CIS La�n America North America Africa
2017E
Western Europe Asia ex-China Middle East 2012
China
Source: CW Research
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masonry in terms of white cement use. Going forward, emerging and developing markets will continue to use white cement mostly for masonry, while demand growth in Western Europe and North America will be driven by architectural precast. For the period between 2017 and 2022, CW Research forecasts a worldwide CAGR growth of three percent on white cement consumption. This means that demand for white cement is going to increase faster than for gray cement, being expected to increase by a CAGR of two percent. The Asia except China region will be the fastest growing consumer, with India alone contributing with a CAGR of eight percent. China’s booming construction will also contribute with a steady rise on demand, notwithstanding the risk of a new deceleration in that sector, similar to that of 2016. In the Middle East, demand is expected to recover by 2022. However, its CAGR will be slower than the global average, as geopolitical conditions will continue to be a burden on local markets. Eastern Europe will likely show the poorest regional performance, given that local economies have reached their maturity and GDPs are now growing much slower. Taking into account that white cement is normally sold for two times the price of grey cement, a demand increase for the commodity in developing and emerging economies will be intimately linked to the pace of purchasing power improvement in those markets. White cement demand will accelerate in the next five years, with Asia except China leading growth. Although both additional capacity and
consumption will be unevenly distributed among regions, their relative position in the white cement market will likely remain the same, with China leading by far on both fields, followed by the Middle East. On a trade level, the United States will also continue to be a magnet for imports, while exports will still be led by China, the Middle East, and Eastern Europe and CIS.
prices, the main predictor of new investment in the Middle East.
About the report CW Research’s Global White Cement Market and Trade Report (2017 update) examines the worldwide white cement industry and presents the latest market data which cover the 2007 – 2017 period, with a mediumterm forecast until 2022. The comprehensive report includes cement consumption and production figures, import and export data, as well as pricing trends and white cement capacity developments. Additionally, this data-rich research product provides extensive quantitative information on consumption, usage segments, production, local prices, trade prices, type of handling, trading facilities and trade-flows, by region and major countries. Furthermore, the report analyses region specific user segments by white cement type and their main consumption drivers as well as perspective for 2022.
Compared to its grey counterpart, white cement is usually more resistant to economic cycles and provides larger margins to producers. However, its production is still costlier and the emergence of substitutes in the market can pose a threat to white cement. Other risks include a slowdown in the Chinese construction sector and unfavourable variations in oil
More information about the report can be found here: http://www.cwgrp. com/research/research-products/ product/200-Global-White-CementMarket-and-Trade-Report-2017update
For more information and placing an order, please contact Liviu Dinu, Market Services & Marketing Consultant, CW Group (Europe), by phone at +40-74467-44-11, or e-mail at ld@cwgrp.com.
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cw research
Refractories Refractories market: market:
aa shift shift from from
quantity
to quality The study provides quantitative information on key industry trends, market size (volume and value) and growth of each of the refractory segments, production volumes, end-use by refractory type and by industry.
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cw research
he global refractories market has made a clear move from quantity towards quality. CW Research has examined the market, analyzing past trends and providing a fiveyear outlook, including end-users, producers, and consumers.
In Europe and CIS region, producers are heavily dependent on the import of raw materials. Nevertheless, Europe is the major hub for development of high quality refractories.
In 2010, demand for refractories was around 36 million tons. By 2021, that figure is expected to surpass 40 million tons. Asia alone is responsible for 80 percent of total consumption of refractories.
A clear trend towards lower quantity and higher quality has been emerging
By 2021, China will remain the largest consumer, with an intake of 26 million tons of refractories. Demand in the region of Asia except China will register the strongest growth in 2017-21, mainly on account of cement capacity additions in the region.
In the Middle East, one of the three regions where demand for refractories increased during the period between 2011 and 2017
The global refractories market
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(together with China and a very slight growth in Asia-Pacific), consumption will slow down, as cement overcapacity forces kilns to shut down. A clear trend towards lower quantity and higher quality refractories has been witnessed in the refractories market, which is especially noticeable in the United States. As presented below, specific end-users choose particular strategies to increase the lifecycle of their refractories. Other important trend in refractories consumption concernsthe increasing preference for monolith over brick refractories, and a growth in the share of basic refractories, in detriment of acidic ones. Those tendencies, CW Research predicts, will only intensify in the future. In terms of producers, major mergers in the sector, like the one between
the intake of refractories: between the 1950s and the 1980s, the average volume of refractories used per ton of steel produced fell from 127 to 20 kilograms.
Regional Refractory consumption CAGR (%) CAGR 11-16
40%
China 40%-
Asia-PacificJapan
CIS
CAGR 17-21
Refractories by end-users
In part, this has happened due to a conversion from open hearth furnace to basic oxygen converters. At the same time, the use of custom-made refractories purposely manufactured for the steel industry has become a common practice. For electric arc furnace steel, the lifespan of refractories is enhanced by oxide injection, scrap preheating, and soft blowing lime; while for basic oxygen steelmaking that is achieved through a splash of slag layered on top of the bricks.
Steel manufacturing continues to absorbthe largest quantities of refractories, since high temperatures in production translate into an intensive rate of replacement. However, steelmakers have made an effort to reduce
For the coming five years, CW Research forecastssteel will continue to have the biggest share in refractories consumption at the global level. By 2021, the steel
Europe North & Central South America America
Africa
Middle East
Source: CW Research
Magnesita and RHI, have been responsible for the consolidation of the market. There has also been a tendency for a more vertical integrationin the refractories industry, with merges between supply chain operators and sources of raw materials,
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cw research industry will consume around 30 million tons of refractories, equivalent to 60 percent of total consumption. Growth in the Chinese steel industry will be a major factor supporting the increase in refractories consumption. Refractories intake per tonnage of steel is still high in China compared to the global average, probably due to their availability of raw materials.However,efforts are being made to align the country with the rest of the world.
Steel continues to be the largest end-user of refractories The second largest segment usingrefractories is cement. Consumption within the sectorwill continue to grow at a healthy rate, supported by demand in the Asia-Pacific and Europe regions. By 2021, the sector will consume nearly four million tons of refractories. On the other hand, aluminum is the smallest end-use segment by consumption, while being the sector with one of the most promisingoutlooks in terms of capacity addition, especially in China and the Middle East. Other end-use segments include lime and cooper.
Total refractory usage by end-use segments (million/tons) Copper Cement
22
August / September July/August 2017 2016
Lime Steel BOF
Other
40
20
Price and market value
2010
The price of refractories has increased across almost every region during 2017. In a large measure, this was due to the cost of raw materials. China, the main producer, introduced new environmental restrictions and suffered a series of stoppages in its mines, leading to lower supply.
Aluminum Steel EAF
2017E
2021F
Source: CW Research
Silica, the cheapest ingredient used in refractories, was sold for around USD 500 per ton. High alumina, used in the production of acidic refractories much like silica, was sold for around USD 900 per ton. Finally, the price
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of zirconia has remainedmostlyunchanged at around USD 2,200 per ton. Zirconia is quite rare, and production is concentrated in Australia and South Africa, which combined represent 70 percent of global production.
cement industry. Demand for cleaner steel will require an increase in the purity of refractories, and R&D departments are set to answer by trying to advance beneficiation and processing technologies.
About the report CW Research’s Global Refractory Industry Report and Forecast analyzes the use of refractories in the manufacture of steel (BOF and EAF), non-ferrous metals, cement, calcination of lime and a host of other high-temperature applications. Natural and synthetic shaped (cast and pressed) refractories covered in the report are primarily products used in high-temperature furnaces / kilns, reactors and other industrial processing units typically facing usage temperatures in excess of 1000°F.
In its base scenario, CW Research expects the global market size to reach USD 41 billion by 2021. The market value of traded refractories will increase by a CAGR of three percent over the next five years, compared to a CAGR of two percent in terms of volume of sales, again pointing towards a trend of lower quantity and higher quality. Contrary to what happens in terms of production and consumption, the market value will not be as much concentrated in China, which is forecasted to account for 50 percent of the total. Given the high cost of importing raw materials, the share of the United States, Europe, and Japan in the market value of refractories will continue to be higher than their weight on production and consumption.
The price of refractories has increased across almost every region during 2017 Going forward, China will continue to be the main supplier of raw materials, producer and consumer of refractories, while steel dominates in terms of end-use segments. Over the next five years, buyers will continue to move their focus from quantity to quality, and from bricks to monoliths. Consumption growth will concentrate around China’s steelmakers and the Asian
The report provides quantitative information on key industry trends, market size (volume and value) and growth of each of the refractory segments, production volumes, enduse by refractory type and by industry, import/export of refractory material by region and major country. The study also identifies past and future consumption trends and innovations, as well as challenges faced by refractory manufacturers and end users. Additionally, CW Research examines in detail the consumption drivers for main user segments to provide the necessary insight to identify trends for implementation of tactical and strategic business plans for major industrial segments. More information about the report can be found here:http://www.cwgrp.com/research/research-products/product/19-global-refractory-market-report
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August July/August / September 2016 2017
23
Article
Sustainability and developments
in cements aman Mangabhai, Chairman of Events and Marketing, World Cement Association wrote an article for this issue on sustainability developments in the cement industry and addressed ways in which CO2 emissions can be reduced in the industry. Concrete is the most widely consumed man-made material in the world. The production of cement is responsible for 3-5% of total global carbon emissions—the world’s second largest emitter of carbon dioxide (CO2). Traditionally, Portland cement has been manufactured using natural geomaterials (calcareous rocks such as chalk or limestone and argillaceous rocks such clay or shale). The materials are heated in a kiln at a temperature of 1450 °C, which forms clinker. The clinker is cooled, ground and blended with gypsum to regulate the setting. During the clinkering process CO2 is emitted from the decomposition of limestone and burning of kiln fuel. It is estimated that 700 -800 kg of CO2 is emitted per tonne of cement. The raw materials are becoming difficult to access with demand for Portland cement 24
August / September July/August 2017 2016
increasing worldwide. Indeed, whilst the world annual cement production in 1970 was about 500 million tonnes by 1994 Chinese production alone had reached 400 million tonnes, with the total world production being at 1000 million tonnes. Chinese production was estimated to be 2400 million tonnes with the world total of 4200 million tonnes in 2016. China is now producing 55% of the world’s concrete, and India is forecast to overtake China in the next 20 years (Figure 1).
The raw materials are becoming difficult to access with demand for Portland cement increasing worldwide In order to reduce the CO2 from the manufacture of Portland cement new developments in cement manufacture have taken place, which include modern cement plant (precalciner, milling
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technology) use of alternative raw materials (pfa/ waste materials) and alternative fuels (biomass/tyre chips). This paper briefly describes a few developments in cements calcium sulfoaluminate cements alkali activated calcium metasilicate, Calciumhydrosilicate cement MgO based cements blended cements
Calcium sulfoaluminate cements (CSA) Calcium sulfoaluminates were developed in the 1970’s in China by China Building Materials Academy. Its initial intended use was manufacture of self-stress concrete pipes due to swelling properties. Ettringite is formed during hydration and depending on the presence of calcium hydroxide the Ettringite swells in the absence of calcium hydroxide the ettringite does not expand and contributes to the strength of the material. Subsequently it has found many uses such as fast setting mortar, tile adhesives and concrete. The manufacturing process is similar to Portland cement but limestone is partially replaced with sulphur and aluminium bearing minerals and clinkering temperature range is 1200 to 1300 °C. Aether and ALI CEM Green
Global cement production to 2050 Low-Demand Case
6,000
High-Demand Case
Million tonnes of cement
5,000 Africa and Middle East
4,000
Non-OECD Europe & Euasia
3,000
Latin America
2,000
Other developing Asia China
1,000
2010
2020
2030
2040
2050
India
Calcium hydrosilicate cement
OECD
Calcium hydrosilicate cement has been developed by Karlsruhe Institute for Technology (KIT) in Germany which use less lime and burning temperatures can be significantly reduced. It is marketed by Celitement.de however to date commercial production is low.
Figure 1 Source: CSI India energy and cement road map projection 2012, www.wbcsd.org
have been produced by LafargeHolcim and Italcementi respectively. Ecobinder project is developing a standard for CSA cement – Part 1, Composition, Specifications and conformity criteria for CSA cements whilst China already has standards (National Standard of Calcium Sulfoaluminate Cement).
such as wollastonite/pseudowollastonite (CaO․SiO2), where clinkering temperature is reduced to 1200°C This contrasts with the high-lime phases that comprise ordinary Portland cement (OPC). The setting and hardening characteristics of Solidia Cement are derived from a reaction between CO2 and the calcium silicates.
Calcium metasilicate
Alkali-activated cementitious materials (AACM)
Solidia Cement™ developed a nonhydraulic cement composed primarily of low-lime, calcium silicate phases
sodium or potassium based) and AACM powder or blend of such powders (fly ash, ground granulated blast furnace slag) with or without the inclusion of subsidiary constituents, with or without the incorporation of Portland cement, which under aqueous conditions, react to produce a hardened monolithic material. AACM materials have been used in building in China and non structural applications.
AACM are defined as a substance consisting of an alkali activator (e.g.
MgO based Magnesium Oxide (and Magnesium Oxy Chloride)were used extensively up until the 1930’s especially in “terrazzo” floors. The promotion of more cost effective Portland cement led to a decline or stop of MgO cement for structural and conventional uses.
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August July/August / September 2016 2017
25
Article
MgO based cements have been developed and are mainly for specialist applications such as repairs and fire protection although varieties are available for selflevelling floors and mortar. Generally these products are more expensive than Portland cement variations and so they are likely to be used in technical situations which justify extra cost.
granulated blast furnace slag, limestone, pozzolans etc. Comparison with CEM1 indicates that Aether and CEM II/A-L reduces CO2 whereas the use of 30% PFA reduces by 30%, 45 % PFA and 50%
Permitted uses and regulations Portland cement varieties have many permitted uses both structural and nonstructural. Specific requirements are
CO2 for common cements vs alternatives baseline
Blended cements
CO2 reduction
Figure 2 compares the CO2 reduction with various types of binder with CEM1 (taken from MPA). The use of CEM1 only concrete has been reduced significantly in many markets by the use of blended cementswith fly ash, ground 26
August / September July/August 2017 2016
-30% CO2e
Solidia
Celitement
AAM
SABC
CMC
CHC
AAM
45% pfa
50% slag
30% pfa
Aether
CEM I
18% limestone
-46% CO2e Portland cement
Fly ash, ground granulated blast furnace slag, limestone, silica fume, pozzolana, have been blended to produce blended cements such as CEM II where clinker can be substituted by 35% with PFA or slag, or 20% with limestone, where CEM III clinker can be substituted by 95% and for CEM IV clinker can be substituted by 55%.Such blended cements are widely recognised in standards and national regulations.
CEM II/A-L CEM II/B-V CEM III/A CEM IV/B-V
(*Uncertain range for AAMs)
Figure 2 Source: The Concrete Centre, Mineral Products Association
slag reduces by 46 % for Solidia and Celitement the reduction is below 46 % and for AAMC the range is uncertain as the raw materials may need calcinations and activation at higher temperatures. However research is under way to reduce the activation temperatures.
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detailed in national building regulations and laws. National regulations may vary in what product can be used in an application because of different local conditions. Portland cement varieties including blended cements, such as those in EN 197 are widely accepted in building regulations
because they have a long history of use in comparable situations. Some of the developing cements such as CSA have some standards and some acceptance partly because actually they have been around for some time and their properties typically comply with well used standards such as ASTM and EN. The absence of long term performance information is a barrier for new cementitious materials. Durability has to be established over time and before a material can be accepted in regulations and regulated applications. Some cement such as Alkali Activated Cementitious Materials have had local Publicly Available Standards (PAS) developed but this will not mean acceptance in regulations or authoritative standards until performance can be proven over time.
Of course many products can find acceptable uses but not so easily in replacement of conventional concrete.
Chinese production was estimated to be 2400 million tons with the world total of 4200 million tons in 2016 Portland cement will be the major use in construction however it will be blended with fly ash, slag etc. and methods of
manufacture will change to reduce CO2 emissions. Alternative cements will find a niche market which will depend on its commercial availability and value for money. Specifications for the use of alternative cements will need to be developed for use in construction. This will require verification of performance and durability over time. The main driver for new cements is the reduction in carbon footprint and raw materials conservation. The use of Portland blended cements using by products such as slag and ash produce carbon footprints similar to even the best performing alternative cements and better than some others. WCA believes that Portland type cements will continue to be the predominant binder for concrete but the industry is continually improving eco performance.
The World Cement Association is the only organization working on a global basis to represent and promote the cement industry and its stakeholders. Our members are drawn from all segments of the cement industry and WCA connects them across the world. We are focused on supporting and improving best practice in a range of important areas such as health & safety, through our forthcoming dedicated awards programme, as well as fair trade practices, action on climate change and social welfare projects worldwide. Members can also access specialist services including comprehensive world cement industry statistics and industrial mediation.
Shaping the future of the Global Cement Community secretarygeneral@worldcementassociation.org / +44 333 939 80 83 The Association is an independent non-profit association registered in England (Company No. 10187292)
COUNTRY SNAPSHOT
CW RESEARCH
Italy: a struggling adaptation to a new market reality
T
he last six years have proven challenging for the Italian cement market, as recession took a heavy toll in the construction sector. Meanwhile, the reconfiguration of the cement industry is helping pave the way towards a stable future.
A construction sector hit by recession
CW Research’s 2017 Italy Cement Market Report points to a decrease in both cement production and consumption, in 2016. Continuing its multi-year slide, Europe’s second largest cement market after Germany saw production and consumption fall seven and ten percent, respectively, coming into 2017. This dramatic decline in cement demand followed the financial crisis in 2008. As many other developed markets, Italian construction activity, both public and private, slowed sharply. The persistent subsequent weakness has been further exacerbated by a struggling banking sector that has seen multiple shocks in the past years. Furthermore, a slowdown in the broader economy, with the political 28
August / September July/August 2017 2016
gridlock and a potential Eurozone exit, has sapped energy out of an economic recovery.
"
The dramatic decline in cement demand followed the financial crisis in 2008
Illustratively, in 2016, cement consumption fell slightly short of eighteen million tons, down from a pre-financial crisis peak of 47 million tons in 2006. Consequently, between 2010 and 2015 cement consumption fell at a ten percent per year on average. With a “new normal” level of cement demand, the drastically lower consumption levels have caused financial distress for cement producers in the country. Industrial rationalization has progressed to address production overcapacity in an effort to balance supply and demand. As a result, multiple cement plants have been permanently shut down or idled. Meanwhile, cement pricing has faced significant headwinds as main demand segments, including
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notably ready-mix concrete, face their own challenges in securing projects.
Private consumption and public investment support moderate recovery Cement consumption is expected to stabilize over the next five years, barring any macroeconomic shocks. Private consumption is expected to lead the recovery. At the same time, the country’s road rehabilitation needs will support a modest demand expansion, which is projected at just under one percent per annum, between 2016 and 2021. Over the past six years, the Italian cement market has undergone a painful transition and adapted to a new business environment and to lower levels of activity. This has led to a consolidation of the market through the absorption of smaller players, in turn increasing efficiency and improving synergies, and setting the stage for a more sustainable cement sector in the coming years. Representative of the market consolidation trend is the HeidelbergCementItalcementi megamerger in 2016, creating a global giant in the cement sector.
About the report CW Group Research’s Cement Industry Country Report series meets the country level cement market research needs of small and large businesses, analysts and governments. The reports cover cement volume trends in detail, analyzing trade flows, cement demand and production (historical and outlook), per capita consumption, and the competitive landscape, including company profiles, cement production facility details, including past and announced brownfield production increases and greenfield projects. Cement Industry Country Reports also cover demand drivers, including macroeconomic and construction sector dynamics, for the specific country. Industry reports are presented in an objective, easy to understand format, providing hard to find answers to top market research questions.
Additional consolidation activities have taken place, including among Italian cement manufacturers, such as the incorporation of Sacci under Cementir, and the Buzzi Unicem strategic agreement with Wietersdorfer to improve costs and logistics. As the consolidation works its way through and cement demand stabilizes, CW Research forecasts an environment supportive of a stronger cement price over the medium term. Challenges no doubt remain for the Italian cement markets, to no small extent held
"
The absorption of small players is setting the stage for a more sustainable cement sector in the coming years
hostage by an uncertain economic outlook for the country. However, CW Research believes that the worst is behind the sector, as it has taken arduous steps to restructure and adjust to the present market reality.
Cement consumption 2010-2016 (mm/tons)
The comprehensive CW Research’s Italy Cement Market Report provides an in-depth and data-oriented analysis of the cement market in Italy. This cement industry report provides a detailed review of the cement market in Italy, with regional perspectives, discussion of demand drivers as well as cement tonnage volume and price trends in the country with provides a national five-year demand forecast.
More information about the report can be found at http://www.cwgrp. com/research/research-products/ country-reports/product/209-italycement-country-report-2017 For more information and placing an order, please contact Liviu Dinu, Market Services & Marketing Consultant, CW Group (Europe), by phone at +40-744-67-44-11, or e-mail at ld@cwgrp.com.
17.8 33.2
2010
19.2
2011 2012 2013
19.6
32.1
2014 2015
21.4
2016 25.3
Source: CW Research
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August July/August / September 2016 2017
29
feature CW RESEARCH
Persian Gulf cement and clinker prices slip in Q2 Prices move lower on Iranian volumes
A
s cement d e m a n d continued to decrease, regional cement FOB prices dropped in Q2 2017. A less expensive FOB of Iranian exporters for both cement and clinker has also contributed for the declining pricing trend. Nevertheless, prices are expected to pick up after the Ramadan.
Cement prices pressured by poor demand According to CW Research’s Cement and Clinker Persian Gulf- Arabian Sea Price Assessment, Persian Gulf- Arabian Sea Ordinary Portland Cement and clinker price indices for prompt deliveries fell in Q2 2017. Regional cement FOB prices hit USD 35.5 per ton, slipping 39% compared to Q2 2015. The decreasing pricing trend follows a weak demand, coupled with producers’ willingness to aggressively price cement to keep clinker lines operational. 30
August / September July/August 2017 2016
In the same period, Portland The Ramadan affects Ordinary Cement and ordinary Persian Gulf-based clinker price indices slipped, following a traders differently less expensive FOB of Iranian exporters for both products. Since Iran-based producers export larger volumes than their regional counterparts, Iranian FOB becomes more predominant in CW Research’s index on a weighted average basis. S i m i l a r l y, CW Research’s Iranian traders do not expect any resolution regional clinker price on the international sanctions that prevent index fluctuated between them from using Letters of Credit (LOCs). USD 26-28 per ton since the beginning Therefore, reaching markets where trading of Q2 2017. The move represented a 31% cement is not possible without LOCs is decline when compared to Q2 2015. not a feasible option in the foreseeable Both indices track prices, based on CW future. Given that production costs for Research’s ongoing conversations with Iranian cement producers are low, many market participants, measuring actual move cementitious products only for the FOB prices during the month for prompt sake of keeping production going, hence delivery cargoes by using a proprietary impacting pricing in the process. methodology. The Ramadan affects Persian Gulfbased traders differently. Iranian traders consulted by CW Research expect a negative impact in terms of pricing, given that they mostly ship to an undiversified range of Muslim clients. Conversely, Pakistani and UAE participants mention little impact in terms of pricing, as most of their volumes are channeled to East Africa and Indian clients. After the end of the Ramadan, traders expect a USD 1-2/t recovery in cement and clinker FOB.
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Pakistani traders, confined in the past to exporting bagged cargos due to the lack of effective dry bulk cargo terminal capacity, will benefit from the new terminal opened in the Muhammad Bin Qasim Port. The infrastructure will allow producers to cater to markets seeking to absorb larger volumes of cement delivered in bulk. Meanwhile, domestic cement demand remains healthy in Pakistan, thus translating in a high cement FOB, around USD 30 per ton. The need to move cargos to maintain utilization rates.
Med Basin cement FOB prices drop in 2Q 2017, while clinker prices remain stable
R
egional cement FOB prices decreased in Q2 2017 prompted by oversupply and poor demand. Meanwhile, clinker FOB prices remained steady.
CW Research’s Cement and Clinker Price Assessments are monthly price markers, offering end-user centric FOB / CIF / CFR pricing information for prompt deliveries of cement and clinker. Based on a continuous dialog with market participants and using a formal methodology, the “Cement and Clinker Price Assessment” product series offers prompt cargo (next 3060 day deliveries) pricing insights, covering four distinct cement and clinker price markers. The new offerings include monthly updates for prices, cement market news and an overview of key developments that are crucial for those involved in the cement and clinker trade to understand.
Cement prices under pressure According to CW Research’s Cement and Clinker Med Basin Price Assessment, Ordinary Portland Cement (OPC) Med Basin price index tracking FOB in the region (prompt cargo basis) slipped below USD 40 per ton in Q2 2017. Prices fell in part due to Turkish exporters continuing to price aggressively in the market. During the same period, CW Research’s OPC clinker Med Basin price index (which tracks FOB pricing in the region on a prompt cargo basis) remained range-bound at USD30-33 per ton.
About Cement and Clinker Price Assessments
CW Research’s leading role in the global cement and clinker sector forms the underpinning for the monthly price assessment.
C l i n k e r prices remain stable
CW Research’s ordinary clinker Med Basin price index remained stable in Q2 2017. Industry players expect price index to increase slightly, as demand is strengthening in Western Africa. Notably, Ghana and Ivory Coast A persistent oversupply of exporters are expected to pick up additional and a shrinking demand for volumes, as cement grinding imported cement in key capacity is increasing traditional markets are and domestic clinker An oversupply of pressuring pricing. production remains exporters and a Therefore, traders see no virtually absent. relief in sight in terms of shrinking demand for cement sales. Some opportunistic imported cement are trades are also taking pressuring pricing place. For instance, traders reported a shipment of clinker from a South Eastern Turkish exporter to a Spanish buyer at an FOB of around USD 29-31 per ton. Since the Spanish market is already oversupplied with domestic clinker production, the shipment is more of an opportunistic exception, perhaps in response to escalating production costs (electricity, in particular) in Spain. www.cemweek.com
More information about cement & clinker price assessments can be found here: http://www.cwgrp.com/ research/research-products/priceassessments/category/26-cementclinker
August July/August / September 2016 2017
31
Country Snapshot
Tunisia: increasing exports and housing support a growing cement market
espite macroeconomic challenges, the Tunisian cement sector has recorded a stable increase between 2010 and 2015. As production is projected to increase faster than demand, Tunisia reinforces its position as a major cement exporter.
Cement consumption 2010-2016 (%) 2010 2014
2011 2015
2012 2016
2013
Cement consumption rebounds after political instability The Tunisian cement sector registered a stable increase from 2010 to 2015. According to CW Research’s 2017 Tunisia Cement Market Report, despite a macroeconomic environment plagued by terrorist attacks and political instability, during that period, cement consumption rose at two percent per year on average, while cement production grew at four percent per year on average. Sustained by a growing population, the Tunisian housing market has shown a steady demand. The resulting stabilization of the construction sector has fomented a solid increase in cement consumption between 2010 and 2015. 32
August / September July/August 2017 2016
Source: CW Research
Sustained by a growing population, the Tunisian housing market has shown a steady demand
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Additionally, the recent liberalization of cement prices has contributed to boost demand. Fixed cement prices had been implemented by the Tunisian government until the end of 2013. From 2014 onwards, cement prices were deregulated and the government ceased subsidizing energy costs in cement production, thus creating a favorable environment for cement prices to soar. As the political environment stabilizes, meeting the population’s needs in terms
of infrastructure has become a priority. Moreover, the improved safety is encouraging more touristic activity in the country, leading to more tourism-related civil construction. Increased cement production is expected to be supplied by Tunisia-based Carthage Cement and global companies, including Secil and Colacem. For the upcoming years, the Tunisian government has established Tunisia 2020, an infrastructure development plan that will boost public spending on construction. Additionally, a new investment law is expected to draw in an increasing amount of foreign investment, which will assist the implementation of Tunisia 2020.
Increasing exports support a positive outlook The outlook for the Tunisian cement sector remains moderately positive. Cement production is forecasted to grow at two percent per year on average from 2016 to 2021. But Tunisian cement production will be growing faster than demand, accelerating the surplus and exacerbating the need to tap into hard-tofind export markets.
Following the price liberalization in the market, cement manufacturers have strived to increase efficiency, asserting their position on the international markets. Tunisia has therefore emerged as a major cement exporter in the North African cement market.
Tunisia has emerged as a major cement exporter in the North African cement market Currently relying on neighboring countries to channel exports, Tunisian cement producers might need to reconsider their trading routes. Algeria is currently the biggest export destination for cement produced in Tunisia, but Algerian companies are also seeking to increase domestic output; whereas Libya, another major export market for Tunisian cement, has been facing both political
and economic instability. The success of Tunisian cement companies’ exports will, thus, be dependent on successfully developing new markets.
About the report The CW Group Research report provides an in-depth and dataoriented analysis of the cement market in Tunisia. The detailed data and analytical insights allow readers to develop strategic directions, competitive strategies and position their business to evolve with the industry and capture opportunities. The report details cement tonnage volume and price trends in Tunisia as well as product segments, providing a strategic perspective on the evolution and an outlook for 2017 and the following five years. http://www.cwgrp.com/research/ research-products/country-reports/product/235-tunisia-cement-market-report-2017-update
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August July/August / September 2016 2017
33
CEMENT MARKETS
CW Research
CEMENT VOLUMES showing an improvement both on a monthly and yearly perspective. Cement consumption and production in Argentina reached a total of 1.0 million tons in May, a 14.3 percent expansion, MoM, and a 10.7 percent increase MoM, respectively. The Argentinian cement market has been benefiting from higher public expenditure in infrastructure at a national and regional level.
In May, Latin Americacement consumption continued to suffer from lack of consumer confidence and low government spending. The Brazilian cement demand reached 4.5 million tons in May, up by 13.0 percent on a monthly basis, and a 6.0 percent contraction on a year-onyear perspective. The country’s cement demand, which is the main regional market for cement, continued to be impacted by political instability, despite low domestic prices.
Asia faced mixed trends in April, with production expanding year-on-year in Korea, Japan, India and China, but retracting in Vietnam and Thailand. In terms of consumption Japan, Korea and Indonesia showed a higher cement demand year-on-year, while Thailand outperformed and registered a 12.3 percent slowdown in cement consumption in May.
Colombia and Peru saw a similar trend than that of Brazil, recording lower year-on-year demand and production. Both countries continue to suffer from a slowdown in housing and infrastructure investments. However, on a monthly basis, these two countries showed an increase in cement sales in the same month. Colombiarecorded a11.0 percent month-on-month expansion in demand in May, while Peruvian demand rose by9.2 percent on a monthly basis. Argentina is outstanding on a regional level with cement production and consumption Cement production May 2017 – YoY change (%)
In Korea, the cement production increased to 6.0 million tons, a 3.0 percent upsurge on a monthly basis, while consumption increased by 6.3 percent month-on-month to 5.8 million tons.In India, cement production surged by 6.8 percent on a monthly basis, and 2.0 percent on a yearly basis to reach 25.4 million tons in May 2017. Cement demand May 2017 – YoY change (%) 20% 10%
-10% -
Source: CW Research * values based on CW Research estimation for January 2017
August / September July/August 2017 2016
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Spain
Pakistan
Source: CW Research * values based on CW Research estimation for January 2017
To learn more, please contact the CW Research team at sales@cwgrp.com or +1-702-866-9474 34
Argentina
Korea
Japan
Indonesia
Colombia
Peru
Brazil
-30% -
Thailand
Spain
Korea
Argentina
Japan
India
China
Vietnam
Peru
Colombia
Thailand
-20% Saudi Arabia
20% 15% 10% 5% -5% -10% -15% -20% -25%
In China, construction activity continued show a strong performance, propelling production increases in the northeast and southwest of the country. On a year-on-year perspective cement production in China is up 0.8 percent, when compared to May 2016, reaching 228.5 million tons.
Saudi Arabia
Colombia and Peru saw a similar trend than that of Brazil, recording lower year-onyear demand and production.
Spanish cement sector seems to be recovering in May. The country’s cement demand in May reached 1.1 million tons, an increase of 25.5 percent, month-on-month. Cement production levels also saw an improvement touching a total of 1.4 million tons in the same month, showing a 0.8 percent expansion on a monthly basis. Spain is looking into strengthening its position as a lead exporter, a role the country carried pre-crisis.
CW Research
CEMENT PRODUCTION (million tons) Country
LM
MoM (%)
CEMENT CONSUMPTION (million tons) YoY (%)
YTD
YTD (%)
LM
MoM (%)
YoY (%)
YTD
YTD (%)
LM MoMIN (%)THE CEMWEEK YoY (%) YTD TABLE AVAILABLE MAGAZINE PRINT EDITION.
YTD (%)
TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.
TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.
WWW.CEMWEEK.COM/SUBSCRIBE
WWW.CEMWEEK.COM/SUBSCRIBE
CEMENT PRODUCTION MOM (%)
CEMENT CONSUMPTION MOM (%)
TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.
TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.
WWW.CEMWEEK.COM/SUBSCRIBE
WWW.CEMWEEK.COM/SUBSCRIBE
CEMENT EXPORTS (million tons) Country
Country
CEMENT IMPORTS (million tons)
TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION. LM
MoM (%)
YoY (%)
YTD
WWW.CEMWEEK.COM/SUBSCRIBE
YTD (%)
Country
WWW.CEMWEEK.COM/SUBSCRIBE
CEMENT EXPORTS MOM (%)
CEMENT IMPORTS MOM (%)
TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.
TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.
WWW.CEMWEEK.COM/SUBSCRIBE
WWW.CEMWEEK.COM/SUBSCRIBE
Source: CW Group analysis estimates
MoM: month vs previous month; YoY: month vs same month last year; YTD: year-to-date; YTD%: year-to-date vs previous year
To learn more, please contact the CW Research team at sales@cwgrp.com or +1-702-866-9474 www.cemweek.com
August July/August / September 2016 2017
35
CEMENT MARKETS
Volume variation analysis for selected countries that are major consumers, producer, importers and exporters of cement. This is a selection of notable markets. Additional detail is available from CW Research.
CEMENT ENERGY MARKETS
CW Research
Energy Prices Update COAL: The average coal price for May 2017 closed at $73.66 per ton, increasing 34.7 percent YoY as compared to May 2016’s price of $54.69 per ton. It decreased by 5.3 percent when compared to April 2017’s price of $77.76 per ton. Steam Coal FOB Average Prices (us$/ton) US exported
Colombia exported
Australia Newcastle
Indonesian HBA
South Africa Richards Bay
120 110 100 90 80
US petcoke exports declined by 3.1 percent to 3.1 million tons in May 2017 when compared to the previous month, and expanded 6.2 percent when compared to May 2016.
70 60 50 40
May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Jul Sep Nov Jan Mar May ’13 ’13 ’13 ’13 ’14 ’14 ’14 ’14 ’14 ’14 ’15 ’15 ’15 ’15 ’15 ’15 ’16 ’16 ’16 ’16 ’16 ’16 ’16 ’17 ’17 ’17
Sources: EIA, Colombia Ministry of Mines and Energy, IMF, Indonesia Ministry of Energy and Mineral Resouces
COAL TRADING VOLUMES: Global trading volumes for the five major coal countries totaled37.47 million tons in May 2017, expanding by 4.2 percent in comparison with the 35.97 million tons recorded in April. With the exception of South Africa, all countries recorded an output expansion when compared to the previous month. PETCOKE: US petcoke exports declined by 3.1 percent to 3.1 million tons in May 2017 when compared to the previous month, and expanded 6.2 percent when compared to May 2016. The US export price for petcoke for May 2017averaged at $77.03 per ton, rising by 9.8 percent as compared to April’sprice of $70.15 per ton, and up 95.6 percent when compared to May 2016’s price of $39.38 per ton. US Petcoke Export Price (us$/ton) 90
Rolling 12-month average
80 70 60 50 40 30 20
M ‘17
A ‘17
M ‘17
F ‘17
J ‘17
D ‘16
O ‘16
N ‘16
S ‘16
A ‘16
J ‘16
J ‘16
M ‘16
A ‘16
M ‘16
J ‘16
F ‘16
D ‘15
O ‘15
N ‘15
S ‘15
A ‘15
J ‘15
J ‘15
M ‘15
10
Source: Customs data
NATURAL GAS: The US Henry Hub spot price traded at $3.15 per MMBTU in May 2017, a 7.6 percent increase when compared to April 2017, and growing 64.1 percent as compared to May 2016’s price of $1.92 per MMBTU. Prices in Europe expanded2.1 percent MoM, reaching $5.35 per MMBTU in May 2017. To learn more, please contact the CW Research team at sales@cwgrp.com or +1-702-866-9474 36
August / September July/August 2017 2016
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Volume variation analysis for selected countries that are major importers and exporters of coal and petcoke. This is a selection of notable markets. Additional detail is available from CW Research. COAL - EXPORTS (million tons) Country
LM
PETCOKE - EXPORTS (million tons) -
May 2017
MoM (%)
YoY (%)
YTD
YTD %
LM
May 2017
MoM (%)
YoY (%)
TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.
TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.
WWW.CEMWEEK.COM/SUBSCRIBE
WWW.CEMWEEK.COM/SUBSCRIBE
TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.
TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.
WWW.CEMWEEK.COM/SUBSCRIBE
WWW.CEMWEEK.COM/SUBSCRIBE
TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT -EDITION. COAL - GLOBAL EXPORT PRICES (USD/ton) May 2017 LM
YTD
YTD %
YTD
YTD %
YTD
YTD %
US PETCOKE EXPORTS PRICES MoM(%)
COAL EXPORTS MoM (%)
Country
Country
MoM (%)
YoY (%)
WWW.CEMWEEK.COM/SUBSCRIBE
YTD
PETCOKE - GLOBAL EXPORT PRICES (USD/ton) Country
LM
MoM (%)
May 2017
YoY (%)
TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.
YTD %
WWW.CEMWEEK.COM/SUBSCRIBE
TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION. WWW.CEMWEEK.COM/SUBSCRIBE
COAL EXPORT PRICES MoM (%)
NATURAL GAS PRICES (US$/mmBtu) Country
May 2017
YoY (%) TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION. LM
MoM (%)
WWW.CEMWEEK.COM/SUBSCRIBE
NATURAL GAS PRICES MoM (%)
TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.
TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.
WWW.CEMWEEK.COM/SUBSCRIBE
WWW.CEMWEEK.COM/SUBSCRIBE
Source: CW Group analysis estimates LM: latest month Jan 2016 except where specified; MoM: month vs previous month; YoY: month vs same month last year; YTD: year-to-date; YTD%: year-to-date vs previous year
To learn more, please contact the CW Research team at sales@cwgrp.com or +1-702-866-9474 www.cemweek.com
August July/August / September 2016 2017
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CEMENT ENERGY MARKETS
CW Research
DEPARTMENTS
PEOPLE LafargeHolcim appoints new Head of Research & Development Heike Faulhammer joins LafargeHolcim from Arkema, one of France’s leading chemicals producers, where she has spent 20 years in research, production, product innovationrelated functions and sustainable development. In particular, she acted as a Director at Arkema’s global R&D center in Lacq, South-West France. Heike Faulhammer graduated from the University of Freiburg (Germany) and holds a PhD in Chemistry. As Head of R&D, Heike Faulhammer will be based at the global R&D center near Lyon, France. With 200 engineers and technicians from more than 20 nationalities, the center creates innovative solutions to address the needs of the construction industry. Most recently, LafargeHolcim announced the launch of Airium, which was developed and patented by the global R&D center in Lyon. Airium is a mineral insulating foam that improves energy efficiency for buildings, from floor to ceiling.
Holcim Argentina appoints CEO Carlos Espina, the new CEO of the company, was since 2012 the senior vicepresident of the research and development from LafargeHolcim. He was, until now, based in a laboratory of materials in Lyon, France, home to 250 researchers. Espina has a Mining, Metallurgy, and Materials Science Engineering degree from the School of Mines at the University of
Orient Cement appoints new director IYR Krishna Roa was appointed Independent Director of Orient Cement for a period of five years. The appointment became effective on May 5, but is still pending approval by shareholders. Confirmation will therefore come during the coming annual meeting. Rao was the Chief Secretary of Andhra Pradesh, between 2014 and 2016. Pre-
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Oviedo, Spain, and an MBA in the European School of Enterprise Development. Espina began his career in AceraliaCorporaciónSiderúrgica in 1995 as manager, and became part of ArcelorMittal in 2002. Prior to joining LafargeHolcim, he was CEO of ArcelorMittal Méditerranée, a position he had assumed in 2009. viously, he served as Chief Commissioner of Land Administration, between 2011 and 2013.
PEOPLE Belarusian Cement Plant may change management
Jan Jenisch takes over as LafargeHolcim’s new CEO
The Belarusian Cement Plant may become directly managed by Republican Unitary Enterprise. If the company is indeed transferred, its management, headed by Igor Lockechnikov, will become redundant, and will be substituted by direct management by Republican. Last year, the two companies produced a total of 3.1 million tons. Separate results
for Belarusian Cement Plant are not made available by the administration.
Cembureau introduces new president Cembureau has elected Gonçalo Salazar Leite as its new president. Gonçalo Salazar Leite is the current vicepresident of Portuguese firm Secil and also the president of Portugal’s Technical Association of the Cement industry. Now, he will be leading Cembureau, the European Association of Cements, for a
Finnsementtia ppoints new CEO MiikkaRiionheimo was the operational manager of Finnsementti since August 2016. He will now become the new CEO of the company, assuming the post of retiring KalervoMatikainen. Riionheimo says that he is looking forward to commandingFinnsementti
period of two years. The new president stipulated climate change objectives, including a reduction of CO2 emissions, as the main focus of his mandate. Leite believes that the cement sector is facing great claims for “sustainability and innovation” that demand “coordinated efforts”. in its future challenges, focusing on responsivity to market and customer needs. He praised the staff of the company and the commitment to the occupational safety of Finnsementti’s workers.
LafargeHolcim announced the appointment of Jan Jenisch as CEO from 16 October 2017. Jan Jenisch joins from Swiss company Sika AG, which has a leading global position in the development and production of systems and products for the building materials and automotive sectors. Jan Jenisch has been the CEO of Sika AG since January 2012. Under his leadership, Beat Hess, Chairman at LafargeHolcim, said, “Jan Jenisch is a CEO that is widely respected for consistently delivering strong business results and he comes with a deep understanding of the building materials sector. His agile leadership style and his personal skills will be a good fit with our company culture and the management team of LafargeHolcim. I look forward to working with him to accelerate the strategy execution of our company.” Jan Jenisch, CEO designate, stated, “I am delighted to have the opportunity to join LafargeHolcim. It is an iconic company and a global leader in the building materials industry with enormous future potential. I very much look forward to joining the global management team and to leading the company into a very successful future.” Jan Jenisch joined Sika in 1996 and has worked in various management functions and countries. He was appointed to the Management Board in 2004 as Head of the Industry Division and he served as President Asia Pacific from 2007 to 2012.
Finnsementti has two producing units in Pargas and Villmanstrand, and employs 216 workers.
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regional report
EUROPE, MIDDLE EAST AND AFRICA Cement plants in Egypt switching back to coal Cement factories in Egypt are returning to coal, as diesel fuel prices ramp up. Several cement factories in the country intend to stop using diesel fuel and return to coal and petroleum due to the high prices of diesel. Most of the factories stopped importing coal in the last months after an increase in prices, following the liberalization of the dollar exchange rate. Boraie Ibrahim, director of the environmental sector at Aswan Cement Company, says that his company had stopped importing coal six months ago as a result of its high prices, following the liberalization of the Egyptian pound exchange rate. After a decision of the Council of Ministers increased prices of fuel on June 29, Aswan will again rely on coal. Coal provides around 80 percent of Lafarge Misr Cement Company’s power needs, with waste and fuel oil covering the remaining necessities. The company wants to increase its dependence on waste-based alternative fuels in the future.
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Tunisia selling stake in Carthage Cement Al Karama Holding, a Tunisian state company that manages several companies that were confiscated to the old regime, will sell its share of the BINA Group, which owns 50 percent of Bina Holding and 40 percent of Bina Corporation. Through BINA Group, Al Karama controls 32.28 percent of Carthage
Dangote ponders leaving Ethiopia
Cement. Bidders for the company were accepted until June 12. Since June 30, 2016, Carthage Cement registered an operating income of TND 120 million and a positive operating result of TND 7 million. Its net deficit has been reduced from TND 25.6 million in 2015-16 to TND 8.6 million in 2016-17.
Dangote Cement is threatening to abandon its operation in the state of Oromia if the local government does not revoke the order that requires cement makers to give control of parts of their business to local young people.
Dangote Cement is refusing to comply and is threatening to close its Mugher cement plant, 90 kilometers north of Addis Ababa. The company argues that mismanagement of mining infrastructure could “lead to total breakdown” of the business.
The local government wants to bring down youth unemployment and therefore ordered Dangote Cement to give pumice, sand, and clay mining to young workers.
The order to outsource mining is “a violation of our rights because the government has given us a mining license,’’ said Edwin Devakumar, executive director of Dangote Cement.
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regional report Cement industry in France expects a rise in demand The French cement industry union forecasts an acceleration of growth in the sector during the second half of the year. A growth of three to four percent is expected in 2017, between 17.9 million and 18.1 million tons.
Cementir using waste fuels in Cognano Amiterno plant Italian manufacturer Cementir announced that it will be using wastebased alternative fuel in its Cognano Amiterno unit. The company secured a license from the local authorities to burn waste as an alternative fuel on its cement plant.
However, the move is facing opposition from locals. A meeting has already been arranged in the premises of the Barete Municipality Council to discuss the matter. Maria Fioravanti, founder of a committee of local citizens that question the use of alternative fuel, says that her organization does not have a hostile position against Cementir, and is only looking for reassurance that all health and safety procedures are being followed.
Raul de Parisot, chairman of the union, believes that the construction sector will be capable of boosting demand for cement. The statement was made during a press conference, in the occasion of the bicentenary of the invention of artificial cementby Louis Vicat, in 1817. During the conference, de Parisot praised the sector for using concrete aggregates from the demolition of buildings in a process called recarbonization, thus curbing the amount of CO2 released by their production. The French cement sector is comprised of 40 industrial sites belonging to five groups, employs nearly 5,000 people and represented a turnover of EUR 2.3 billion in 2015.
Bamburi Cement is expanding capacity Bamburi Cement wants to increase its cement production capacity from 2.3 million tons to 3.3 million tons, in order to meet demand from the market. This increase will be achieved by expanding the Bamburi’s Athi River plant. The company is also promoting an expansion of the Mombasa plant, with an increment of 800,000 tons on its installed capacity.
bring down cement prices in Kenya. A bag of 50 kilograms of cement currently sells for KES 600, down from KES 750 in 2008-09. EUROPE, MIDDLE EAST & AFRICA COMPANY/LOCATION
OVERVIEW
“We want to ensure our production capacity meets growth in the industry, hence the decision to increase our produce,” said Bamburi’s technical projects manager Julius Induswe. An increase in production is expected to www.cemweek.com
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regional report
SOUTH EAST ASIA Four cement plants to close in Telangana, India India’s Central Pollution Control Board (CPCB) ordered the closure of three cement units in the state of Telangana, including Kakatiya Cements, in Nalgonda, Mancherial Cements, in Mancherial, and Cement Corporation of India at Tandur. An additional eleven show-case notices have been issued to other units, including Zuari Cements, Keerthi Industries, Deccan Cements, Amareshwari Cements, Bheema Cements, and Grey Gold Cements, all in Nalgonda. This was part of a major crack-down by the CPCB, which led to 240 closure or show-cause notices to cement units across India. Those units were found to be in violation of pollution regulations. This came after CPCB demanded cement factories to install online pollution monitoring systems connected to their servers and to the State Pollution Control Board as well.
Cement producers in Pakistan ask government for help The All Pakistan Cement Manufacturers Association (APCMA) is trying to convince the government to impose an anti-dumping duty on Iranian cement. The association is also asking for a tax break that would ease prices and increase demand, it claims. APCMA is concerned with a fast decrease in exports. In May, exports dropped by
BK Birla Group to expand its presence in the cement sector Kesoram Industries, part of B K Birla Group, wants to expand its presence in the cement segment. Currently, the company has the installed capacity to produce 7.5 million tons of cement per year at its two plants located in the state of Telangana, near the limestone deposits of Sedam, in the Gulbarga District. Kesoram wants to acquire 700 acres of land in Gulbarga, and possibly set a grinding unit there.
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44.6 percent year-on-year, following deeper falls of 45.7 percent in February, 60.4 percent in March, and 50.8 percent in April. Cement manufacturers fear that lower exports, coupled with the latest hike in taxes, will slow down the healthy growth made by the industry in the last two months. "Gulbarga has one of the finest limestone deposits in our country. We have a definite plan to get enough limestone mining area and around 700 acres of land on which we have mining rights can be acquired," said Trdib Kumar Das, director and CFO of Kesoram.
regional report State of Odisha approves Ambuja Cements’ expansion The state of Odisha approved an expansion project for Ambuja Cements on July 4.
Karakalpak Cement inaugurates new plant in Uzbekistan Karakalpak Cement inaugurated a new cement plant in June in the Republic of Karakalpakstan, western Uzbekistan. The unit now commissioned is the first of three. The second one will be completed
before the end of the year, while the last stage will be in place by 2017. That first unit cost USD 17 million, while the entire project is valued at USD 40 million. When fully developed, the cement plant will create 200 jobs and have the installed capacity to produce 1.2 million tons per year.
The State Level Single Window Clearance Authority approved the construction of a grinding unit, with the capacity to process 1.5 million tons per year. The new grinding unit will be set in a 125-acre site in Jharsuguda. Ambuja Cements will invest INR 430 crore on the project and expects to create 300 jobs. Currently, the company already operates five integrated cement manufacturing plants and eight cement grinding units across India.
Kazakhstan developing new oil-well cement project A new cement plant is currently under construction in Kazakhstan. The new unit is being built in the village of Shiely, located in the region of Kyzylorda. When finished, the plant will produce one million tons of oil-well cement per
Ultratech finishes acquisition of Jaiprakash Associates’ cement assets The largest cement manufacturer in India, Ultratech Cement, successfully concluded the takeover of six integrated cement plants and five grinding units from Jaiprakash Associates, in late June. This completes the deal between the two companies, valued at INR 16,189 crore.
year. Oil-well cement is used in the oil and gas industry, but also in uranium related businesses. Construction of the plant will employ 1,200 workers. When finished, it will retain 260 jobs. units and seven bulk terminals. Its total capacity now stands at 93 million tons per year, making it the fourth-largest cement manufacturer in the world. SOUTH EAST ASIA COMPANY/LOCATION
OVERVIEW
The plant and units are spread across the states of Himachal Pradesh, Uttar Pradesh, Uttrakhand, Madhya Pradesh and Andhra Pradesh. They have the total capacity to produce 21.2 million tons of cement per year. UltraTech now operates 18 integrated plants, one clinker unit, 25 grinding www.cemweek.com
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regional report
ASIA PACIFIC China Building Materials Group to cut overcapacity The Chinese National Audit Commission has found that China Building Materials Group (CBMG) has not been able to eliminate six million tons of annual cement production capacity, which were considered to be outdated. Its subsidiary, North Cement, has also been accused of illegally increasing its capacity by 1.4 million tons. China Building Materials Group is the largest cement producer on a global scale, with a total cement production capacity of 407 million tons per year, as of March 2016. Beijing has been trying to reduce overcapacity in the domestic cement sector. According to the China Cement Association, with demand nearly stagnated, overcapacity has become a dire problem. Around the country, utilization rates are standing at around 65 percent.
Cement shortage crisis in Fiji deepens The Fiji islands have been facing a cement shortage after faulty equipment caused several stoppages at Pacific Cement. The company agreed to sell clinker to Tengy Cement in order to ameliorate the situation. However, in mid-June, production at Tengy Cement had to be halted, due to an electrical glitch. According to
Cement export tax in Vietnam under scrutiny The Department of Management of Administrative Violations and Law Enforcement in Vietnam, part of the Ministry of Justice, sent an official letter to the Ministry of Finance in mid-June, requesting further guidance regarding the tax on exports of several products, including cement. The Ministry of Finance recently announced a five percent tax on commodities in which mineral resources and electricity account for 51 percent of production costs.
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Hongyang Li, general manager of Tengy Cement, engineers had been working around the clock to fix the problem. In the meantime, 20 trucks queued near the factory waiting for a cement load. Fijian dealers say that they were receiving fewer bags than needed, with some rationing the number of bags sold to each client. Cement manufacturers have been protesting this tax, complaining that its wording is not clear and fearing that such a tax will hamper the competitiveness of Vietnam’s cement exports.
regional report New cement plant inaugurated in Vietnam
A new cement unit was inaugurated in the first days of July in the Thanh Liem District, Ha Nam Province of Vietnam.
SsangYong Cement acquires Daehan Cement South-Korean cement manufacturer SsangYong Cement paid KRW 265 billion for Daehan Cement, the largest blast-furnace slag cement producer in the country, until now owned by equity fund Hahn & Company. Daehan Cement produces slag cement used in concrete pavement, structures
and foundations. It had a turnover of KRW 240 billion and an EBITDA of KRW 47 billion in the previous year. By acquiring Daehan Cement, SsangYong consolidates its place as the largest cement manufacturer in South Korea. That top place was being threatened by Hanil Cement, which recently acquired a mutual smaller rival, Hyundai Cement.
This unit, the second from Thanh Thang Cement, was officially inaugurated with the presence of Vietnam’s Deputy Prime Minister, Trinh Dinh Dung. The new unit represents an investment of VND 5 trillion and is expected to produce 6,000 tons of clinker per day. It includes a crushing line, a bagging production system, and a waste-heat recovery plant with the capacity to generate seven megawatts. The Deputy Prime Minister praised the achievements and contributions of the Thanh Thang Cement Group during the past and emphasized that these results have shown the enterprise's efforts.
Conch Cement actively looking into new mergers and acquisitions Conch Cement revealed that it was actively looking for new mergers and acquisitions at its shareholders meeting, held on May 31. These new acquisitions that the company is seeking are located in both the domestic market and abroad. This attitude, Conch Cement says, is the result of a positive environment of stable prices.
Recently, the company acquired a 40 percent stake at Huaibei Xiangshan Cement, expanding its capacity by 5.4 million tons of clinker and 3.5 million tons of cement per year. ASIA PACIFIC COMPANY/ LOCATION
OVERVIEW
In light of those optimist prospects, vice chairman of Conch, Wang Jianchao, announced a capital expenditure of CNY 9 billion for 2017. Right now, Conch Cement has the capacity to produce 311 million tons of cement per year, including 93,500 tons of overseas capacity. www.cemweek.com
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regional report
AMERICAS Lara Cement plant in Venezuela operating at suboptimal rate The Lara cement plant, located in Venezuela, is facing shortages of spare parts and packaging. The plant, which is owned by Corporación Socialista del Cemento (Socialist Corporation of Cement), has been operating at suboptimal levels due to the lack of spare parts and bags, creating a cement shortage in its market region. For some time now, the construction industry has faced difficulties in acquiring cement, a situation that is more serious among private individuals. Most of Lara’s production goes to Misión Vivienda, a government-backed project focused on building affordable housing. Orlando Chirinos, president of Fetracemento and vice-president of the union of workers of that industry in Lara, says that the local cement plant is producing at a rate of only 60 percent of its capacity, while at the national level it is around 70 percent.
New cement plant to be commissioned in Venezuela A new kiln and grinder unit were deployed on June 20 in the Venezuelan state of Táchira, heading for a new grinding unit. According to José Vielma Mora, governor of the state, the new cement production unit will be commissioned in order to cover demand in the state. The plant is part of the Corporación Socialista del Cement (Socialist Corporation of Cement).
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Mora believes that the new plant will be an advancement for the community and a milestone in the development of the socialist policies in Venezuela.
Hurtado Vicuña’s takeover of Polpaico is approved
Hurtado Vicuña will have five working days to acquire 100 percent of Polpaico.
Chile’s Competition Defense Tribunal authorized the takeover of Polpaico, a cement manufacturer part of Holcim Chile, by Hurtado Vicuña in the first days of July.
Holcim has already agreed to sell its 54.3 percent; other stakeholders include Volcán y Megeve, from Peru, and Solari Donnaggio.
The Hurtado Vicuña Group controls Cementos Bicentenario. The market price of Polpaico is estimated between USD 70 million to USD 90 million. Once the takeover is launched,
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Also, Mora informed, a new packaging unit will allow the dispatch of plastic cement bags with 42.5 kilograms. The packaging, he says, is in consonance with world standards and are resistant, reusable, and water-proof.
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regional report Cement producers in Bolivia ask for import ban Bolivian cement manufacturers have asked the government to ban imports of products from Cemento Yura, on July 4. Cement manufacturers and the Center for Departmental Works from Chuquisaca met and agreed to demand a ban on imports of clinker and cement from Cemento Yura.
Caribbean Cement increases prices Caribbean Cement Company has increased the price of its products, effective June 26. The company announced a hike of JMD 38 (General Consumption Tax not included) on its most popular
product, Carib Cement Plus. The price of other cement products from the Caribbean Cement Company will also be increased. The cement manufacturer says after three years without a price increase, the devaluation of the Jamaican dollar and increases in fuel prices have forced it to adjust cement prices.
According to Walter Villavicencio, from the center, the ban is crucial to protect domestic demand from imports, which are cheaper. Moreover, stakeholders present at the meeting asked for an end to the privileges attributed to Itacamba.
Cement prices increase in Mexico On July 1, Mexican cement companies have increased the price of their product by eight percent, announced Jorge Luis Pérez Aguirre, director of communication at Cemex. Aguirre says that this increase in prices is designed to recover from the inflationary cost of inputs and transportation, following a devaluation of the Mexican peso. Responding to accusations of fixing prices, the National Chamber of Cement said that the prices of cement are established by the dynamics of supply and demand, autonomously and independently by each of its members.
In the meantime, the government of Guanajuato has assured that infrastructure works will continue in spite of the higher prices for cement. Arturo Durán Miranda, chief of Guanajuato’s Public Works Bureau, stressed that projects will not be slowed down, while admitting that costs will have to be revised. He also promised to discuss the recent hike with manufacturers. AMERICAS COMPANY/LOCATION
OVERVIEW
The increase in cement prices has been strongly criticized by the Municipal Public Works Direction and by the National Chamber for Development Industry and Housing Promotion. Cement prices have already increased 26 percent this year and 50 percent since January 2014.
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BMWEEK.COM
CONSTRUCTION & BUILDING MATERIALS BY BMWEEK.COM India raises taxes for construction sector While notifying the tax rates for central GST, IGST and Union Territory GST, the Central Board of Excise and Customs (CBEC) tweaked the tax rate and the mode for calculation. Construction of a complex, building, or civil structure, including a complex or building intended for sale to a buyer, wholly or partly, will attract a GST rate of eighteen percent. However, it will not be imposed on fully constructed properties, wherein a completion certificate has been issued by the competent authorities. In May, the GST Council had decided to levy 12 percent GST on construction of a complex, building, civil structure or intended for sale to a buyer, wholly or partly, with the land value to be included in the amount on which the tax was to be calculated. Sources within the council also claimed that there is a chance that a post-facto approval to the GST rate schedule for the construction sector is also likely to be given.
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Imerys acquires zirconia producer in China Imerys is expanding its specialty range into the field of high purity zirconia, having acquired one of the leading producers of this mineral in China. The company signed an agreement for the acquisition of Zhejiang Zr-Valley Science and Technology, a producer of zirconium, zirconium oxychloride, and high purity zirconia in China. Zhejiang also operates a research center and manufacturing plant, which generated approximately CNY 220 million in sales in the previous year.
Limestone trade dips in the Great Lakes
Imerys hopes to expand its range of manufacturing technologies and processes through this acquisition, including its specialty offering, in particular for high purity zirconia products for advanced ceramics, such as 3D printing, electronics, and other applications. The transaction should occur in the third quarter of 2017, and Zhejiang will be consolidated in Imerys’ Minerals Division, a part of the Minerals of High Resistance Division.
Limestone shipments in the Great Lakes area fell 5.4 percent in the month of May 2017, compared to May 2016.
2016, totaling 628,000 tons. In the first five months of 2017, the Great Lakes limestone trade stood at 5.3 million tons, a decrease of 12.3 percent compared to the year-ago period.
3.6 million tons were shipped during the month of May, 2.9 million of which came from quarries in the United States, decreasing 4.2 percent year-on-year, while Canada’s shipments dropped 9.3 percent when compared to May
During that time, US ports traded approximately 2.9 million tons of limestone on average between 2012 and 2016. In this assessment, five ports from Michigan and one from Ohio along the Great Lakes were included.
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BMWEEK.COM Heidelbergcement and Cemex close deal over building materials operations HeidelbergCement finished the acquisition of Cemex’s Pacific Northwest Materials Business.
Building materials prices in Abu Dhabi decline In Abu Dhabi, the prices of building materials varied in April when compared to the previous month, as well as the same month of the 2016. Compared to March 2017, prices for aggregates and sand, as well as cement blocks, rose 8.7 percent in April 2017, while paints rose 4.6 percent in the same month. Meanwhile, also monthon-month, construction labor costs
decreased 10.5 percent, while diesel dropped 3.5 percent, and steel declined 2.9 percent from March to April 2017. Comparing April 2016 to April 2017, diesel rose 25.0 percent, while power cables increased 9.1 percent, and cement blocks expanded 8.7 percent. However, steel slipped 12.3 percent, while waterproofing products contracted 11.0 percent, and wood decreased 10.1 percent year-on-year in April 2017.
Crushed stone production decreases in 1Q2017 The United States produced and shipped an estimated 261 million metric tons of crushed stone for domestic consumption during the first quarter of 2017, a slight decrease compared with the same period of 2016, reports USGS. In 2016, the estimated annual output produced for consumption was 1.4 billion metric tons, increasing modestly when compared with 2015. Output and shipment of sand and gravel for consumption in the first quarter of the year reached 165 million metric tons, declining
four percent year-on-year. Estimated annual output for consumption in 2016 was 945 million metric tons, increasing slightly when compared to 2015.
HeidelbergCement's U.S. subsidiary, Cadman Materials, a part of Lehigh Hanson, acquired Cemex’s Pacific Northwest Materials Business consisting of aggregate, asphalt and ready mixed concrete operations in Oregon and Washington for a purchase price of about USD 150 million. “The acquisition strengthens our vertically integrated market position in the states of Washington and Oregon” explains Dr. Bernd Scheifele, Chairman of the Managing Board of HeidelbergCement. “This improves our ability to move our products to customers in these attractive growth markets. The acquisition is part of our strategy of disciplined growth and increasing shareholder returns and we are expecting significant synergies.” Cemex’s Pacific Northwest Materials Business includes seven aggregate quarries, five ready mix concrete plants and three asphalt operations, and generated about USD 110 million revenues and about USD 14 million of EBITDA in 2016 with about 350 employees. The acquired aggregates reserves and resources amount to about 110 million tons. Lehigh Hanson will fully integrate all the operations into its current network and targets annual synergies of about USD 7.5 million.
Estimated US output of construction aggregates produced and shipped for consumption in the first quarter of 2016 was 426 million metric tons, a decrease of three percent when compared to the equivalent period of 2016. In the previous year, estimated annual output for consumption rose to 2.3 billion metric tons, when compared to annual output in 2015. www.cemweek.com
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PETCOKEWEEK.COM
Petcoke Market update from PetcokeWeek.com South Korean companies sign MoU for petcoke venture Hyundai Heavy Industries, oil refiner Hyundai Oilbank and state-run Korea Electric Power (KEPCO) have entered a business venture and signed a memorandum of understanding (MoU) to export power generators fueled by high-sulfur petcoke. The MoU was signed on June 29, and establishes the guidelines for cooperation on the exporting of petroleum coke-powered circulating fluidized bed (CFB) boilers. Hyundai Heavy Industries will be in charge of designing and building the boilers running on coke fuel, while Oilbank will take care of operations. Kepco will be in charge of marketing the equipment. The companies decided to work on petcoke equipment because the byproduct is cheap, and requires special facilities and high-skilled operational technology, which Hyundai Heavy industries and Hyundai Oilbank have expertise on. The three companies aim to construct the circulating fluidized bed combustion boilers near global oil refineries that sell petcoke, planning to re-sell the electricity generated from their power generators to the oil refiners.
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Aluminum output increases in first five months of 2017 Brazil’s primary aluminum output reached 331,900 tons in January-May, an increase of 2.6 percent year-on-year. In May alone, primary aluminum output in Brazil rose 1.6 percent when compared to the same month in 2016, standing at 68,300 tons, the 13th consecutive monthly rise. In 2016, the country produced a total of 792,700 tons of aluminum.
Aluminum smelters’ profit rises In the Shandong province in China, aluminum smelters had a theoretical profit of CNY 300 per ton in the week ended June 23, a rise of CNY 21 per ton. This was the fourth consecutive weekly increase in profit, aided by lower petcoke prices, with coking goods costing around CNY 2,450 per ton with tax, a decrease of CNY 50 per ton.
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Brazil is the ninth largest producer of aluminum in the world, having slipped several places over the past few years in the global upstream segment. However, it still remains a major player with an integrated chain that includes bauxite mining, alumina refining and primary aluminum production. Petcoke products remained relatively stable, and diesel prices stabilized as well, at around CNY 4,600 per ton, while LPG prices increased modestly.
PETCOKEWEEK.COM Duqm refinery in Oman to gain new strategic partner
Pemex refinery halting production Pemex is stopping production at its Salina Cruz refinery in Oaxaca for about 47 days, after a fire on June 14 forced the refinery to cease its operations. The refinery should be running by July 30, said the company. This stoppage will deprive Mexico of nearly ten percent of its daily intake of gasoline, and will force it to import the fuel to meet internal demand. The refinery, the largest in the country, also produces petcoke, turbosine, and asphalt. The fire at the Antonio Dovalí Jaime, in Salina Cruz, was caused by the passage of Tropical Storm Calvin, according to Pemex. During the first five months of the year, it produced 75,900 barrels per day of gasoline, 9.7 percent of the average 778,900 barrels per day sold during the same period.
Domestic demand for automotive fuels will be met by an increase in imports, while for other fuels and products, such as petcoke, it will be replaced by output from other refineries, such as Cadereyta, Madero, Minatitlán, Salamanca and Tula. Pemex said that it was working on the installation of a new pump room to supply crude to the refinery, which was damaged by the fire. They also reported that the production halt will be used for maintenance activities as well, which were planned for April 2018, thereby reducing the economic impact of the stoppage. Additionally, the affected area will also be cleaned and rehabilitated. Pemex is still unsure of the total economic impact this will have for both the state-owned petrochemical and the country, as it will depend on the imported amounts.
Orpic finds funding for petcoke storage project Oman Oil Refineries and Petroleum Industries Company (Orpic) and the Alizz Islamic Bank signed an agreement to finance the construction of a petroleum coke storage facility at the Sohar complex. Both companies’ CEOs, Salaam bin Said Al Shaksy, CEO of Alizz Islamic Bank, and Ahmed Saleh Al Jahdhami, CEO of Orpic, signed the agreement. Al Shaksy said: “We are delighted to partner with Orpic in building its petcoke storage project. The signing of this agreement is in line with our strategy to
support and finance various projects in the sultanate and contribute to the growth of the local economy.” “This agreement with Alizz Islamic Bank will provide us with the groundwork to continue our achievements in the construction of important national projects,” commented Al Jahdhami. “Alizz Islamic Bank is one of the important local banks that offers strategic solutions and we are proud to strengthen our relationship with them and build a partnership for future project financing,” he added.
Kuwait International and Oman Oil signed the partnership agreement for the Duqm refinery project on April 10 2017, and now a third player could come into place. Each of the stateowned companies is said to hold a share of 50 percent on the project, which sets a precedent for economic and oil cooperation between the Gulf States. According to sources within the industry, the project’s team in both companies has already completed the evaluation phase for contractors, construction and management of the refinery and adjacent facilities, while the parallel economic feasibility and design optimization for the second phase of the project, a petrochemical complex that will contain a naphtha cracking unit, is still underway. Another joint team, according to the sources, is also working with a team of global marketing at the Kuwait Petroleum Corporation (KPC) to finalize the marketing of petroleum products and supply of crude oil, with KPC marketing around 50 percent of the total production. The refinery also stands to benefit from its location, being able to access new markets in Africa, Asia and Europe. Kuwait Petroleum International is seeking to achieve a long-term investment opportunities strategy, in order to find a profitable way to sell its oil products, having set up a strategy plan up to 2030. The company is considering investment opportunities in Indonesia, the Philippines, and India. The refinery will have a refining capacity of 230,000 barrels per day, and is located in the Duqm Economic Zone in Oman. It will have a hydrocracking unit, and a coking unit, and is designed to accommodate Kuwaiti oil by 100 percent, in addition to the petrochemical complex, which is to be implemented later. Both projects will occupy a 900 hectares area, and will produce diesel, jet fuel, naphtha, and liquefied petroleum gas, among other key products.
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EQUIPMENT
EQUIPMENT Loesche wins order for cement plant in Philippines Eagle Cement Corporation wants to use its state-of-the-art production line to contribute to meeting the country's growing demand for construction material. Loesche could now once again place one of its vertical roller mills on the Philippine market. For the first time, the local cement manufacturer Eagle Cement Corporation ordered a Loesche vertical roller mill for its plant in Barangay, in San Ildefonso – 50 km north of the capital city of Manila. The coal mill for line 3 of the cement plant will ensure the fuel supply and is designed for grinding coal and petcoke with a capacity of 54 t/h of mixed coal or 34 t/h of petcoke. The grist is ground to a fineness of twelve percent (coal) or three percent (petcoke) sieving residue with 90 μm. The scope of supply also includes an LSKS-classifier and corresponding filters, blowers, an inertization unit, the gas analysis and the main drives – all components are to be delivered before the end of the 2017. One benefit is that the coal mill operates with a low differential pressure and therefore has a significantly lower energy consumption than typical solutions. In addition, the Eagle Cement Corporation (ECC) was impressed by the distinctly good price performance ratio and the close customer contact developed over the years.
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Gebr Pfeiffer supplies mill to Société Saoura The company will supply a MVR mill to a cement plant belonging to Société Saoura. It will be installed in a new cement plant located in Bechar, close to the Algerian border with Morocco. Société Saoura opted for a MVR 5000 R-4 cement raw material mill. This is the fourth MVR mill sold by Gebr Pfeiffer
Teploozersky cement plant to undergo modernization program The plant, located in the Jewish Autonomous Oblast, is about to go through a costly program of modernization that will include the switch from the wet to the dry method of production. The modernization of production will be carried out until 2024-25. It will also include the connection of the plant to the Siberia Power gas pipeline. "We are considering two stages of
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to the Algerian market. Delivery of the equipment is scheduled for the first half of 2018. The mill is capable of processing 350 tons of cement raw material per hour to a maximum fineness of 12 percent R 0.090 millimeters. The total drive power of the mill is 3,800 kilowatts. modernization: the first is the reequipment of the current production with the switch to the dry process, while the second is the construction of a new modern dry cement production line”, said Evgeny Sysoev, managing director of the plant.
EQUIPMENT Uzbekistan converts all cement plants to dry method
New technologies are revised to support CO2 emissions cut in the cement sector
of the level of possible implementation, the challenges, as well as the costs of these technologies in future scenarios for 2030 and 2050.
The World Business Council for Sustainable Development (WBCSD)’s Cement Sustainability Initiative (CSI) published a report focusing on the availability of the latest technologies and the need to scale up research and development that can help the cement industry mitigate its greenhouse gas emissions.
The European Cement Research Academy (ECRA) supported CSI with the review of these technology papers, drawing on its renowned expert knowledge of cement manufacturing and extensive experience with literature research of latest developments.
In light of the United Nations Framework Convention on Climate Change (UNFCCC) Paris Agreement’s entry into force, the CSI initiated an indepth review of its original technology papers. They were originally developed in 2009, when the sector issued the first ever low-carbon technology roadmap, in partnership with the International Energy Agency (IEA). The technology review published in 2017 comprises 52 individual papers on well-known existing technologies (for which the latest development and implementation status is reviewed) and seven additional summary papers describing state-of-the-art and anticipated technological developments that can contribute to the reduction of CO2 emissions in cement production. The report also includes an assessment
These new technology papers will be a major source of information for the global cement industry and beyond. The papers have already been considered by IEA’s technology flagship publication, Energy Technology Perspectives 2017. They will also serve as an important reference document for development of low-carbon technology roadmaps for the cement sector, at global as well as regional or national levels. For instance, the CSI is currently working with IEA to update their joint global cement technology roadmap using these papers. Beyond quantification of the contribution of a portfolio of technologies and strategies to mitigate CO2 emissions from the sector in the least-cost low-carbon pathways, the roadmap will also identify the major opportunities, barriers and measures facing the industry, as well as financial partners and policy makers.
By 2020, the Uzbek government wants all cement plants operating in the country to switch to the dry method of production. The measure was approved by Presidential decree on May 26 as part of a program of energy efficiency for 2017-2020. Reconversion will be financed by the Fund for Reconstruction and Development of Uzbekistan and also by loans provided by commercial banks from the country. Cement production is expected to increase by a CAGR of 3.5 percent until 2019, reaching 8.9 million tons by then. Chinese firm Anhui Conch Cement Company is finishing plans for a new cement plant in the Samarkand region, with the capacity to produce two million tons per year.
Weg supplies new equipment to Itacamba The equipment company supplied a package that includes W22 IP66 (High Performance) low voltage motors and medium voltage slip ring motors with a brush lifting system for continuous operation and suitable for operation in aggressive environments. Those will operate in mills, crushers, and fans at the plant. Itacamba is responsible for the operation of Brazilian group Votorantim Cimentos in Bolivia. "We at Votorantim Cimentos establish long-term relationships with our suppliers. Together, we think and can develop projects that provide the best resources for our plants offering professional excellence. WEG electric motors are a good example of this approach. Our solutions and relationships are important legacies in our projects”, says Vitor Kazuo Shin-Ike, electrical engineer at Votorantim Cimentos, commenting on the deal.
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analyst recommendations LafargeHolcim As of July 7, 2017, the consensus forecast amongst 26 polled investment analysts covering LafargeHolcim advises investors to hold their position in the company. This has been the consensus forecast since the sentiment of investment analysts deteriorated on Jun 19, 2017.
HeidelbergCement As of Jul 7, 2017, the consensus forecast amongst 28 polled investment analysts covering HeidelbergCement advises that the company will outperform the market, since the sentiment of investment analysts improved on Jun 8. The previous consensus forecast
advised investors to hold their position in HeidelbergCement. In terms of price targets for HeidelbergCement have a median target of 96.0, with a high estimate of 120.0 and a low estimate of 80.0. The median estimate represents a 9.46% increase from the last price of 87.7, according to the Financial Times.
The previous consensus forecast advised that the company would outperform the market. The 18 analysts offering 12 month price targets for Lafargeholcim have a median target of 61.0, with a high estimate of 72.0 and a low estimate of 47.7. The median estimate represents a 9.8% increase from the last price of 55.6, according to Financial Times.
CRH For CRH shares, 22 polled investment analysts advises that the company will outperform the market, since the sentiment of investment analysts improved on Jan 27, 2016. The previous consensus forecast advised investors to hold their position in CRH.
Cemex The consensus forecast amongst 8 polled investment analysts covering Cemex advises that the company will outperform the market. This has been the consensus forecast since the sentiment of investment analysts improved on
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Nov 26, 2012. The previous consensus forecast advised investors to hold their position in the company. In terms of prices, the 7 analysts offering 12 month price targets for Cemex have a median target of 20.2 (a 13.2% increase from the last price of 17.8), with a high estimate of 22.0 and a low estimate of 10.58.
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The analysts offering 12 month price targets for CRH have a median target of 35.5 (a 13.26% increase from the last price of 31.4), with a high estimate of 40.0 and a low estimate of 30.5.
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Italy Country Report
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May 2017
May 2017
June 2017
BUZZ
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Cimpor to be delisted from Lisbon Stock Exchange
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Cementos Molins to expand capacity
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Morocco consumes less cement in 1Q2017
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Dangote sets up new plant in Republic of Congo
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UltraTech to complete Jaypee deal soon
10. Semen Indonesia to build two new plants
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TOP BMWEEK STORIES activity Imerys acquires zirconia producer in China IRAN 2. India raises taxes for construction sector 1. 3.
Heidelbergcement and Cemex close deal over building materials operations
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Building materials prices in Abu Dhabi decline
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Limestone trade dips in the great lakes
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Crushed stone production decreases in 1Q2017
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Martin Marietta acquiring bluegrass materials
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Knauf expects demand for its products to grow in Kazakhstan
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South African researchers turning fly ash into building materials
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10. Colombia’s ready mixed cement declines yearly
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South Korean companies sign Mou for petcoke venture
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Aluminum Smelters’ profit rises
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Aluminum output increases in first five months of 2017
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Pemex refinery halting production
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Duqm refinery in Oman to gain new strategic partner
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Orpic finds funding for petcoke storage project
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Phillips 66 reports strong qoq growth
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Petcoke imports surging in India
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FLSmidth to sign contract in North Africa
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CW SUMMIT DUBAI 2017 CW Group Cement and Fuel Strategy, Trade and Finance Summit Middle East & Africa
September 27-28, 2017 Dubai-UAE Key Burning Topics: Global market outlook and projections: Africa & Middle East highlights Capacity expansions across the Middle East Current and future flows: impact of regulatory changes and trade barriers Petcoke trading- outlook and opportunities for cement Opportunities and challenges for specialty products: white and oil well cements Overview of bulk shipping and outlook – cement, fly ash, coal and petcoke
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