Weekly cement market update

Top stories from the global cement market in the previous week

Semen Indonesia acquires Holcim Indonesia's assets. Semen Indonesia has acquired Holcim Indonesia and its assets, and is now seeking to expand its market share and face free trade."We know that so far Holcim's position in the market is also quite strong, so that joining Holcim to Semen Indonesia is certainly very profitable. Competitiveness will be even stronger," said Capital Market Observer, Hariyajid Ramelan."There needs to be immediate growth in sales so that the costs incurred to enlarge the market pay off," said Hans Kwee, President Director of Investa Saran Mandiri, noting that the Semen Indonesia Group still had to pay attention to the pressures that might be faced by the cement industry going forward.

Bolivia: State cement is cheaper than private competitors'. A 50-kilogram bag of Ecebol cement costs between Bs 42 and 43, roughly Bs 1 and Bs 2 less than that of the products of traditional brands such as Fancesa and Itacamba Cement. Ecebol cement is the public cement brand developed by Sedem (Servicio de Desarrollo de las Empresas Públicas Productivas). Commenting on the price difference. Patricia Ballivián, general manager of Sedem, notes that the competitive advantage resides in the production process: "The site is one kilometer from our plant. In addition, our technology is the latest generation." The private sector asks for equal conditions."Taking into account the large investments made by national companies, both public and private, it is important that all can compete on equal terms to benefit consumers," observed Alexander Capela, general manager of Itacamba Cemento.

Cement prices in Saudi Arabia edged up in 1H2019. The price of cement in Saudi Arabia rose 1.6 percent year-on-year. Ready-mix concrete also inched up 0.3 percent YoY, according to data released by the General Authority for Statistics. In January, cement prices had slipped by a marginal one percent, but kept trending upwards until June to touch SAR 13.10, a two-percent increase, per 50-kilogram bag.

Indian cement companies report record margins in 2Q2019. Cement manufacturers in India reported quite positive profit margins in the second quarter. Lower production costs played an important role, along with price increases, which were more prominent and decisive for companies operating in the south of the country. However, the exceptional trend is not expected to repeat itself, as cement demand remains lackluster. If in 2Q cement consumption shrank on uncertainty surrounding the elections, and water shortages, the current quarter is likely to be plagued by floods and a shortage of new state construction projects. Nevertheless, analysts expect demand to pick up in the second half of the fiscal year, since manufacturers are likely to shift their focus from the trade sector to the non-trade sector, as state projects are forecast to start after the monsoon quarter.

Cemento Argos Panam├í to expand clinker plant. Argos Panam├í has presented a new Environmental Impact Assessment to Colombia's Environmental Ministry to develop a new industrial project dubbed ÔÇ£Project BalboaÔÇØ, which aims to expand its clinker production. The project comprises the installation of a new clinker production line at the grounds company's plant in Buena Vista, in an area of around 17 hectares. The company plans to adapt the land, to build new operational buildings and install equipment for the activities of limestone crushing, grinding of raw materials, and to produce and transport clinker to silos. The silos will be used to store the clinker so it can later be used in cement production. Total investment for infrastructure and equipment, including other expenses, is in the order of USD 168 million.

Kenyan cement companies' exports earnings reach new low. Earnings from exports by Kenyan cement companies reached a new low on shrinking demand and exports. Preliminary exports statistics by the Central Bank of Kenya (CBK) reveal income from cement exports dipped to Sh362.28 million in the first six months of the year, a 65.28 percent fall compared with Sh1.04 billion the same period the previous year. The country's cement exports have been dropping steeply since 2015 mainly on the setting up of new grinding plants and expansion of existing ones in Uganda and Tanzania. ÔÇ£We have seen increased capacity in Uganda in particular especially for Bamburi Cement,ÔÇØ ICEA Lion Asset Management head of research Judd Murigi said. Sales in Tanzania have, on the other hand, partly been hit by the collapse of ARM Cement, Mr Murigi said.

Pan American Games boosting cement production in Peru. In June 2019, the cement, lime and plaster industry grew by 10.2%, the fifth month with positive figures and the highest in the last 13 months, according to the Ministry of Production. In the accumulated from January to June of this year, this industry advanced 2.1%, due to the good performance during the months of May and June, which showed growth of 5.6% and 10.2%, respectively. "It has been the highest rate in the last 13 months, due to a recovery in the production of Portland cement (20.2%) and lime (10%)," said Deputy Minister of Mype and Industry, Oscar Graham. Graham said that this behavior is due to the recovery of the construction sector as a result of the development of the construction works for the Lima 2019 Pan American Games and the reconstruction works due to the damage left by the El Ni├▒o Costero phenomenon.

Israeli producers contest anti-dumping duties on cement imports. Cement importers have fiercely criticized Dani Tal, who is responsible for duties under the Ministry of Economy, advocating the introduction of anti-dumping duties on cement imported from Greece and Turkey. Siment, Israel's largest cement importer, claims it is yet another attempt to maintain Nesher's monopoly on the sale of cement in the country. ÔÇ£Your decision is not related to professional considerations and does not take into account market data,ÔÇØ Siment said in a letter addressed to Tal and legal advisors to the Ministry of Economy and the Ministry of Finance. The Ministry of Economics has repeatedly dealt with this issue. Over the years, Nesher has almost completely dominated the Israeli cement market, but a few years ago the situation changed. Siment started importing cement from Turkey and Greece at a price 30 percent lower than the price in the Israeli market. The low demand for cement in these countries, combined with excess production capacities, forced manufacturers to redirect surplus products for export at low prices. Israeli producers such as Nesher accused Siment of aggressively importing cement from Turkey and Greece at dumping prices. The Ministry of Economy conducted an investigation, as a result of which the official responsible for duties at the Ministry of Economy recommended introducing anti-dumping duties on cement imported from Greece and Turkey, but Economy Minister Eli Cohen decided that competition was more important than the interests of the monopoly and refused duties (more precisely, he decided to appoint minimum anti-dumping duties on imported cement in the amount of 0.25 percent). Now, anti-dumping duties are back on the agenda.

Dominican Republic: Cement production, sales rise in 1H2019. The volume of local cement sales increased 5.2% whereas production rose 2.7%, some 2,812,131 tons, according to figures for the January-June 2019 semester compared to the same period of 2018. At the end of this year cement production will grow 8% in relation to to 2018, which means 4.8 million metric tons, according to data offered by the president of the Dominican Association of Portland Cement Producers (Adocem), Adriano Brunetti. He stressed that the construction sector grew in the first quarter of the year 12.5% ÔÇïÔÇïand this drives the growth of the cement industry. "The Dominican Republic has gone from being a net importer of cement to being self-sufficient and exporting approximately 20% of its production, along with the demands imposed by the markets, especially with the new commercial order in which international trade is developed." Cement production capacity in the country has steadily increased in recent years and today is up to approximately eight million metric tons.

South Africa mulls tariffs on cement imports. Cement Institute managing director, Bryan Perrie, noted South African businesses were being undercut by 40-50% because of cheaper imports from Pakistan, Vietnam, and China. Initiatives to regulate the cement industry are on the table, including tariffs on imported cement. According to Meluleki Nzimande, commissioner at the International Trade Administration Commission of South Africa (Itac), the topic is not new. When Pakistan began exporting large quantities of cement to South Africa five years ago, the local industry applied to Itec for anti-dumping duties to be imposed. "This was done and the margins were quite significant and Pakistani imports reduced significantly," observed Nzimande. The official added that the same measure can be applied to other import sources, such as Vietnam, which currently exports to South Africa.