india A CemWeek Publication
ISSUE 26
CEMENT
SEPTEMBER - OCTOBER 2015
& CONSTRUCTION MATERIALS
CW Research Highlights LOWER CEMENT PRICES AND TRADING VOLUMES GLOBALLY
INDIA’S ECO BRICK-MAKING REVOLUTION – A study by Duke University, USA
Global Cement Forecast Report 2015 INDIA’S CEMENT CONSUMPTION GROWTH MERE ONE PERCENT News
|
Analysis
|
Market Coverage
|
Interviews
|
People
CW Research
RESEARCH REPORT:
GLOBAL WHITE CEMENT MARKET & TRADE REPORT WORLDWIDE WHITE CEMENT INDUSTRY, CURRENT AND FUTURE STATE OF THE MARKET SEGMENTS, INDUSTRY TRENDS, GLOBAL MOVEMENT OF PRODUCT AS WELL AS MAJOR SUPPLIERS AND CONSUMER NATIONS
White cement continues to enjoy its niche as a specialized, value add segment within the global cement sector. Though the sector has climbed up from its depths in the global recession, the industry may be pausing to find breadth. Even so, new production capacity is expected to come on-line in the next few years, following the recent commission of some of the world's largest white cement production units Is there room for more?
PRICING
DESCRIPTION 5-year projection of global white cement consump-
tion, production and net trade through 2019 Worldwide white cement plant production facilities Extensive quantitative information on consumption,
production, local prices, regional benchmark trade prices, trading facilities and trade-flows
WHO IS THIS REPORT FOR? INDIVIDUAL
(ONE LICENSE)
Electronic (PDF)
US$3,650
Hardcopy
US$3,700 + S&H
Business development professionals Industry and trading analysts Financial investment institutions Other executives and decision-makers involved
GROUP
(MULTI USER LICENSE)
Electronic (PDF)
US$7,300
Hardcopy
US$4,250 + S&H
CEMENT • CHEMICALS • ENERGY • STEEL • METALS & MINING PORTS • COMMUNICATIONS • FINANCIAL SERVICES • AGRICULTURE
You can contact the CW team at sales@cwgrp.com or +1-702-430-1748 with any questions you may have or to place your order.
+1-702-866-9474 research.cwgrp.com inquiries@cwgrp.com
FEATURES
DEPARTMENTS
3 India’s cement consumption
1
EDITORIAL LETTER
2
NUMBERS IN BRIEF
growth mere one percent
The overall cement consumption is expected to witness a modest demand in 2015
9 Lower Cement Prices and Trading Volumes Globally
A Moderate Outlook for 2015
15 India’s Brick-Making Revolution
Fall-G, an alternate technology for brick-making process
india
42
ANALYST RECOMMENDATIONS
Latest Broker Recommendations
& CONSTRUCTION MATERIALS
www.cemweek.com/india
CemWeek
Going green
Performance of India’s cement sector
CEMENT
ROBERT MADEIRA CEMWEEK PUBLISHER HEAD OF CW GROUP RESEARCH
RAHUL KAMAT SENIOR EDITOR
MARINA FERNANDES JR. EDITOR & COMMUNICATIONS ASSISTANT
research and analytics
cement
LUCIANA MURARASU
21 cement volumes
29 MARKET AND COMPETITION
LIVIU DINU
MARKETING & COMMUNICATIONS COORDINATOR
ADVERTISING
31 M&A and FINANCE
24 coal market update
33 PROJECTS AND EXPANSIONS
25 energy price update
35 VOLUME AND PRICING
construction & building materials 40
INFRASTRUCTURE & PROJECTS Infrastructure & Projects Gammon India wins Rs 1,708 crore road project
36 PEOPLE 37 REGIONAL UPDATE 39 EQUIPMENT HIGHLIGHTS
RALUCA CERCEL SILVIU STEFANESCU STEFANA ABICULESEI SUSHIMITA RAI CONTRIBUTING ANALYSTS
CATALIN CIOBANU SANTOSH SHETTYE DESIGNERS To subscribe or advertise, please contact us at T (India): +91-989-236-1085 T: +1-702-430-1748 F: +1-928-832-4762 E: sales@cwgrp.com ©2015 CemWeek LLC. All rights reserved. The contents of this publication may not be reproduced by any means, in whole or in part, without the prior written consent of the publisher. SUBMISSIONS To submit a contribution to the India Cement & Construction Materials magazine send us an email at inquiries@cwgrp.com Any submissions or contributions from readers shall be subject to and governed by CemWeek's Terms and Conditions, which are available upon request. The CemWeek Magazine is published by the CW Group LLC 132 Larchmont Ave, Suite 12, Larchmont, NY 10538, USA T: +1-702-430-1748 F: +1-928-832-4762 www.cwgrp.com www.cemweek.com The publishers regret that they cannot accept liability for error or omissions contained in this publication, however caused. The opinions and views contained in this publication are not necessarily those of the publishers. Readers are advised to seek specialist advice before acting on information contained in this publication which is provided for general use and may not be appropriate for the reader's particular circumstances. The ownership of trademarks is acknowledged. No part of this publication or any part of its contents thereof may be reproduced, stored in a retrieval system or transmitted in any form without the permission of the publishers in writing. An exemption is hereby granted for extracts used for the purpose of fair review.
TO SUBSCRIBE please visit www.cemweek.com/india
LETTER FROM EDITOR
GOING
GREEN
The current issue of India Cement and Construction Material magazine, has a green effect. Considering India’s promise to reduce the intensity of greenhouse gas, a small step has been already made its way.
K
udos to the efforts of—Dr. Bhanumathidas and Mr. N. Kalidas—who have invented an alternative production of a brick production process—Fall-G. Importantly, with the use of this new production process, brick makers no longer have to manufacture bricks in coal-fired kilns, thus completely eliminating the use of coal. Also, it will not use fly-ash, lime and gypsum, which are essential raw materials to produce bricks. What’s more, the Fall-G, will also provide a healthy environment to laborers, which are exposed to wretched conditions. Surprisingly, the duo despite filing a patent, did not claim its exclusivity which has led more than 18,000 FaL-G brick plants up and running throughout India. In an another development, a low-carbon cement developed by Indian and Swiss researchers is expected to get boost in India. Federale De Lausanne (EPFL), a leading technology institute in
1
SEPTEMBER - OCTOBER 2015
Switzerland has already tested in a pilot project. And, aiming to make Limestone Calcinated Clay Cement (LC3) a standard general-usable material and a feasible and viable product for sustainable development in the global cement market. On a positive note, with the Indian government focusing on major infrastructure projects, the global cement bigwigs are in the race to take the maximum advantage. It is expected that the Indian cement sector is set to witness a major consolidation overhaul with major players CRH, Heidelberg and LafargeHolcim making their presence felt in the country. This may lead to an increase in cement production capacity to 20 million tons, as per the industry experts in India. Ergo, the current issue also gives us an overview of cement prices and consumption pattern, across the globe. The two reports, published by CW Resreach—Global Cement Trade Price and Global Cement Forecast—are must read. Importantly, the “2H2015 update of the Global Volume Forecast Report 2015”, expects a modest growth of 1 percent in cement consumption in India for 2015, in particular and a decline of 2.7 percent in cement demand globally, in general. Importantly, this report will add more value to your thought process in terms of investment decisions, where we have exclusively mentioned the scenarios of 55 countries, which may prompt you to act swiftly. Meanwhile, the Global Cement Trade Price highlights how several emerging countries in the world, including India, Brazil and China are protecting their domestic cement industry. This particular strategy is likely to help these countries gain control over international capital flows, and help reduce their reliance Imports. Lastly, ICCM Magazine provides all the relevant news about the main indicators of the industry, including the latest facts and figures about cement volumes, energy prices, relevant people in the business, regional developments, equipment and construction projects. Don’t miss out the numbers and the trends laid out in the special sections.
INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE
Rahul Kamat SENIOR EDITOR
NUMBERSIN BRIEF
A BRIGHT FUTURE FOR INDIA’S CEMENT SECTOR Though short term expectations remain subdued, the Indian cement sector is bound for a robust long term recovery. INDIA CEMENT DEMAND FORECAST
300 200 Source: CW Research
MILLION TONS
400
100
2014
2015E
2016F
2017F
After cement demand hit 388 million tons in 2014, cement production levels reached 138 million tons of cement in the first half of 2015. CW Research 2H 2015 forecasts a modest 1 percent growth in consumption levels for 2015. Meanwhile, the infrastructure projects announced by the Indian government
2018F
2019F
2020F
have been finally taking shape. This clearly suggests that the cement market is likely to witness a sustainable growth in the next five years. CW expects, between 2015 and 2020, consumption growth to come at a Compounded Annual Growth Rate (CAGR) of 6.5 percent.
Utilization rates
100%
450
75%
300
50%
150
25%
2014
2015E
2016F
2017F
The major infrastructure and housing for all by 2022 mission planned by the government have not gone unnoticed by the leading cement manufacturers, most of which are planning capacity expansions and new plants during the next five years. A case in point would be UltraTech. The company, which has the capacity to produce over 60.2 million tons per year, agreed in
2018F
2019F
2020F
UTILISATION RATES (%)
Cement capacity
600
0%
Source: CW Research
CEMENT CAPACITY (MILLION TONS)
INDIA CEMENT CAPACITY AND UTILIZATION RATES
December 2014 to purchase two cement plants from Jaiprakash Associates in Madhya Pradesh, which would take its capacity to 65 million tons. UltraTech is in the process of executing other expansion projects that are aimed at raising its capacity to 71 million tons upon completion. Other additions will come from JSW Cement, HeidelbergCement, and Zuari Cement.
INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE
SEPTEMBER - OCTOBER 2015
2
FEATURE
INDIA’S CEMENT CONSUMPTION GROWTH MERE ONE PERCENT: GLOBAL CEMENT FORECAST REPORT 2015
A
lthough, the current government has given a major impetus on infrastructure projects, the overall cement consumption is expected to witness a modest demand from the real estate sector in 2015.
3
SEPTEMBER - OCTOBER 2015
INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE
INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE
SEPTEMBER - OCTOBER 2015
4
FEATURE Delhi Metro, India.
It is expected that 2015 will end with capacity additions of over 10 percent for countries like Iraq, Peru, Algeria, South Africa, and the Philippines”
The “2H2015 update of the Global Volume Forecast Report 2015”—released by CW Research, expects a modest growth of one percent in cement consumption in India for 2015. This forecasts has come at a time when, despite the Indian government’s impetus on major infrastructure projects, the overall cement consumption in India is expected to witness a modest demand from its major consumer—the real estate sector—in 2015. Consider this: The housing sector in India, continued to suffer because of high home loan interest rates and the unit prices. In addition, lack of new project announcements by real estate players, and their plans of raising funds too likely to impact the cement sector, going forward.
GLOBAL CONSUMPTION FORECAST (‘13-‘20E) & COMPARISON TO LAST FORECAST 2H2015 fcst
5,000
1H2015 fcst
Fcst revision
4,600
4,200
3,800
3,400
2013
2014E
2015
2016
2017
Source: CW Research
5
SEPTEMBER - OCTOBER 2015
INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE
2018
2019
2020
GLOBAL ECONOMY (2014-2016) Real GDP (YoY%’ April 2015 update)
Advanced economies
2014
2015
2016
USA Russia China Euro area Emerging and developing Asia Latin America and the Caribbean Sub-Saharan Africa Middle East, North Africa, Pakistan
Source: CW Research
Meanwhile, the recent cut (50 basis point) by the Reserve Bank of India has been applauded by India’s housing sector. However, the banks—private and nationalized—may not pass the entire rate reduction to end consumers due to the fear of rising non performing assets. In addition, it is also expected that the current government’s plan for the infrastructure and construction sectors, will give a boost to the cement sector, post 2015. Consider this: The then planning commission (now NITI Aayog), has envisaged an investment of about USD1 trillion for roads, ports and to establish new infrastructure by 2020. What's more ambitious projects including “100 smart cities”, “Housing for all by 2020”, concretization of 1 lakh km roads, industrial corridors (Delhi-Mumbai Industrial Corridor), construction of major and minor ports and urban transport
The global average utilization rate will rise from 75 percent in 2015 to an estimated 78 percent in 2020
projects (Metro Rail, Dedicated Freight Corridor etc.) are expected to give the required push to the cement sector over the forecast period.
CONSTRUCTION SECTOR TO THE RESCUE A modest increase in India’s construction sector (5 percent) is on the cards, as the growth momentum will be pushed by positive reforms including the Land Acquisition Bill and the Goods and Service Tax Bill. It is expected that, theese reform will help to improve funding environment and enhance the focus of the government to develop the country’s infrastructure. The construction sector in India is poised for robust growth going into the second half of 2015. Apart from an investment increase of INR 70,000 crore for the infrastructure sector, the government is expecting FDI too. Countries including the USA, China and Japan are pledging USD 42 billion, USD 22 billion and USD 35 billions of investment , respectively, will not only improve the ailing infrastructure sector but also boost the cement consumption, in the country.
INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE
SEPTEMBER - OCTOBER 2015
6
FEATURE India to have ambitious projects that include 100 smart cities and Housing for all by 2020.
on account of not only the slowdown in the Chinese economy, but also commodity collapse in coal, iron ore and oil prices. In addition, the crumbling Brazilian phenomenon, widening conflicts in regions including the Middle East, Ukraine and Russia, caused investments and, ultimately, the demand for cement to decline. In light of these developments, CW Research forecasts a cautious outlook for the forecast period, and lowers the global average growth to 2.4 percent till 2020.
North America is likely to see strong cement consumption growth of 4 percent in 2015 Moreover, until March 2015 the Project Management Group had accepted 511 projects with estimated investments of Rs. 25.4 trillion, which had been facing various implementation hurdles. CW Research forecasts a robust outlook for India over the forecast period, considering the pipeline of major infrastructure projects. This is likely to help the cement consumption to expand at 1.2XGDP growth rate, then consumption is likely to reach an estimated 372.4 million tons by 2020.
GLOBAL SCENARIO The “2H2015 update of the Global Volume Forecast Report 2015”, expects 2015 world cement demand to decline by 110 million tons, or 2.7 percent (Refer Global Consumption Forecast (‘13-‘20E) & Comparison to Last Forecast). This is
7
SEPTEMBER - OCTOBER 2015
“Undoubtedly,” says Robert Madeira, CW Group Managing Director and Head of Research, “there remain some compelling markets for cement volume growth, but the overall outlook in the short term has a negative bias.” Meanwhile, a structural shift in the Chinese economy—from an export oriented to domestic consumption driven one —will have a negative impact on the world’s cement demand, expects the report.
ASIA PERSPECTIVE Economic growth in Asia decelerated slightly, particularly in the second quarter of 2015. Additionally, the IMF, in its October update, has further decreased Asia’s growth. Further, the devaluation of the Chinese yuan has had a ripple effect across the economies, especially in East and South East Asia. The economies of emerging Asian countries are expected to grow at 6.4 percent in 2015, with the Indian economy blazing the path with a 7.5 percent growth. Low oil prices will benefit emerging countries in Asia, but the region’s net fuel exporters will experience slower growth and lower government revenues. Other countries on the continent, including Malaysia, have seen growth in the construction sector that is set to continue.
INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE
Fact file • Until March 2015, the Project Management Group had accepted 511 projects with estimated investments of Rs. 25.4 trillion.
• World cement demand to decline by 110 million tons, or 2.7 percent in 2015.
• The
economies of emerging Asian countries are expected to grow at 6.4 percent in 2015.
• I ndia’s GDP to grow at 7.5 percent in 2015. A modest growth of one percent •
consumption is expected in India for 2015.
Indonesia and the Philippines, on the other hand, have envisaged ambitious construction investment programs, are finding these projects rather challenging to commence or complete. The fluctuations in commodity and currency markets may affect the latter countries’ ability to attract private-public investment or government-aided projects. Nevertheless, the construction sector will remain a positive story in Asia, given the on-going trend of urbanization. All of these factors are likely to benefit the construction sector, particularly those of China, India, Vietnam and Indonesia in the long run.
THE RISING STARS in cement
The construction sector will remain a positive story in Asia, given the on-going trend of urbanization
CW Research, while taking a close look at the regional level, continues to envisage varied performance for different regions of the world. According to CW Research’s estimates, North America is likely to see strong cement consumption growth of 4 percent in 2015. The United States is expected to grow at a CAGR of 4.5 percent from 2015 to 2020, becoming in the process a bright spot of the global cement industry. Interestingly, the forecast reveals that there is a notable recovery in cement volumes, during 2015, in countries including the Czech Republic, Mexico, Argentina Nigeria and Kenya.
THE TEMPERED MARKET CW Research expects that capacity additions in the Chinese market will remain subdued and is likely to exhibit a CAGR of 1.1 percent over the next five years, starting with 2015.
GLOBAL CEMENT CAPACITY Mm tons
Base Cement Capacity (million tons)
Incremental Cement Capacity (million tons)
6,000
4,000
2,000
0
2015
2016
2017
2018
2019
2020
Source: CW Research
INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE
SEPTEMBER - OCTOBER 2015
8
FEATURE An under construction Sahar Elevated Road in Mumbai India, which was completed in 2014.
market in Latin America, is expected to witness a drastic fall in consumption by 9 percent. However, consumption is expected to grow over the forecast period.
CEMENT PRODUCTION According to Prashant Singh, Associate Director, CW Advisory & Research, “In spite of the decline in Chinese cement consumption in 2015, the sector will continue to be supported by a pipeline of the infrastructure projects as well as support from the government for this important sector.” Meanwhile, marred by uncertainties, mainly due to the decrease in oil prices, the Middle East market has been tempered. Saudi Arabia’s mega projects appetite is somewhat less certain, the Yemen situation is adding fuel to the fire creating investor uncertainty. However, CW Research expects the region’s governments to keep their infrastructure spending largely intact. In Latin America, a decline in cement consumption of one percent is expected in 2015. But, going forward, the region is likely to recover, over the next five years. Brazil, once a booming
The pipeline of major infrastructure projects is likely to help the cement consumption to expand at 1.2XGDP growth rate in India by 2020
9
SEPTEMBER - OCTOBER 2015
CW Research, for the 2015-2020 period, forecasts worldwide incremental production capacity will reach 5,499 million tons, an increase of 355 million tons from the current level of 5,094 million tons. Meanwhile, it is expected that 2015 will end with capacity additions of over 10 percent for countries like Iraq, Peru, Algeria, South Africa, and the Philippines. Importantly, on a positive note, the global average utilization rate will rise from 75 percent in 2015 to an estimated 78 percent in 2020, as China’s productivity recovers after capacity rationalization.
FINAL VERDICT At the end, this forecast gives a muted positive outlook on the future of cement volumes. Though global volumes will see a decline in 2015, investors can expect sustainable growth in the markets mentioned earlier. Additionally, demand from emerging economies in Asia and Africa will give boost to the growth. On a positive note: Iran’s reintegration into the global economy is also expected to be an asset to overall demand growth. Finally, global cement consumption, which expanded by 3.8 percent average per year from 2010 to 2015, will witness a deceleration in some markets. This will translate into a 2.4 percent increase per year on average for the 2015-2020 period. Following an immediate contraction, the forecast expects exChina cement consumption to grow at a slower pace at around 4.2 percent through 2020, than it had in previous years.
INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE
CEMENT RESEARCH
CW Research
GLOBAL cement trade price REPORT BENCHMARK CHARTBOOK AND ANALYSIS WITH MONTHLY IMPORT, EXPORT, EX-WORKS, SLOVAKIA
RETAIL PRICES FOR GRAY CEMENT, WHITE CEMENT, CLINKER AND GRANULATED SLAG. COLOMBIA
PRODUCT DESCRIPTION
WHY BUY?
The Global Cement Trade Price Report (GCTPR) is the source for monthly gray cement, white cement, clinker and granulated blast furnace slag trade prices and volumes. The extensive report, published on a quarterly basis, includes data for about 60 individual markets worldwide on monthly average selling prices, retail price changes, a trade price forecast and volumes for the past 24 months as well as a forecast for the next 3 months for each country. The report also includes regional price indices as well as a quick review of trading dynamics and drivers in the different regions.
Monthly data series (US$/ton and tons)
Benefits of subscribing to the Global Cement Trade Price Report :
WHO IS THIS REPORT FOR?
Evaluate the competitiveness of cement trading worldwide Track quarterly cement, clinker and granulated slag prices on a consistent and comparable multi-year basis
National: Ex-works and retail pricing Trade: Import and export pricing, plus traded volumes Regional benchmark price indices Forecasted trade prices (1Q ahead)
Business development professionals Cement traders
Understand changes in national cement prices, ex-works average prices as well as retail level changes
Strategy teams
Follow benchmark regional price indices in key regions including Mediterranean Basin, Gulf of Mexico, Northern and Central Europe, among others
Country managers
Each report is over 150 pages and includes average selling prices, retail prices as well as import and export prices (US$/ton) and volumes for key markets around the world for: Gray cement White cement Clinker
Shippers Logistic professionals Analysts Consultants
RELEASE DETAILS Quarterly (Jan, Apr, Jul, Oct) 150+ pages per update
Granulated slag
CEMENT • CHEMICALS • ENERGY • STEEL • METALS & MINING • PORTS COMMUNICATIONS • FINANCIAL SERVICES • AGRICULTURE GREENWICH (US) • HOUSTON (US) • MUMBAI (IN) • BUCHAREST (RO) • SAO PAULO (BR)
research.cwgrp.com •
CW Group
inquiries@cwgrp.com • +1-702-866-9474 PO Box 5263 • Greenwich, CT 06831 • USA
$$$ FEATURE
CW RESEARCH HIGHLIGHTS
$$
LOWER CEMENT PRICES AND TRADING VOLUMES GLOBALLY, A MODERATE OUTLOOK FOR 2015
D
elays in the infrastructure project and a slower growth in the emerging markets this year are likely to impact India’s pricing trend and cement demand going further, according to the 2Q2015 Global Cement Trade Price Report. Meanwhile, growth rate declines are likely to impact demand, as well as prices of both - gray and white cement, while sales in the second quarter of the year are estimated to remain strong.
11
SEPTEMBER - OCTOBER 2015
INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE
to price declines in the second quarter of 2015. The northern part of the country experienced the strongest price reductions, as ex-works prices fell almost 20 percent year-on-year in 2Q2015. Interestingly, the decline rate was lower in the southern region, where the average sale price of cement dropped by just below 1.5 percent year-on-year during the same period.
A NOT-SO-BRIGHT GLOBAL CONTEXT The global context brings economic growth projections marginally lower than in 2014, with an estimated growth rate of 3.3 percent in 2015. The decline is attributable to the slowdown in growth in emerging economies, which cannot be compensated by the gradual pickup of advanced economies this year. Slower growth in emerging markets is mainly due to lower commodity prices and tighter external financial conditions. While structural bottlenecks, re-balancing in China, and economic distress related to geopolitical factors further impact economic growth.
Overall, India saw weaker pricing, as well as cement demand. After two consecutive quarters of significant price declines, the second quarter of 2015 brought a slight 0.66 percent quarter-on-quarter increase in average cement prices across India. This was, however, was much lower than the 6.8 percent quarter-on-quarter increase reported in the same quarter of 2014. India has struggled with negative rural and housing demand in the southern states, where government projects and road construction have yet to see any traction.
This has led several emerging countries, including India, Brazil and China to protect their domestic industries on a priority basis. This particular strategy is likely to help these countries gain control over international capital flows, and help reduce their reliance imports. In fact, such a model is now influencing other economies as well,
As for the retail prices, the Global Cement Trade Price report assessment indicates no change between April and June 2015, after slight increases in the first three months of the year.
Pakistan saw a significant decline in cement exports to India due to non-tariff barriers imposed by the Indian authorities.
INDIA’S DEMAND, PRICE DECLINES FOR GRAY CEMENT While, at a global scale export price for gray cement stabilized or increase marginally in the second and third quarter of the year, the Asia-Pacific-Japan region counted among less dynamic regions, with small volume increases. India is the third largest exporter of cement in the region and the seventh worldwide.
with the most notable example being Russia. The new economic model implemented by Russia comes in response to the collapsing ruble and weak oil prices. Pakistan witnessed a significant decline in cement exports to India due to non-tariff barriers imposed by the Indian authorities. In India, a mixture of global developments and local context led
SNAPSHOT: EX-WORKS PRICES
2Q2015: Average sale prices for select markets (USD/ton) 250
2Q 2014
2Q 2015
200
150
100
Jamaica
Argentina
USA
Peru
Oman
India: South
South Africa
Saudi Arabia
India: Pan
Mozambique
Thailand
Nigeria
Chile
Cape Verde
Portugal
Egypt
Paraguay
China
Germany
Indonesia
India: North
Czech Republic
Luxembourg
Brazil
Italy
Poland
Ukraine
Russia
50
Source: CW Research
INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE
SEPTEMBER - OCTOBER 2015
12
FEATURE FEATURE LEADING GREY CEMENT EXPORTERS AND MAIN DESTINATIONS Leading grey cement exporters in 1Q2015
RH - Average FOB price in 1Q2015 (USD/ton)
3.0
LH - Exported cement volume in 1Q2015 (mn tons)
90 80
2.5
70 60
2.0
50 1.5
40 30
1.0
20 0.5
10 0
0.0 Thailand
China
Turkey
Germany
Portugal
Spain
India
Greece
Italy
Belgium
Source: CW Research
In April 2015, its exports of gray cement fell almost 10 percent as compared to the previous month. Indian freight on board (FOB) prices for gray cement, generally ranging from USD 54.0 per ton to USD 61.0 per ton, fell in April 2015 below the inferior mark to reach USD 51.9 per ton. The rate was USD 9.1 per ton below the twelve months to April’s peak, touched in July 2014 at USD 61.0 per ton. India exported roughly 0.54 million tons of cement in the first quarter of the year, accounting for 4.1 percent of the global cement trade. Average FOB prices for Indian gray cement were rated at USD 54.6 per ton in the quarter, posting no variation from the previous quarter.
Fact file • India's northern parts experienced the strongest price
reductions, as ex-works prices fell almost 20 percent year-on-year in 2Q2015.
• In April 2015, India's gray cement exports fell almost 10 percent as compared to the previous month.
• Indian freight on board (FOB) prices for gray cement, fell in April 2015 below the inferior mark to reach USD 51.9 per ton.
• India exported roughly 0.54 million tons of cement in the first quarter of the year, accounting for 4.1 percent of the global cement trade.
13
SEPTEMBER - OCTOBER 2015
As for gray cement export pricing in the Asia-Pacific-Japan region, the main drivers were the price hike in China and the marginal increase in Taiwan. CW Group’s Global Cement Trade Price report estimated that export prices will decline more abruptly in India, by almost 4.5
India has struggled with negative rural and housing demand in the southern states. percent in September 2015 as compared to June 2015. Also, a decline is expected to be slower in the Malaysian market. By comparison, in China and Taiwan, prices are projected to report slight increases in the third quarter of 2015. A similar trend is expected to occur for gray cement prices in the Asia-Pacific-Japan region, with projected increases of around 2 percent over the third quarter of 2015. White cement pricing was not much different from gray cement, according to the 2Q2015 update of the Global Cement Trade Price Report. The report projected India to witness a slowdown in prices between June to September 2015, lower than China and higher than Malaysia. At a regional level, the trend was partly offset by the increase seen in Thailand, where white cement FOB prices rose by 0.5 percent in September 2015 as compared to June 2015. Average white cement export prices in the Asia-Pacific-Japan regions are projected to decline marginally and eventually stabilize in the quarter to September 2015. However, average FOB prices for white cement will decline on a year-on-year basis, touching USD 133.3 per ton in September 2015, down 11.1 percent from the level reported in September 2014.
INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE
JSW Cement Plant, India.
Import prices for white cement in the region are projected to see a marginal decline of USD 0.1 per ton in September 2015 as compared to June 2015. As such, CIF prices for white cement in the Asia-Pacific-Japan regions are projected to reach USD 133.4 per ton in September 2015, driven by strong decline in Korean pricing that will be partly offset by growth in CIF prices in Australia and India.
INDIAN SLAG TRADING COUNTERS REGIONAL TREND The second quarter of 2015 brought about a significant increase in the export volume of slag by India – the second largest slag exporter in the world. During the three-month period there was an over 10 percent hike over the previous quarter. The main export markets for Indian slag were Bangladesh and Nepal during that period. That was opposed to trends reported by other main exporters of the commodity, who exhibited falling trading volumes, as well as a drop in prices. Global trade
volumes fell by 15.4 percent month-on-month in April, and the highest exporting activity for slag was observed in March 2015, when volumes touched 2.1 million tons. Slag FOB prices are expected to decline in the third quarter of the year, set to reach USD 6.8 per ton in September 2015 in Japan, the main exporter of slag in the world. More detailed information and analyses down to country level are available in the latest update of the Global Cement Trade Price Report, a benchmark price assessment for monthly worldwide gray cement, white cement, clinker and slag trade, ex-works and market prices. The Report is published by CW Research, the research desk of global industry advisory and analysis boutique CW Group, based in Greenwich, CT USA.
SNAPSHOT: OUTLOOK ON GREY CEMENT EXPORTS Asia Pacific Japan gray cement import prices (USD/ton) China
Georgia
India
Malaysia
Taiwan
Thailand
Asia PaciďŹ c Japan
80
70
60
50
40
Sep-14
Oct-14
Nov-14
Dec-14
Jan-15
Feb-15
Mar-15
Apr-15
May-15
Jun-15
Jul-15
Aug-15
Sep-15
Source: CW Research
INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE
SEPTEMBER - OCTOBER 2015
14
FEATURE
US study highlights
INDIA’S ECO BRICK-MAKING REVOLUTION
E
fforts by the local governments, and non-profit organizations to expand the use of fly-ash for ecological brick-making may be discouraged by the findings of a new study in the USA.
15
SEPTEMBER - OCTOBER 2015
INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE
INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE
SEPTEMBER - OCTOBER 2015
16
FEATURE
A
Brick making near Dhaka, India, 1997.
recently conducted study by the Duke University revealed that, the radioactive contaminants present in the coal-ash is five times higher than in normal soil, and up to ten times higher than in the parent coal itself. It is mainly because of the way combustion concentrates radioactivity. The finding may add a series of new challenge to recent efforts by the local authorities that foster coal-ash utilization in alternative brick making technologies.
THE CLEAN PROMISE The finding of the US study comes at a time when Industrial Productivity (IIP), a non profit making organization are stepping up efforts to promote the use of fly-ash in Indian states like Odisha. The organization also accelerating efforts in an alternative production of brick-making process called Fall-G. The technology (Fall-G) was discovered by two Indian scientists in the 80’s and is believed to revolutionize age-old brick-making practices, while being healthier and more environmentally friendly. The procedure, invented by Dr. Bhanumathidas and Mr. N. Kalidas uses fly-ash, lime and gypsum to produce bricks without using top soil and thus completely eliminating the use of coal. Importantly, with the use of this new production process, brick makers no longer have to manufacture bricks in coal-fired kilns. This process is likely to provide a healthy work environment to its laborers, which are more exposed to wretched conditions and long working hours. Meanwhile, the new technology it will also take care of high levels of soot, which causes side effects on the lungs.
17
SEPTEMBER - OCTOBER 2015
So far, the Fal-G technology has been considered to be a good way to modernize production practices and a chance for workers to dramatically improve their working conditions. The technology will also ensure a drastic drop in air pollution and greenhouse gas emission. Moreover, supporters of the procedure have placed emphasis on the positive environmental impact of finding fly-ash use, which is in itself an unwanted residue of coal burning. In order to make sure that the use of Fal-G can bring transformation in the brickmaking industry, inventors have filed a patent but did not claim exclusivity. As a result, more than 18,000 FaL-G brick plants are in operation throughout India, and over 25 million tons of waste fly-ash are used for their production. This has helped India tackle an environmental menace.
This study raises the possibility we should also be looking for radioactive elements Local authorities and organizations such as IIP, the Fly-Ash independent Brick and Block Manufacturers Federation or organizations such as the U.K. Department for International Development are working together to encourage the adoption of the Fal-G technology. These organizations are trying to overcome the fact that many brick-makers still find little incentive to follow those efforts.
INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE
As far as clay brick production is concerned in India, many brick makers are not tax registered whereas, fly-ash brick production must be tax compliant. FABMAFED is lobbying with the Indian government on policy reforms favoring the adoption of fly-ash brick technology over clay brick technology, with some success. In turn, the IIP, with support from the U.K. Department for International Development under its Knowledge Partnership Program, is looking at duplicating these efforts across Bangladesh, one of the most densely populated and polluted countries in the world. IIP is working with the inventors and the Bangladesh Brick Manufacturing Owners Association (BBMOA) to customize flyash brick technology to local conditions and carry out pilots.
THE BANGLADESH CONNECTION In Bangladesh, one the traditional brick-making country in the world is one of the biggest polluters, with clay brick production responsible for 9.8 million tons of greenhouse gases emitted each year. This emission is almost twice the amount of that in India. At the same time, the brick-making industry provides a million jobs in Bangladesh, and it forms the backbone of the construction industry. It is expected that, like India, the introduction of an alternative technology which reduces the volume of waste coalash, seems to be a positive initiative with long term benefits for the industry and the environment, as well. A fact check: around 17 billion bricks that are made in Bangladesh each year, and their manufacture require about 45 million tons of fertile soil, equivalent to around 2,600 hectares of agricultural land. At this rate, the country is fast moving towards severe food shortages. Apart from using clay, nearly 3.5 million tons of coal and 1.9 million tons of wood are burned annually in outmoded kilns in Bangladesh, causing severe air pollution. Particulate matter pollution is a huge problem in Dhaka in particular: it weighs heavily like a blanket on the skyline and creates grave health problems. Almost 38 percent of particulate matter pollution around Dhaka is due to brick kilns. The government of Bangladesh has tried to clamp down on the industry through regulations mandating the use of cleaner technologies, but it has not helped the country to solve environmental and social challenges in a sustainable manner. However, to the country’s energy security issue, the government is concurrently commissioning three large coal-based, superthermal power plants, too. These thermal power plants would produce large quantities of fly-ash, which will be a major environmental concern in a few years.
According to figures presented by the International Journal of Scientific & Engineering Research, Bangladesh produces an estimated 1.3 million cubic feet of fly ash, per annum by thermal power plants alone, and the volume is expected to reach an alarming crescendo of 9.5 million cubic feet by 2018. Promoters of technologies such as Fal-G highlights the fact that waste fly-ash from Bangladesh’s existing or new coal-fired plants could be used to produce bricks of higher quality — saving forests, agricultural land and preventing environmental pollution while increasing sustainable livelihood potential. However, the US study on the elevated radioactivity levels of fly-ash sheds a new light on the whole process. It is very likely that authorities and NGOs will have to consider potential health effects of the Gal-F bricks.
Odisha’s fly-ash love The Indian government has mandated thermal power plants to provide fly-ash to brick manufacturers for free and stipulated targets to achieve high levels of ash use. One of the more recent moves occurred in September 2015, when the Odisha state government instructed all power plants, with a generation capacity of more than 100 MW to subsidize transport cost at the rate of Rs 150 per tonne or provide free transportation up to 100 km. The decision comes at a time when nearly half of the massive volume of fly ash generated by thermal power plants remaining unutilized in Odisha. To increase utilization, the Works Department had already made notification making mandatory use of fly-ash bricks in the construction of government buildings situated within 100 km radius of a power plant. According to IIP, in 2014-15, a total number of 36 power plants with an installed capacity of 14,244 MW had generated 24.687 million metric tons of fly ash. Out of this, only 12.94 MMT could be used, accounting for a little more than half of the total amount. In Odisha, about 10 percent of the flyash volume is used for brick making or as ingredients for cement, asbestos or road making.
INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE
SEPTEMBER - OCTOBER 2015
18
FEATURE FEATURE FROM DIRT TO PLAIN RADIOACTIVE The finding of the Duke University researchers, published in the Environmental Science & Technology journal, raises concerns about the environmental and human health risks posed by coal ash. The waste material is currently unregulated and is stored in coal-fired power plants’ holding ponds and landfills.
This analysis can be applied to all coal ash worldwide “Until now, metals and contaminants such as selenium and arsenic have been the major known contaminants of concern in coal ash,” said Avner Vengosh, professor of geochemistry and water quality at Duke’s Nicholas School of the Environment. “This study raises the possibility we should also be looking for radioactive elements, such as radium isotopes and lead-210, and including them in our monitoring efforts.” Radium isotopes and lead-210 occur naturally in coal as chemical by-products of its uranium and thorium content. Duke University reported that Vengosh’s research team revealed Thermal Power Plant in Sarni, Madhya Pradesh, India.
19
SEPTEMBER - OCTOBER 2015
that when the coal is burned, the radium isotopes become concentrated in the coal ash residues, and the lead-210 becomes chemically volatile and reattaches itself to tiny particles of fly ash. This causes additional enrichment of radioactivity in the fly ash. “Radioactive radium and lead-210 ends up concentrated in these tiny particles of fly ash, which, though individually small, collectively comprise the largest volume of coal ash waste going into holding ponds and landfills,” said Nancy Lauer, a Ph.D. student in Vengosh’s lab who was lead author of the study. A case in point would be Smokestack scrubbers, installed in modern U.S. power plants keep these contaminants from escaping into the air when the coal is burned. But if the contaminated coal ash is spilled, or if effluents leak from ponds or landfills, it may pose a hazard. “Because of the tiny size of the fly ash particles, they are much more likely to be suspended in the air if they are disposed in a dry form.” Said Lauer. The study compared radioactivity in coal and coal ash from the Illinois, Appalachian, and Powder River basins. The researchers collected multiple samples of coal and coal ash from all three coalproducing basins, and then measured the radioactive elements in each sample. Their tests showed that coal and coal ash from different basins exhibited different levels of radioactivity. The tests also showed that the ratio of radium to uranium in the parent coal was consistent with the ratio found in its residual coal ash. “This means we can predict how much potential radioactivity will occur in coal ash by measuring the uranium content in the parent coal, which is easily discerned,” Vengosh said. He added, “This analysis can be applied to all coal ash worldwide, and is useful information for regulators, industries and scientists alike.”
INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE
Apart from using clay, nearly 3.5 million tons of coal and 1.9 million tons of wood are burned annually in Bangladesh.
Because the isotopic ratios of the coal and coal ash varied between basins, but were consistent within each individual basin, researchers can also use them to determine the source of environmental contamination. “They allow us to not only distinguish between the three basins, but also to determine whether contaminants are coming from coal ash or some other naturally occurring source in the local environment,” Lauer said. Currently, coal ash disposal sites are not monitored for radioactivity, Vengosh noted, “so we don’t know how many of these contaminants are released to the environment, and how they might affect human health in areas where coal ash ponds and landfills are leaking.” At the end, the study opens the door for future evaluation of this potential risk and adds a new dimension to projects involving alternative uses if coal-ash. Moreover, authorities and organizations that encourage the use of fly-ash for brick-making will have to consider finding new ways to measure the radioactivity levels of the coal-ash. This may mitigate any possibility of unknown sideeffects of a so far beneficial technology.
Fact file • More than 18,000 FaL-G brick plants are in operation throughout India, and over 25 million tons of waste fly-ash are used for their production.
• In
2014-15, 36 power plants had generated 24.687 million metric tons of fly- ash.
• In Odisha, about 10 percent of the fly-ash volume is being used for brick making.
• Bangladesh’s clay brick production responsible for 9.8 million tons of greenhouse gases emitted each year.
• The brick-making industry provides a million jobs in Bangladesh.
• Around 17 billion bricks are made in Bangladesh each year, with a requirement of around 45 million tons of fertile soil.
INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE
SEPTEMBER - OCTOBER 2015
20
CEMENT MARKETS
CW Research
CEMENT VOLUMES France has so far this year seen lower cement demand levels as compared to the previous year. In January-August 2015, cement demand in France dropped by 8.0 percent as compared to the same period in 2014. According to SFIC, the Association of the French Cement Industry, these are the lowest levels of cement consumption in the country has seen in about 50 years. Going further, demand is expected to remain subdued as the residential building market is expected to see a marginal increase this year, but the non-residential building market will most likely decline more than 9 percent in France this year.
In August 2015, cement prices in Argentina increase by 29 percent. High cement prices which boosted construction costs, as well as the shortages of cement the country has seen.
Japan has reduced its production and domestic sales of cement in August 2015, both indicators falling in the eight months to August. Meanwhile, Japan saw higher export volumes. Cement manufacturers in the country have increased the level of foreign cement sales in a bid to counteract low domestic demand. Argentina has seen a significant year-on-year (YoY) decline in cement production in August 2015 as the cement market has been reported to have experienced severe cement shortages in various provinces. These shortages have contributed to a sharp boost in cement prices, but the situation is expected to stabilize in the following weeks. In August 2015, cement prices in Argentina increase by 29 percent. High cement prices, which boosted construction costs, as well as the shortages of cement the country has seen, put a halt on many construction projects. Many cement producers in the country cited the lack of natural gas supplies as the main reason behind the low production volumes. Cement dealers in Argentina began importing higher quantities of cement from Chile, but selling prices are higher than those of locally produced cement. Chile has benefited from severe cement shortages in Argentina, while local cement demand has also been on the rise, growing by 11.4 percent YoY in July 2015. Chile has recently been hit by an earthquake of magnitude 8.3 that hit the north-central regions of the country, a region which has relatively low population. The effects of the earthquake extended to residential and public properties and infrastructure, which will result in a spike in cement demand due to required repair works.
AUGUST 2015 YEAR-ON-YEAR CEMENT DEMAND GROWTH (%) 25% 20% 15% 10%
To learn more, please contact the CW Research team at sales@cwgrp.com or +1-702-430-1748.
21
SEPTEMBER - OCTOBER 2015
INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE
Source: CW Research
Saudi Arabia
Morocco
Indonesia
Spain
Poland
Germany
-10%
Argentina
Japan
-5%
France
5% 0%
CW Research CEMENT MARKETS
Poland is seeing relatively stable cement volumes. Cement demand growth is increasingly being supported by investments in building concrete roads throughout the country, which, coupled with an expected boost in housing, will further contribute to growth in cement demand. After continued decline since 2008, cement consumption in Spain increased in 2014 and continues to recover this year. In August 2015, cement demand in Spain expanded by 7.5 percent YoY, which further boosted overall figures for January-August 2015. The country’s economy is also well on its way to recovery, with construction benefiting from the economic growth. Going further, demand is expected to remain this year higher as compared to the previous year.
Cement demand in Saudi Arabia grew a staggering 22.2 percent YoY in August 2015, with year-todate volumes growing by nearly 10 percent as compared to the previous year.
Cement demand in Saudi Arabia grew a staggering 22.2 percent YoY in August 2015, with year-todate volumes growing by nearly 10 percent as compared to the previous year. Though Saudi Arabia was hit by lower oil prices, the massive push towards infrastructure developments have contributed to a rise in sales of cement. Cement production has also increased, in line with demand growth. However, Cement manufacturers in Saudi Arabia are experiencing increased pressure from rising clinker stocks, which continue to increase despite a decline, albeit small, of clinker production. The decline of cement production volumes in China continues in August 2015, output of the building material falling by about 3 percent YoY in the eighth month of the year. Volumes in China have seen a downward trend due to the government’s efforts to see emission levels reduced, efforts which saw many small manufacturing units halt production. Furthermore, many cement companies in China are struggling due to their inability to pay high environmental taxes, while others lack the required funds to upgrade their plants. On top of this, economic growth in China is slowing, putting a strain on construction activity and thus contributing to the decline in cement demand. Though the construction market in Ukraine is expected to resume growth not earlier than 2016, cement production in the country has seen a marginal YoY increase in August 2015. However, yearto-date volumes in the first eight months of the year remain lower as compared to the previous year. going further, weak economic growth and sluggish construction activity are expected to continue to negatively impact the Ukrainian cement market. JULY 2015 YEAR-ON-YEAR CEMENT PRODUCTION GROWTH (%) 30% 20%
-30%
Source: CW Research
Saudi Arabia
Ukraine
Poland
Argentina
-20%
China
-10%
Japan
0%
Belarus
10%
To learn more, please contact the CW Research team at sales@cwgrp.com or +1-702-430-1748. INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE
SEPTEMBER - OCTOBER 2015
22
MARKET DATA SNAPSHOT
CW Research
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 as well as on-line at http://www.cemweek.com to the market data section.
Cement Production (million tons)
Cement Consumption (million tons)
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)
Cement Imports (million tons)
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 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 +1-702-430-1748.
23
SEPTEMBER - OCTOBER 2015
INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE
CEMENT ENERGY MARKETS
CW Research
CEMENT ENERGY MARKETS Coal Market Update Global trading volumes decreased to 82.76 million tons in July 2015, declining 1.8 percent in comparison with 84.26 million tons recorded in June 2015. A decline in coal trading volumes was observed in Australia, Russia, Indonesia and Colombia, whereas the US and South Africa showed some increase in coal trading volumes. China’s concern on increasing pollution has initiated a shift from thermal power production. Reduced growth prospects are contributing to less demand for thermal coal.
Australia coal deliveries deceased 5.7 percent MoM in July 2015 to reach approximately 16.9 million tons, down 6.9 percent when compared to July 2014 index.
China has started moving coal from inland mines to coastal users. Therefore, it is expected that China will no longer have to import coal. Rather, it will have the capability to export the same to other countries. With demand slowing and traded thermal coal markets well supplied, thermal coal imports are expected to remain subdued. Australia coal deliveries deceased 5.7 percent MoM in July 2015 to reach approximately 16.9 million tons, down 6.9 percent when compared to July 2014 index. The Australian coal sector is already struggling under low commodity prices and weak demand. The recent reporting season confirmed that many Australian coal mines are loss-making, including the local coal divisions of Glencore, Yancoal, South32 and WLC. Additionally, the National Bank of Australia has ruled out funding Adani’s AUD 16.5 billion ($11.2 billion) Carmichael thermal coal export project in the Australian state of Queensland’s Galilee coal field. Russia exported 12.3 million tons of coal in July 2015, declining 0.1 percent in comparison to June 2015 and increasing 0.2 percent from June 2014’s coal export volumes. The coal market conditions remain difficult due to slower demand growth and abundant supply. Major coal producer Adaro Energy has lowered its production target from 56-58 million tons previously to 54-56 million tons to mitigate oversupply that led to plunging commodity prices. Although the short-term outlook for coal remains challenging due to slower demand growth and macroeconomic uncertainty, it is expected that the demand for coal will play a key role in the future. COAL GLOBAL TRADING (million tons) Indonesia
120
Australia
Russia
South Africa
Colombia
US
Rest
100 80 60
Jul ‘15
Jun ‘15
Apr ‘15
May ‘15
Feb ‘15
Mar ‘15
Jan ‘15
Dec ‘14
Oct ‘14
Nov ‘14
Sep ‘14
Jul ‘14
Aug ‘14
Jun ‘14
May ‘14
Apr ‘14
Feb ‘14
Mar ‘14
Dec ‘13
Jan ‘14
Oct ‘13
Nov ‘13
Sep ‘13
Jul ‘13
Aug ‘13
Jun ‘13
Apr ‘13
May ‘13
Mar ‘13
Feb ‘13
Dec ‘12
Jan ‘13
Oct ‘12
Nov ‘12
Sep ‘12
Jul ‘12
0
Aug ‘12
20
Source: customs data
40
To learn more, please contact the CW Research team at sales@cwgrp.com or +1-702-430-1748. INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE
SEPTEMBER - OCTOBER 2015
24
CEMENT ENERGY MARKETS
CW Research
Energy Prices Update COAL: The average coal price for September 2015 closed at $58.93 per ton, declining 3 percent as compared to August’s price of $60.96 per ton and down 19 percent as compared to September 2014’s price of $72.79 per ton. Thermal coal benchmarks hit record lows due to a sharp slowdown in demand and with overall output remaining high.
Coal is the main fuel for electricity in China, but power output is now growing at only 4 percent per year, far below annual growth rates of around 10 percent since 2000.
Falling Chinese demand continues to hit thermal coal prices, with benchmark physical cargoes dropping to their lowest levels in more than eight years. Spot prices for coal from Australia’s Newcastle and from South Africa’s Richards Bay terminals have both dropped to around $50 per ton, close to levels last seen in the first half of 2007. Morgan Stanley cut its long-term price forecast by 11 percent to $63 per ton on a FOB basis, in the midst of abundant supply. Coal is the main fuel for electricity in China, but power output is now growing at only 4 percent per year, far below annual growth rates of around 10 percent since 2000. Despite major producers China Shenhua Energy and China Coal Energy cutting domestic output, the country’s coal imports have collapsed approximately 30 percent since the beginning of the year. China’s imports have declined sharply due to quality restrictions and unpredictable enforcement on imports, as well as weak industrial activity and growing non-coal generating capacity. Depreciating currencies of major producer countries including Australia, South Africa and Colombia have also added to the worsening situation. However, a gradual cutback in output by Indonesia prevented an even bigger drop in coal prices. Due to a slowdown in orders from India, where local miners have increased production, Richards Bay terminal exports have also been falling. South African coal is almost 30
STEAM COAL FOB AVERAGE PRICES (US$/TON) US exported
Colombia exported
Australia Newcastle
Indonesian HBA
South Africa Richards Bay
130 120 110 100 90 80 70 60
To learn more, please contact the CW Research team at sales@cwgrp.com or +1-702-430-1748.
25
SEPTEMBER - OCTOBER 2015
INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE
Sep ‘15
Jul ‘15
May ‘15
Mar ‘15
Jan ‘15
Nov ‘14
Sep ‘14
Jul ‘14
May ‘14
Mar ‘14
Jan ‘14
Nov ‘13
Sep ‘13
Jul ‘13
May ‘13
Mar ‘13
Jan ‘13
Nov ‘12
Sep ‘12
Jul ‘12
May ‘12
Mar ‘12
Jan ‘12
Nov ‘11
Sep ‘11
50
Sources: EIA, Colombia Ministry of Mines and Energy, IMF, Indonesia Ministry of Energy and Mineral Resouces
140
CEMENT ENERGY MARKETS
CW Research percent cheaper versus April levels. European cargoes to its main ports at Amsterdam, Rotterdam and Antwerp terminals are down over 10 percent since April, pulled down by sluggish European demand growth and strong renewable power output. US PETCOKE EXPORT PRICE (US$/ton) Monthly price
PETCOKE: US petcoke exports increased 12 percent to 2.7 million tons in July 2015 as compared to the previous month, and down 5 percent as compared to July 2014. The US export price for petcoke for July 2015 closed at $62.73 per ton, decreasing 1 percent as compared to June’s price of $63.33 per ton and down 16 percent as compared to July 2014’s price of $74.95 per ton. US and Venezuelan petcoke prices are reported to have dropped due to lackluster overseas demand and continued oversupply in the marketplace. Traders and end-users were looking for reduced prices as there continues to be little demand for both mid-sulfur and high sulfur petcoke. Prices for imported fuel grade petcoke delivered to India continued their decline this week due to sluggish demand, sliding coal prices and greater availability of less expensive material from Saudi Arabia. Petcoke prices have been under pressure as very few cement companies are currently buying. China has signed a law prohibiting the import, sale or burning of “unqualified” petcoke in order to reduce air pollution. The law does not specify a definition of “unqualified” yet. The country is likely to adopt the recognized industry standard of 3 percent sulfur as the cut-off point. China’s aluminium industry uses as much as 4 million tons of petcoke annually, with 3-5 percent sulfur content. If petcoke above 3 percent is banned from sale or import, the country will consume every ton of domestic low sulfur petcoke, leaving nothing for exports. This is likely to push prices for petcoke up and raise the costs for aluminium producers in the region including companies in Russia, India and Australia.
Source: customs data
J-15
J-15
M-15
A-15
M-15
F-15
J-15
D-14
N-14
O-14
S-14
A-14
J-14
J-14
M-14
A-14
M-14
F-14
J-14
D-13
N-13
O-13
S-13
A-13
Rolling 12-month average
J-13
90 80 70 60 50 40 30 20 10 0
Prices for imported fuel grade petcoke delivered to India continued their decline this week due to sluggish demand, sliding coal prices and greater availability of less expensive material from Saudi Arabia.
Iran will commission a semi-industrial production line for petcoke, the first of its kind in the country. The production line will come online on September 22. It is predicted that To learn more, please contact the CW Research team at sales@cwgrp.com or +1-702-430-1748. INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE
SEPTEMBER - OCTOBER 2015
26
CEMENT ENERGY MARKETS
CW Research
Iran will need up to 500,000 tons of petcoke per year in order to meet fuel demand from new aluminium factories to be built in the coming years. The first fully industrial coker unit in Iran will also be commissioned in the near future. Oman Oil Refineries and Petroleum Industries Company (Orpic) is expected to receive bids from a number of international firms for a contract to provide project management consultancy (PMC) services for a new petcoke facility. Earlier this month, Orpic launched a competitive tender for the appointment of a qualified project management consultant to oversee the implementation of the petcoke handling and storage venture.
The US Henry Hub spot price traded at $2.75 per MMBTU in July 2015, increasing 1.2 percent MoM, as forecasts for above-normal temperatures boosted demand expectations.
NATURAL GAS: The US Henry Hub spot price traded at $2.66 per MMBTU in September 2015, decreasing 4 percent as compared to the previous month. Above-average stock of natural gas is one of the reasons for falling prices. Milder weather throughout September has also helped push down natural gas prices. Despite the EIA report showing that storage inventory numbers had increased less than market expectations, the price continued to fall. According to the EIA, total marketed production for July was at around 79.47 billion cubic feet per day, almost the same as marketed production in June 2015. The EIA remained bullish about natural gas supplies in the remaining months of 2015. In its short-term energy outlook report, it projected that the total US marketed natural gas production would grow by as much as 5.7 percent YoY, to 78.95 billion cubic feet per day in 2015. It is further expected to increase by 2.2 percent to 80.68 billion cubic feet per day in 2016. The report mentioned total marketed natural gas production at 74.72 billion cubic feet per day in 2014. However, continued production growth may further pressure natural gas prices if demand does not match the increase in supply.
NATURAL GAS PRICES (US$/MMBtu) 20
US
Europe
Japan LNG
16 12
To learn more, please contact the CW Research team at sales@cwgrp.com or +1-702-430-1748.
27
SEPTEMBER - OCTOBER 2015
INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE
Sep ’15
Jan ’15
May ’14
Sep ’13
Jan ’13
May ’12
Sep ’11
Jan ’11
May ’10
Sep ’09
Jan ‘09
May ’08
Sep ’07
Jan ’07
May ’06
Sep ’05
Jan ’05
May ’04
Sep ’03
Jan ’03
May ’02
Sep ’01
Jan ’01
May ’00
0
Sep ‘99
4
Source: EIA, World Bank
8
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 as well as on-line at http://www.coalweek.com/ to the market data section. Coal - Exports (million tons) - Jul 2015
Country
LM
MoM (%)
Petcoke - Exports (million tons) - Jul 2015
YoY (%)
YTD
YTD %
Country
LM
MoM (%)
YoY (%)
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
MARKET DATA SNAPSHOT
CW Research
YTD %
Coal Exports MoM (%) US petcoke exports 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
Coal - Imports (million tons) - Jul 2015
Country
LM
MoM (%)
YoY (%)
YTD
YTD % Petcoke - Global export prices (USD/ton) - Jul 2015
TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.
Country
MoM (%)
YoY (%)
YoY (%)
YTD
YTD %
WWW.CEMWEEK.COM/SUBSCRIBE
Coal - Global export prices (USD/ton) - Sep 2015
LM
MoM (%)
TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.
WWW.CEMWEEK.COM/SUBSCRIBE
Country
LM
YTD
YTD %
TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION. WWW.CEMWEEK.COM/SUBSCRIBE
Natural Gas Prices (US$/mmBtu) - Aug 2015
Country
LM AVAILABLE MoM (%)IN THE YoY CEMWEEK (%) YTD TABLE MAGAZINE PRINT EDITION.
YTD %
WWW.CEMWEEK.COM/SUBSCRIBE Coal export prices MoM (%)
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 2015 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 +1-702-430-1748. INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE
SEPTEMBER - OCTOBER 2015
28
CEMENT MARKET AND COMPETITION
M
arket and competition
INDIAN CEMENT DEMAND REMAINS STABLE IN H1 The Indian cement market recorded a stable growth of 5 percent during first six months of 2015, the growth rate being the same during first six months of 2014. The director of Sanghi Industries explained that institutional demand for cement has increased during the first six months of 2015. This is on account of the increased construction activities in rural and urban areas, which have contributed to the increased demand. The cement prices have improved during the Q4 of FY2015 but the overall price of cement was low. The director of Sanghi Industries also discussed about the expansion plans of Sanghi Industries. The cement company plans to expand its operations in Gujarat and Mumbai. The company plans to spendRs 1,500 cores for expansion activities. The company has completed the first phase of its expansion. It included construction of the cement plant with 1.2 million tons capacity in Mumbai and Gujarat. The company aims to increase its overall production capacity to 8 million tons per year in the next few years. The expansion plans of the company does not includes setting up any unit in Maharashtra. The company has approached banks and financial institutions for funding for the second phase of its expansion plan.
29
SEPTEMBER - OCTOBER 2015
Jammu and Kashmir
KASHMIR GOVERNMENT ENSURES QUALITY AND PRICE CONTROL OF CEMENT The Kashmir government has called upon the cement producers to maintain the quality of cement and control cement prices. Meanwhile, to arrest unfair trade practices, the Consumer Affair, Public Distribution and Tribal Affairs minister has appointed a team of officials to catch the culprits. Officials will take strong action against the people caught practicing unfair trade of cement. The minister, in this meeting,also explained that the government has not increased cement prices over last three years,
INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE
and it would not increase the prices in the near future. The government wants to maintain healthy competition in the cement market. He assured that the government is taking active interest to solve the problems faced by the cement producers. “We want to help the cement sector in the state to grow, as the industry plays an important role in state’s development.” However, he added, “We want your cooperation in doing so by maintaining the quality in your products and a control over the prices.”
THE INDIAN CEMENT SECTOR EXPECTS INCREASED GROWTH OVER MEDIUM TERM
Low-carbon cement developed by Indian and Swiss researchers
LOW-CARBON CEMENT GETS BOOST IN INDIA A low-carbon cement developed by Indian and Swiss researchers is expected to get boost in India. It is expected that the cement demand to increase strongly on the back of a $1 trillion infrastructure development plan. The Limestone Calcinated Clay Cement (LC3) can help reduce CO2 emissions by about 30 percent. LC3, made of limestone and lowgrade clays, is also cost-effective and does not require intensive modifications to existing plants to adapt to production of the new type of cement. "We are in
J&K GOVERNMENT IMPOSED BAN ON SALE OF INDIA’S AMBUJA CEMENTS
India’s Jammu and Kashmir government banned the sale of Ambuja Cements in the state. The decision follows a probe
touch with agencies, including the National Council for Building Material in India. They have all shown keen interest in the material," said Karen Scrivener, Full Professor, Construction Material Laboratory at Ecole Polytechique Federale De Lausanne (EPFL), a leading technology institute in Switzerland. The cement’s efficiency has been tested in pilot projects. The aim is to make LC3 a standard general-usable material and a feasible and viable product for sustainable development in the global cement market. found underweight bags and irrational product prices. "The sale and operations of Ambuja Cements have been banned in the state. These steps have been taken after the complaints of malpractices against the company," said the Minister for CA&PD and Tribal Affairs Choudhary Zulfkar Ali.
Prices of petcoke have declined further in September 2015 as Reliance Industries has cut the prices by Rs 100 per ton M-o-M in second quarter of FY2016, now the prices have reduced by 10 percent Y-o-Y. Imported coal prices (in Rs terms) are down to around 8 percent Q-o-Q. The decline aids further headroom for energy cost savings in 2-3QFY16 for companies having a high mix of pet coke and imported coal. Motilal Oswal expects 2-2.5 percent Q-o-Q moderation in road freight cost, benefiting companies with a higher road mix should benefit. Amidst weak demand and low pricing power, moderation in cost push is offering partial resilience. It is crucial to manage freight cost. All these factors will play a key role in positive growth in cement sector in medium term.
During the investigation, it was found that the company was selling cement bags at two different MRP rates in Kashmir and Jammu regions. On the basis of irrational pricing and frequent changing rates and underweight bags, the ban is imposed on sale and stocking of Ambuja Cement.
INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE
SEPTEMBER - OCTOBER 2015
30
CEMENT M&A AND FINANCE
M
&a and finance
INDIA’S PRISM CEMENT POSTS DECLINE IN CEMENT VOLUMES Indian cement manufacturer Prism Cement reported a net loss of Rs 8.04 crore for the quarter ended June 30, 2015. In the same quarter, last year, the company reported net profit of Rs 13.24 crore. Net sales for the quarter ended June 2015 stood at Rs 1,365.94 crore as against Rs 1,383.91 crore in the threemonth period ended June 2014. "The highlight during the quarter was improvement in cement EBITA at Rs 507/ton for the quarter ended June 30, 2015 up from Rs 433/ton during the quarter ended March 31, 2015 despite lower volumes and realizations," said Prism Cement. Prism Cement sold 1.36 million tons of cement and clinker in the AprilJune period, down from 1.51 million tons of cement sold in the same period last year.
31
SEPTEMBER - OCTOBER 2015
ULTRATECH CEMENT SEEKS CLARIFICATION FROM THE INDIAN GOVERNMENT UltraTech has sought clarification over the transfer of limestone reserves as part of its deal to buy Jaypee Group’s two Madhya Pradesh cement assets. Access to a limestone reserve is a significant factor in deciding the viability of a cement plant and in some cases, the value of the asset put for sale. The new Mines and Minerals (Development and Regulation) Act 2015 does not allow transfer of mines, which are not allocated through an auction process. Many feel that the new amendment wll interfere with smooth functioning of the deal. The Supreme Court also has asked for clarification over this particular clause in the law.
LAFARGE DEAL IN INDIA SPARKS DISPUTE The ownership dispute between the Birla family and the Lodhas has again flared up, involving one of the largest cement deals of recent times. The dispute involves the Lafarge deal. Last month, Birla Corporation pipped several larger rivals to announce its acquisition of two cement units from Lafarge India having a capacity of 5.15 million tonnes per annum for Rs 5,000 crore.. The Birlas and the Lodhas have been locked in a legal battle for the MP Birla group assets since July 2004 soon after the demise of MP Birla's wife Priyamvada Birla. Ultratech, run by Kumar Mangalam Birla, is the largest cement maker in the country with a capacity of 63.2 million tons. The two units of Lafarge are amongst the most profitable cement units in eastern India and their acquisition would substantially add to the footprint of Birla Corp in the eastern Indian market.
ULTRATECH TO ACQUIRE CEMENT PLANT
India-based UltraTech Cement will acquire Jaiprakash’s 2.2 million ton cement plant in Bhilai, Chhattisgarh.. Both the companies are awaiting approvals from SAIL, as the steel company has a 26 percent stake in the cement plant. The Ultratech's consolidated net profit had declined to Rs 591 crore for the first quarter ended June 30, 2015-16 as against Rs 628 crore in the year-ago period. In one of the biggest deals in the cement sector, Ultratech's board, had approved the acquisition for Jaiprakash’s Bela unit which has 2.1 million tons per annum of clinker and 2.6 million tons per annum cement grinding capacity. Its Sidhi unit has 3.1 million tons per annum clinker and 2.3 million tons per annum cement grinding capacity.
INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE
HEIDELBERG-ITALCEMENTI FINALIZES DEAL IN INDIA The Competition Commission of India has approved Heidelberg Cement's proposed acquisition of Italcementi. Earlier this year, Heidelberg Cement has announced its intention to acquire 45 percent of Italcementi’s operations in India. Heidelberg Cement offered around EUR 3.7 billion for the acquisition deal. Under the transaction, Heidelberg would initially buy Italmobiliare's 45 percent stake in Italcementi and subsequently make an open offer to buy the remaining shares. Italmobiliare is the primary shareholder of Italcementi with a 45 percent stake in the company.
SOUTH REGION RALLIES ON PRICING AND PRODUCTION DISCIPLINE June quarter performance for cement producers in South India have surpassed results of all-India and other regional companies. Weak demand took a toll on realizations across regions, barring the south. The pricing and production discipline by south-based cement players, however, led to good realizations boosting their performance despite weak volumes. The EBITDA per ton reported by Ramco Cements and India Cements were almost to Rs 1,144 and Rs 961 (up 116 percent and 114 percent, respectively). The good realization trend continues in the September quarter. The average cement price in the south was ruling Rs 350-355 a bag (flat month-on-month and up seven per cent year-on-year) mainly on account of production discipline maintained by companies in the region.
GLOBAL CEMENT PLAYERS EYES M&A IN INDIA The Indian cement sector is set to witness merger and acquisition activities with global majors like CRH, Heidelberg and LafargeHolcim looking to expand their presence in the country. The Indian government is pushing infrastructure projects and these developments are expected to be visible in next 12-24 months. Managing director of Dalmia Cement Bharat, Puneet Dalmia feels that global consolidation in the cement sector is happening in India as well. There are some major mergers and acquisitions like Birla-Lafarge, Heidelberg and Italcementi etc. This is likely to increase cement production capacity to 20 million tons. Meanwhile, the recent M&A activities have clashed with expansion plans of Reliance Cement and JSW Cement. Reliance Cement will increase
Indian workers in a cement plant.
its production capacity to 15 million tons and JSW Cement is setting up new grinding units to triple its cement and clinker production over next three years. The demand growth between 6.5 percent and 8 percent is likely to outpace supply additions at 6.7 percent in FY16. This mainly because, the cement capacity utilization was around 71 percent in FY14, is likely to improve to73-75 percent in the current financial year.
INDIA: JK LAKSHMI CEMENT POSTS LOSS IN THE FIRST QUARTER
Indian cement maker JK Lakshmi Cement reported a loss of Rs 23.48 crore for the quarter of June which ended June 30, as the company suffered due to subdued market and higher cost. The total standalone income of the company fell by 2 percent in the first quarter of the current fiscal year. JK Lakshmi Cement brought down the coal consumption of 685 K Cal/kg of clinker in the June quarter this fiscal from 714 K Cal /kg of clinker in the same quarter of 2014-15 at its Sirohi plant. JK Lakshmi has production operations at two spilt locations, which are progressing satisfactorily. The grinding unit Gujarat is to begin production at the end of this fiscal year.
GRASIM MAINTAINS MARKET LEADER POSITION The Aditya Birla Flagship company, Grasim Industry reported a net profit of Rs 485 crore for the first fiscal quarter till 30 June 2015. The company’s profits are unchanged in comparison to the last quarter. As compared to the last year, the revenue has increased by 7 percent and the earnings without interest were up by 3 percent. Gross revenue increased by 15 per cent and the sales volume increased by 19 percent. The company is well poised to reap benefits of these investments with updated technology and accelerated growth of the economy.
INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE
SEPTEMBER - OCTOBER 2015
32
CEMENT PROJECTS AND EXPANSIONS
P
rojects and expansions
LUCKY CEMENT GETS NOD TO EXPAND CEMENT PRODUCTION The largest maker of the building material in Pakistan--Lucky Cement-is close to winning permit to extract limestone in Punjab province of Pakistan. Lucky cement will get a limestone quarry for a cement plant in Punjab. The agreement will be finalized in next few days. Karachi-based cement maker is set to join producers, including Attock Cement and D.G. Khan Cement. Lucky Cement operates two plants at 85 percent of capacity in Pakistan. It also has a cement grinding facility in Iraq and is part of a venture that will build a cement plant in the Democratic Republic of Congo.
SIAM CEMENT GROUP PLANS TO ADD CEMENT CAPACITY IN CAMBODIA Siam Cement Group (SCG) plans to invest between $200 million and $300 million in Cambodia over the next five years. The investment plans include adding a third production line to its cement plant in Kampot, southern Cambodia. The company just commenced the second production line at the plant a few months ago. SCG expects sales from its Cambodian operations to approach Bt5 billion this year. Including its exports to Cambodia, which are expected to reach Bt7 billion, SCG's Cambodian revenues are targeted to total Bt12 billion in 2015. About 80-90 percent of SCG's
sales from its Cambodian operations are derived from cement business, about 10-15 percent from ready-mix concrete, for which it currently has 14 plants operating in the country, and the rest from concrete roofing and other businesses. SCG invested $120 million to install the second production line to nearly double the production capacity of its Cambodian cement factory. The Kampot Cement factory, majority-owned by SCG, recently started the second production line, which has an annual capacity of 900,000 tons. The plant’s first production line has an annual production capacity of 1.1 million tons. Cement demand in Cambodia is estimated to total 4 million tons per year, so Kampot Cement's total capacity of 2 million tons per year indicates the Thai conglomerate should control around half of the country's cement market.
ULTRATECH CEMENT TO CONTINUE WITH ITS EXPANSION PLAN IN INDIA UltraTech Cement has received Environment Ministry's clearance to expand capacity at its Awarpur plant in Maharashtra. The company will invest Rs 248 crore for the expansion. The cement company has proposed to increase production of clinker to 4.5 million tons per annum from the existing 3.30 million tons per annum, and increase cement output to 6 million tons per annum from 4.48 million tons per annum. UltraTech Cement has to follow specific conditions like developing green belt over 33 per cent of the total project area, installing air-monitoring devices to monitor air emission, continuous stack monitoring of facilities to monitor gaseous emissions, among others. The company will carry out a proposed expansion plan within the existing plant area of 307.35 hectare. The additional power required for the proposed expansion will be 5.1 MW. Lucky Cement plant, Pakistan.
33
SEPTEMBER - OCTOBER 2015
INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE
HIMACHAL PRADESH GOVERNMENT CANCELS CEMENT PLANT ALLOTMENT TO INDIA CEMENTS India’s Himachal Pradesh government has cancelled the allotment of cement plant to India Cements at Gumma, Shimla. India Cements have expressed its unwillingness to start with work allotted to the cement plant. “It has been decided to cancel the allotment as the company is no longer keen to set up the plant and moreover they have failed to show any progress in the last few years,” said Mukesh Agnihotri, Industry Minister. The government has invited fresh global bids for the proposed cement plant in Chamba, as Jai Prakash Cement has moved to JSW STEEL TO INVEST IN SALBONI GRINDING UNIT IN WEST BENGAL, INDIA
JSW Steel Ltd, Vijayanagar works, Karnataka.
Sajjan Jindal-controlled JSW group said it will be investing Rs 700 crore in setting up a 2.4-million ton cement-grinding unit at Salboni of West Midnapore district, West Bengal, India. The steel company had initially planned to erect a 10 million ton steel plant at the same location. JSW Group Affairs Head, Biswadip Gupta, said “The group wants 134 acres of land, reassigned from JSW Bengal steel to a group company for which it has applied”. The construction of cement plant is likely to begin within a year and to be completed by 2017. The company has completed raw material linkage for grinding unit.
court. The project in Chamba has been allotted to Jai Prakash Cement in 2006 and a memorandum of understanding has been signed in February 2007 for the setting up of a 2 million tons per annum capacity cement plant. The Industry Department had issued showcause notices to the three cement plants and to Jai Prakash as to why their plants should not be cancelled as they had failed to set up the units approved several years back.
PAKISTAN’S ATTOCK CEMENT DECLARES ITS RESULTS FOR FY 2015 Attock Cement, a subsidiary of Pharon Group, earned a profit of Rs 2.21 billion in FY 2015 ended June 30, 2015, as compared to Rs 2 billion in the year ago period. The company recorded a 4.3 percent year-onyear increase in revenues. Attock Cement announced it plans the expansion of its cement production unit. The company will install a new cement production unit worth USD 120 million in its existing cement plant in Balochistan. The new plant will have a clinker production capacity of 3,300 tons per day. The additional capacity is expected to kick in at the end of FY 19. The expansion will favour the earnings outlook moving forward. The new production line will include a cement-grinding unit in Basra and a 40-MW coal fired power plant. The company has cash and short-term investment reserves of Rs. 3.8 billion. The company is likely to get average growth of 7 percent in the southern local dispatches.
PAKISTAN: DG KHAN CEMENT CONTINUES WITH CEMENT EXPANSION DG Khan Cement has signed a contract with Germany’s Loesche to supply complete raw materials, cement and coal grinding mills for its greenfield cement plant in Lasbella, Baluchistan. The new plant will have a production capacity of 9,000 tons per day that will be completed with a cost of around USD 300 million within two and half years. DG Khan Cement has already signed an agreement with K-Electric for the supply of 40MW electricity. “Grinding mills will be provided by a German firm, while Flsmidth of Denmark has been contracted for engineering and equipment,” said Khalid Chohan, Company Secretary at DG Khan Cement. At present, the housing sector is largest consumer of cement and fluctuations in prices of
furnace oil, coal and other petroleum products will influence the cement sector. The new cement plant is expected to create an oversupply of cement in Pakistan’s cement market. However, some analyst explained that the cement plant would fulfil the demand for cement after three and half years. Presently, there are 24 cement production facilities in Pakistan, having a cumulative operational capacity of 45.618 million tons of cement per year.
DG Khan Cement plant.
INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE
SEPTEMBER - OCTOBER 2015
34
CEMENT VOLUME & PRICING
V
olume and pricing
INDIAN CEMENT SECTOR WITNESSED AN INCREASE IN CEMENT PRICES Cement prices have risen sharply in north India since August 2015 after a dismal first quarter that saw cement companies were struggling to improve their operating profit. Cement prices have increased by Rs 40-60 a bag in Rajasthan and Punjab amongst other regions. Many mjor Indian cement companies, including Shree Cement, JK Lakshmi Cement and JK Cement, will benefit owing to regional concentration in the north, even as pan-India players such as Ultratech Cement, ACC and Ambuja Cement also have a large presence in the northern market. The cement volumes have recorded a 2-3 percent year-on-year growth in north India, 6-7 percent in east India, flat year-on-year growth in the central region of India and 10-13 percent year-on-year decline in the south in the first quarter of FY16.
35
SEPTEMBER - OCTOBER 2015
INDIAN REAL ESTATE PLAYERS REQUESTS GOVERNMENT TO CONTROL CEMENT CARTELS
Shankarbhai Desai (left).
Real estate companies feel that the government should control cement cartels. "If the real estate sector is not improving and new launches of projects have dropped across cities, how cement prices are rising, unless there is a pre-arrangement between cement companies," questioned Shankarbhai Desai,
Vice president of the Builders Association in India. According to BAI, there is excess installed capacity in the cement sector. The Indian cement sector recorded a 20 to 40 percent increase in cement prices over the past two months. Due to low activity in the real estate market, India is witnessing weak cement demand. Cement prices in various parts of India-- Noida, NCR, Delhi--have increased from Rs 200 a bag in July 2015 to Rs 285 in September 2015. In Bengaluru, Karnataka, prices have risen by about Rs 30 a bag in the last month or so to over Rs 400 a bag. In Hyderabad, Andhra Pradesh, cement prices have increased from Rs 265 a bag in July 2015 to about Rs 305 a bag in September 2015. In Ghaziabad, Uttar Pradesh, prices have witnessed an increase from Rs 195 a bag in June 2015 to Rs 280 a bag in September 2015.
PAKISTAN'S CEMENT EXPORT DECLINES IN 2015" Cement exports in Pakistan recorded a 31.54 percent decline to 566,689 tons in August 2015 as compared to 827,707 tons in August 2014. Cement exports from North area were 349,873 tons, while exports from the South area were 216,815 tons. Exports of cement to Afghanistan also declined by 18.24 percent to 394,000 tons in July Agust 2015 to 482,582 tons in July –August 2014. A spokesman of All Pakistan Cement Manufacture’s Association, said that the exports to Afghanistan are gradually drying due to inroads made by the Iranian cement. In fact, he added the Iranian cement is also penetrating Pakistani markets on the strength of massive under invoicing that remains unchecked. He added that domestic uptake is a good sign for the industry, however the decline in exports should be taken seriously.
INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE
CEMENT VOLUME & PRICING
P
eople
LAFARGE’S VETERAN PROMOTED AS CHIEF EXECUTIVE OFFICER The Indian arm of the French-based Lafarge, has promoted Ujiwal Batria to the position of chief executive officer w.e.f June 22, 2015, according to a press release of the company. Earlier, Martin Kriegner has occupied the position, now being named area manager for Central Europe of LafargeHolcim. Priori to beginning Lafarge India’s CEO, Batria acted as managing director of the company, having worked with Lafarge for 16 years.
Ujiwal Batria, CEO Lafarge India.
DALMIA CEMENT APPOINTS VIZEUM AS AOR Dalmia Cement Ltd (DCBL) has appointed Aegis Media's Vizeum as its media agency. The business will be handled by Vizeum Chennai, under the leadership of EM Sreeneelakandhan, general manager. DBCL's creative duties are with JWT. Commenting on the appointment of Vizeum India, BK Singh, executive director, sales and marketing, DCBL, inform, "Vizeum has been evaluated amongst the other choices available, on the basis of their exhaustive processes. We are positive that this association will bring in diversity in our existing communication investment strategy." DCBL is a multi-spectrum cement player in South India. It produces specialty cements for strengthening airstrips, concretizing railway sleepers and cementing oil wells. Its consumer facing brands are Vajram and Superoof.
N SRINIVASAN RESIGNS AS DIRECTOR OF INDIA CEMENTS CAPITAL
N Srinivasan has resigned from the board of financial services company India Cements Capital (ICCL), part of India Cements. "N Srinivasan and T S Raghupathy have resigned as directors of the company with effect from 30 March 2015," said ICCL in a statement. ICCL provides various financial services like money changing services and advisory services on the foreign exchange market to exporters and importers. Earlier, India Cements announced the appointment of P L Subramanian as a non-executive director with immediate effect. Subramanian joined the company in 1986 and has served in various positions. He was serving as its executive director of operations and retired from service in May 2015.
INDIA: 33 PERCENT SALARY HIKE FOR CEMENT WORKERS The representative body for cement makers in India has announced a salary hike for cement workers, which will be implemented over next two years in the country. As per the settlement, additional Rs 6,000 would be given to cement workers in two instalments of Rs 3,000 each in April 2014 and September 2016, which translates into a 33 percent hike in salary. It also provides the enhanced Dearness Allowance. The arrears for 16 months will be paid in two instalments. CMA represents 20 cement companies in India; it covers around 66 percent of total annual cement production capacity in the country. The Vice Chairman and MD of India Cements, who is also part of the CMA’s managing body said, "The current settlement is unique in today’s scenario since it is perhaps the only nationwide settlement reached for workers of a major organized industry in the private sector.”
Sri N. Srinivasan, Vice Chairman India Cements.
INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE
SEPTEMBER - OCTOBER 2015
36
REGIONAL NEWS
R
egional news DEPARTMENT OF ROADS IN NEPAL FACILITATES ROAD NETWORK FOR CEMENT PLANTS
VIETNAM CEMENT SECTOR RECORDS INCREASE IN DOMESTIC CONSUMPTION The Vietnamese cement sector recorded an increase in cement consumption to 46.52 million tons, up by 10 percent as compared to in the first eight months of 2015 as compared to the first eight months of 2014. Cement exports increased by 10 percent to 1.25 million tons in first eight months of 2015 as compared to first eight months of 2014. Many cement companies have recorded an increase in its production activities. Vicem Ha Tien 1 posted profits in the first six months of the year at VND 397 billion, while its net sales reached VND 2,063 billion. The company’s gross profit reached
PAKISTAN’S FAUJI CEMENT RECORD HIGHER EARNINGS Pakistan’s cement company--Fauji Cement--recorded a higher earnings by more than half to PKR 4 billion in fiscal year
37
SEPTEMBER - OCTOBER 2015
VND 433.5 billion, up 51.57 percent in the first six months of 2015. Vicem Hoang Mai has recorded an increase in sales at VND 499 billion in the second quarter of 2015 as compared to VND 452.5 billion, slightly up in second quarter of 2014. The cement company recorded increased profit at VND 30 billion during first eight months of 2015 as compared to VND 24.7 billion in first half of 2014.
2015. Its revenues increased by 6.3 percent to PKR 18.6 billion in the 2015 fiscal year as compared to PKR 17.5 billion collected during the 2014 fiscal year. The increased earnings are due to decline in coal prices
INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE
The Department of Roads in Kathmandu, Nepal has opened 26 km of roads for connectivity for 18 cement plants in Nepal. The department has fulfilled all infrastructure requirements of Dang Cement and Rolpa Cement factories in the Dang region of Nepal. The construction of roadways for Ghorahi Cement and Sonapur Cement in the Dang district has achieved 95.16 percent and 99.54 percent of progress, respectively. The department has a few access roads to certain cement plants under construction. It includes roads connecting to CG Cement, Sarbottam Cement, Palpa Cement and Butwal Cement in Palpa has been completed. The progress of Palpa Cement is slow, with the Forest Office demanding additional study on already-approved Initial Environmental Evaluation. The progress of United Cement in Dhading too has remained slow due to opposition from locals.
and power costs. Fauji Cement Company’s profits surged to PKR 1.4 billion, quarter ending on June 30, 2015. The growth is due to activation of Waste Heat Recovery Plant along with a decrease in taxation.
CEMENT PRICES HIKE EXPECTED IN KASHMIR, INDIA The cement market of Kashmir, India is severely affected by shortages of cement. Many construction projects have come to a standstill. Cement dealers are forced to increase prices or close shops due to shortage of cement. Locals are forced to buy imported cement, which is costlier as one bag is valued at Rs 465. A prominent local brand, Khyber Cement, is sold at Rs 30 to Rs 50 higher than its normal price of around Rs 375. According to the local cement suppliers, the supply of cement bags has declined drastically. The cement suppliers in Kashmir have asked the government to intervene and take steps to manage the cement shortage.
HOLCIM INDONESIA RECORDS LOSSES DURING THE FIRST HALF OF 2015 Holcim Indonesia recorded a loss of IDR 123 billion in first half of 2015. The cement company suffered losses due to increased costs related to energy production, depreciation of the rupiah, and labor costs. The total operating expenses of Holcim Indonesia increased by 26 percent to IDR 949 billion in the first half of 2015. The gross profits decreased by 26 percent to IDR 4.86 trillion during the first half of 2015 as compared to the first half of 2014. "These results were achieved amid increasing competition due to the amount of cement business players who now make up almost doubled compared to two years ago," said Gary Schutz, CEO of Holcim Indonesia.
PAKISTAN’S CEMENT SECTOR CONTINUES TO RECORD INCREASED GROWTH Pakistan's listed cement companies continued to deliver double digit profitability, as it grew by 13 percent to Rs 46.6 billion in the fiscal year ended June 30, 2015. Profits have increased due to increase in volumes and cut in energy costs. The listed cement companies have recorded 14 percent growth in the 2014 fiscal year. The 11 firms represent 95 percent of the total cement companies’ market capitalization. Increased profits were supported by the declining financial charges, which reduced by 31 percent on a yearly basis. Average cement prices have stabilized at PKR 510-PKR 560 per bag in FY15. The overall demand rose by 3.5 percent
Workers for DG Cement Pakistan.
to 35.5 million tons in FY15. Following industry's increased volume growth, revenues of some cement companies grew by 3.7 percent to PKR 194.4 billion. The exports of cement declined by 11.7 percent in yearly basis to 7.2 million tons due to weak demand from the Afghanistan market and anti-dumping duty charges imposed by South Africa on Pakistan cement manufacturers.
CHINESE CEMENT SECTOR RECORDS AN INCREASE IN CEMENT PRICES Cement prices in China continued to increase by about 0.16 percent in the last week. Prices of cement have increased in local areas like southern Jiangsu, Anhui along the Yangtze River, Guangdong Qingyuan by between CNY 10 to CNY 20 per ton. The prices of cement are not expected to increase further. During early September 2015, cement retailers recorded a steady upward trend in cement prices. In the short term, prices rebounded in East China Cement companies would have to maintain a strict price rise to stabilize the overall prices of cement market. To achieve profitability in the fourth quarter, the majority of cement companies along the Yangtze River region will be ordered to limit production, and push prices higher. National cement prices in China continued to increase by about 0.16 percent in the last week. Prices of cement have increased in local areas like southern Jiangsu, Anhui along the Yangtze River, Guangdong
Qingyuan by between CNY 10 to CNY 20 per ton. The prices of cement are not expected to increase further. During early September 2015, cement retailers recorded a steady upward trend in cement prices. In the short term, prices rebounded in East China Cement companies would have to maintain a strict price rise to stabilize the overall prices of cement market. To achieve profitability in the fourth quarter, the majority of cement companies along the Yangtze River region will be ordered to limit production, and push prices higher.
Cement plant in China.
INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE
SEPTEMBER - OCTOBER 2015
38
ORDERS & EQUIPMENT HIGHLIGHTS
O
rders & equipment CHINA’S XINLE SHIPBUILDING TO BUILD A NEW CEMENT CARRIER
KHD TO SUPPLY SLAG GRINDING MILLS TO JSW CEMENT Humboldt Wedag India and Humbold Wedag, subsidiaries of KHD Humboldt Wedag, have won contracts valued between EUR 55-65 million for the supply and maintenance of eight slag grinding mills. JSW Cement, an Indian cement manufacturer, placed an order for the KHD equipment. Each of the eight mills has two significant components, namely two KHD roller presses with a total capacity of 180 tons per hour. It will be booked as an order intake as soon as the pre-conditions for the project executions are fulfilled. KHD is represented in multiple growing markets, like India, Russia and the Asia-Pacific region. The German equipment manufacturer has been providing high quality equipment and services to cement producers for more than 150 years. KHD is a leader in environmentally friendly and energy-efficient product for grinding and a Pyro processing section of cement plants.
39
SEPTEMBER - OCTOBER 2015
China’s Xinle Shipbuilding Group received an order to construct a 6,700 dwt cement carrier. The Ningbo-based shipyard said the new carrier is scheduled to be delivered to the Italian shipowner in 2017. The cement carrier will be designed with environmentallyfriendly features. The yard has been focusing on ‘greener’ ships in an effort to build higher specification and better valueadded vessels. Meanwhile, the company was reluctant to disclose any financial details of this contract.
VIETNAM’S XUAN THAN GROUP AWARDS FLSMIDTH CEMENT PLANT ORDER FLSmidth received an order worth approximately EUR 100 million (DKK 750 million) from the Vietnamese cement producer Xuan Than Group for the supply of a complete cement plant with a capacity of 12,000 tons per day. The plant, to be located approximately 100 km South of Hanoi, Vietnam, will be the largest cement plant in South East Asia once completed. The plant will feature energy efficient equipment, state-of-theart emission control and leading process control systems. "The Vietnamese cement market is expected to grow over the coming years and it is a well-known market to FLSmidth as we have been present in the country for many years - also the construction of the largest cement plant in South East Asia proves our strong position in the area," President of the Cement Division Per Mejnert Kristensen said.
FLSMIDTH TO SUPPLY NEW CEMENT PLANT IN PAKISTAN FLSmidth will supply a new cement plant in Pakistan. The company has signed a EUR 57 million contract with D.G. Khan Cement Company. D.G. Khan Cement is part of the Nishat Group, one of the largest conglomerates in the country. FLSmidth will supply engineering and equipment for a 8,500 tons per day greenfield cement plant in Pakistan. The plant will be located in a hub in the province of Baluchistan approximately 30 km northwest of Karachi, Pakistan."Pakistan is animportant market for FLSmidth and we are extremely pleased that D.G. Khan Cement has again chosen FLSmidth as their supplier,”said Per Mejnert Kristensen,President, Cement Division, FLSmidth. The president added, “This underlines our valuable long-term ties with D.G. Khan Cement Company as well as our strong foothold in Pakistan, where we expect to see more activity following new government development programs.”
INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE
INFRASTRUCTURE & PROJECTS
I
nfrastructure & projects
INDIA’S RATING AGENCY PREDICTS INCREASE IN CEMENT DEMAND The government’s ‘housing for all by 2022’ project, entailing an investment of up to Rs 15 lakh crore is likely to give a boost to the Indian economy, said India Ratings. According to the rating agency, the success of this mega plan will depend on the ramping up of the existing urban infrastructure, fast tracking of approval processes and also targeting the actual beneficiary. Funding requirement to the tune of Rs 15 lakh crore through public-private partnerships and improving the supply of raw materials like steel and cement are big challenges, according to the agency. The analysis indicates that sectors supplying crucial inputs to the construction sector, such as cement, iron and steel, will also grow, while other sectors will depend on the strength of the forward and backward linkages of the construction sector with the rest of the economy. Meanwhile, China has dismissed any
CHINA DISMISSES INDIA’S APPREHENSIONS ON SILK ROAD PROJECTS China has assured India about its ambitios mult-billion dollar Silk Road projects which has envisaged under the One Belt and One Road (OBOR)
GAMMON INDIA WINS RS 1,708 CRORE ROAD PROJECT FROM NHAI IN JAMMU & KASHMIR
apprehensions in India on this project. And made it clear that this project has been built to improve connectivity with the avowed aim of expansion of trade and development. Strategic experts in India are divided with some favouring that it should join the projects to reap the benefits while others view them with suspicion. The OBOR comprises the entire periphery of the Indian subcontinent, including Pakistan, and also that seeks to connect the east with the west through the central Asian region..
India’s Gammon India has won a road contract worth Rs 1,708 crore from National Highways Authority of India (NHAI) in the state of Jammu & Kashmir. The scope of the work involves four-laning of Udhampur to Ramban section of NH 1 A, considered as an important stretch of National Highways 1A under government's flagship road building programme NHDP. The contract has been awarded under phase II of the National Highways Development Project (NHDP). Gammon India, one of the largest contractor and developer of infrastructure projects in India, operates in four major areas - engineering, procurement and construction, construction business, infrastructure development business and and international business.
unveiled by President Xi Jinping two years ago. “The key objective of OBOR is to share benefits with all countries involved with China, ,” said Liu Yunshan, the fifth ranking member of the Standing Committee of the ruling Communist Party of China (CPC) said. INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE
SEPTEMBER - OCTOBER 2015
40
INFRASTRUCTURE & PROJECTS OLD DELHI ROAD REPAIR WORK TO START IN NOVEMBER Delayed by almost three years, finally the renovation work of the old Delhi-Gurgaon Road will start in the first week of November. The work will be monitored by Haryana chief secretary D S Dhesi. It is expected that the repair work will be completed in the next six months, after its commencement in November. The government has approved the project at an estimate of Rs 56.25 crore for special repair and construction of the 8 km stretch.
Delhi-Gurgaon Road.
CANADA TO INVEST IN INDIA’S URBAN INFRASTRUCTURE PROJECTS Canada is keen on extending its pension funds for urban development and infrastructure projects in India. In a statement released by High Commissioner of Canada Nadir Patel he mentioned that his government is thinking of entering into a Bilateral Investment Policy Agreement with India. The Canadian government has about $750 billion of pension fund and is looking at huge investment opportunities now available in India in the context of new urban sector initiatives and stress on infrastructure development.
41
SEPTEMBER - OCTOBER 2015
ROAD PROJECTS WORTH RS 1,800 CRORE FOR TAMIL NADU The Tamil Nadu government has announced plans for roard projects worth over Rs 1,800 crore. The government, in a bid to ensure safe transportation will expand the path used by devotees at the famous Thiruvannamalai Temple, from the existing seven metres to 10 metres, at a cost of Rs 65 crore. Further, new road over bridges and road under bridges at railway crossings will be constructed at Salem, Vellore, Coimbatore, Cuddalore, Madurai, Kanyakumari and Tirunelveli at a cost of Rs 665.36 crore. The
J Jayalalithaa, Chief Minister of Tamil Nadu.
Chief Minister of Tamil Nadu, J Jayalalithaa also announced allocating additional funds to take up works under existing roadlaying and expansion projects in Chennai and its suburbs, and expressed confidence that these efforts will help upgrade the infrastructure.
INDIA’S DALMIA CEMENT TO START PRODUCTION AT NEW UNIT The Dalmia Cement Bharat has commenced its production activity in a new unit situated in Kolphapur, Maharashtra. The Rs 1,300 crore plant has an annual production capacity of 2.5 million tons and is the company’s eleventh manufacturing unit in India. According to the management, since Maharashtra market accounts for 10-12 percent of the total India cement market, hence it was decided to expand in Kolhapur. Over the last one year, the market has been growing at 3-4 percent. Mahendera Singhi, Group CEO, Dalmia Cement Bharat said, “DCBL estimates that cement sales in Maharashtra will touch 1 lakh million tonnes by 2020 and in order to tap this opportunity, we are targeting to appoint over 600 dealers in the state of which 170 are in Kolhapur.” He also added: “We will now have a presence across 10 cities including Mumbai, Pune, Thane, Kolhapur, Satara, Ahmednagar etc., in the state and are looking to strengthen our
INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE
market share from 5 percent to 6 percent in the next three years.” Dalmia Cement recently commenced operations at its greenfield cement plant in Belgaum district, Karnataka which will cater to the growing demand in Maharashtra, Goa and Karnataka.
Dalmia Cement Bharat plant.
ANALYSTRECOMMENDATIONS ACC
AMBUJA CEMENTS
Rahul Mohindar of viratechindia.com recommends ACC stock, which did not performed in the recent past, and can be considered as a BUY option. According to the analyst, 4-5 percent run-ups are very likely, so with a stop loss at Rs 1,370 the ACC is clearly a good investment. The share touched its 52-week high Rs 1,774.80 and 52-week low Rs 1,318.25 on March 02, 2015 and September 01, 2015, respectively.
ULTRATECH CEMENT Yogesh Mehta of Motilal Oswal recommends BUY for UltraTech Cement stocks, as the company has a strong setup and it crossed the barrier of Rs 2,930-2,950. “We are looking at a buy trade with a target of Rs 3,060 keeping a stop loss of Rs 2,960," said the analyst. The
COAL INDIA Ambareesh Baliga, an independent market expert recommends Coal India a good buy. “Despite the talk in the market about the falling international pricesin the coal, Coal India was selling at a major discounted international prices. So, I don’t think that should make too much of a difference,” says the analyst. Especially now, with the sort of focus which is there on power sector going ahead, Coal India does not seem to be concerned. While the e-auctions, which should be taking off decently well, the analyst expects higher margins.According to the analyst, the only other issue which Coal India would be facing is possibly a higher sort of a taxation by the government because of environmental issues. In turn, V K Sharma of HDFC Securities suggests buying 310 Put at around Rs 8 with stop loss at Rs 5, and hope to sell at around Rs 15.
company's trailing 12-month earnings per share (EPS) was at Rs 72.15 per share, in Jun, 2015. The stock's priceto-earnings (P/E) ratio was 41.15. The latest book value of the company is Rs 687.21 per share. At the current value, the price-to-book value of the company was 4.32. The dividend yield of the company was 0.3 percent.
Sudarshan Sukhani of s2analytics.com recommends BUY for Ambuja Cements. According to the analyst, "Cement is a buying opportunity, although all the opportunities we are talking about are for the short-term.” It is very difficult to predict what the medium-term will bring to the market. However, at current levels Ambuja Cements can be bought into. In turn, Ambareesh Baliga, an independent market expert has aslo advised BUY on Ambuja Cements, as stock hasn’t really performed, so even at the current level one could be looking at buying.
ORIENT CEMENT
Orient Cement reported subdued set of numbers with a ~20.0% decline in earnings largely owing to 10.2% decline in the cement volumes. While weak demand resulted in lower volumes, the same was accentuated by sharp fall in the cement prices (particularly in Maharashtra region, which accounts for a ~60% of Orient’s volumes) as realizations sequentially declined by 8.1%. According to SPA Research, the “BUY” stays on with a target of INR 224. Being amongst the lowest cost cement producer, OCL enjoys industry leading return ratios and has successfully captured a higher market share despite muted industry growth. With capacity expansion on track, the Spa Research report expects revenue and net profit to register a CAGR of 33.8% and 20.5% respectively over FY15-17E.
Orient Cement plant.
INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE
SEPTEMBER - OCTOBER 2015
42
MOST POPULAR ON CEMWEEK.COM The most-read stories on CemWeek over the past two months reflects the industry’s mixed outlook. The India column shows the 20 most popular stories from CemWeek featuring India-related coverage, and the Global column shows the global events that gathered the most attention worldwide during this period. Visit CemWeek.com to access the full stories.
INDIA
GLOBAL
1.
Lafarge deal in India sparks dispute
1. Nigeria:Lafarge-Holcim merger to produce 14mtpa of cement
2.
India: Ultratech Cement to acquire Jaiprakash Cement plant
2. FLSmidth signs agreement with Mamba Cement
3.
Indian cement market expects growth in near future
3. Essroc Cement in Nazareth, U.S. gets its new CEO
4.
LafargeHolcim and Birla Corporation reach agreement for asset divestment in India
4. Votorantim helps Sivas Cement set up new plant in Turkey
5.
Indian cement companies record steep decline in cement prices
5. Vietnam’s Lam Thach cement plant halts production
6.
India:33 percent salary hike for cement workers
6. Dangote Cement declares its half-yearly profit
7.
India: Ultratech Cement to boost capacity by March 2016
7. Palestine to get its first cement plant
8.
UltraTech Cement seeks clarification from Indian government
8. Egypt: Misr Qena Cement plans to complete three projects by next June
9.
India’s Prism Cement posts decline in cement volumes
9. Vietnam: Cement prices stabilize after increased consumption
10. India’s Andhra Cement declares its performance report for Q1
10. Italcementi, HeidelbergCement to be presented to antitrust commission
11. Demand for cement in South India falling
11. Chinese company to set up new cement plant in Russia
12. Indian cement sector expects increased growth over medium term
12. Indocement to close three cement plants
13. JSW Steel to invest in Salboni grinding unit in West Bengal, India
13. Latest project by Eurocement Group to open in 2017
14. Jaypee Cement wins Majra coal block in Maharashtra, India
14. Proposed cement plant in Vallejo, California faces opposition
15. Cement companies expand presence in Indian cement market
15. Supply of cement stabilizes in in Egypt
16. Acquisition of Lafarge India’s two cement units by Birla Corporation
16. Pakistan: Attock Cement to expand its production capacity
may come unstuck 17. CFO of HeidelbergCement lays groundwork for announced merger with Italcimenti
17. UltraTech Cement to continue with its expansion plan in India 18. HeidelbergCement completes acquisition process of Italcementi 18. Heidelberg-Italcementi deal finalized in India 19. Dangote Group appoints new Chairman 19. Indian cement demand remains stable in H1 20. Namibian cement maker sets up Special Composite Cement Plant 20. India: Birla Corporation sees sharp drop in profit
43 SEPTEMBER - OCTOBER
2015
INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE
CW GROUP MEETING AGENDA The CW Group will be hosting and participating in a number of webinars and conferences. We invite you to join us on-line or in person at the events to discuss our views of the industry.
CONFERENCES WHERE THE CW GROUP WILL BE PRESENTING
CBI Brazil & LatAm 2016
February 24 – 25, 2016
WEBINARS HOSTED BY CW RESEARCH
CW Research
Sao Paolo, Brazil
WEBINAR
Global Slag Market – a glance at next year’s trends
October 15, 2015 at 2:00 PM GMT
CW Summit Middle East & Africa
April 4 – 5, 2016
WEBINAR
Cement Clinker Price Assessment
Solid Fuel Summit Middle East 2016
April 5 – 6, 2016
Thursday, October 15, 2015 at 2:00 PM GMT
Dubai, UAE CW Research
SFS
Global Slag Market – a glance at next year’s trends
Dubai, UAE
November 5, 2015 at 2:00 PM GMT
Cement Clinker Price Assessment
Thursday, November 5, 2015 at 2:00 PM GMT
Middle East 2016
CW Research
WEBINAR
Global Cement Trade Price Report
EUROPE
2016
AshTrade Europe
April 21-22, 2016
Global Cement Trade Price Report
Rome, Italy November 26, 2015 at 2:00 PM GMT
Thursday, November 26, 2015 at 2:00 PM GMT
FOR QUESTIONS OR INQUIRIES PLEASE CONTACT
FOR MORE INFORMATION PLEASE VISIT
Liviu Dinu, Market Services & Marketing Consultant at the CW Group at ld@cwgrp.com
http://research.cwgrp.com/meetings
INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE
SEPTEMBER - OCTOBER 2015
44
CEMENT RESEARCH
CW Research
GLOBAL cement VOLUME FORECAST REPORT DATA-ORIENTED FORECAST REPORT, PROVIDING EXTENSIVE DETAILS ON THE OUTLOOK FOR KEY CEMENT MARKETS WORLDWIDE PRODUCT DESCRIPTION The CW Group’s Global Cement Volume Forecast Report is a twice-yearly update on projections for cement volumes at the national, regional and global basis. The report brings together the CW Group’s principal research team to provide the latest insights on the evolution of cement volume trends for 55 key cement markets worldwide. Provides the latest insights for 55 important cement markets worldwide Presents a 5-year outlook on national cement consumption, production, net-trade estimates, Industry-wide utilization rate, and cement production capacity This benchmark study brings a global forecast report to the industry with a new level of analytical rigor, enabling industry professionals to shape their perspective on markets’, priorities and what may be around the bend.
SLOVAKIA
COLOMBIA
WHY BUY? National cement consumption (tonnages) National cement production (tonnages) National net-trade estimates (tonnages) Industry-wide utilization rate (%) Cement production capacity (integrated & grinding tonnages)
WHO IS THIS REPORT FOR? Business leaders Strategic planners Business development professionals Investment analysis Equipment suppliers Fuel and cement traders
The Global Cement Volume Forecast Report has two updates a year: Extended (September): a September each year extended update (includes briefs on the 55 key markets with principal supply-demand impacting drivers and CW Research's analyst market assessments presenting a detailed numerical worldwide analysis, as well as the regional and global supply-demand model). Quantitative update (February): a February each year quantitative update (only includes the numerical sections of the report, not country write-ups).
CEMENT • CHEMICALS • ENERGY • STEEL • METALS & MINING • PORTS COMMUNICATIONS • FINANCIAL SERVICES • AGRICULTURE GREENWICH (US) • HOUSTON (US) • MUMBAI (IN) • BUCHAREST (RO) • SAO PAULO (BR)
RELEASE DETAILS Twice per year:
(two updates included in subscription):
February: 40+ pages Quantitative update (abbreviated) September: 150+ pages Extended with qualitative analysis for key countries
research.cwgrp.com •
CW Group
inquiries@cwgrp.com • +1-702-866-9474 PO Box 5263 • Greenwich, CT 06831 • USA