Thursday, August 14, 2014

TURKEY: CRH, Eren Said to Hire JPMorgan to Sell Turkey Cement Unit

CRH Plc (CRH), Ireland’s biggest cement company, and its Turkish partner Eren Holding AS have hired JPMorgan Chase & Co. (JPM) to help sell their cement joint venture in Turkey, people with knowledge of the matter said.

Companies including Haci Omer Sabanci Holding AS (SAHOL), Limak Holding AS and Oyak Cement Group are interested in the unit, in which CRH holds a 50 percent stake with Istanbul-based Eren owning the rest, said the people, who asked not to be named because the talks are confidential.

The three potential bidders are among those shortlisted and the sale process for the unit, known as Denizli Cimento Sanayii TAS, could be finalized by October, one of the people said.

About 20 domestic and international cement producers, including Italcementi SpA (IT), operate in Turkey, where cement makers have a total annual capacity of about 107 million tons, according to the local Cement Producers’ Association. The country, which has a gross domestic product of about $820 billion, is seeking to become one of the largest 10 economies in the world by 2023, and has planned $100 billion of infrastructure projects in the next four years, including a new bridge across the Bosphorus strait.

Representatives of Sabanci Holding and Eren Holding didn’t respond to e-mailed questions and calls seeking comment. Representatives of CRH, JPMorgan, Oyak, Denizli and Limak Holding declined to comment.
Denizli Output

Denizli, in which CRH bought a 50 percent stake from Eren Holding in 2007, produces about 3 percent of Turkey’s and 31 percent of western Turkey’s total clinker output, according to its website. The company is aiming to increase its sales to 250 million liras ($116 million) this year from 220 million liras in 2013, according to an e-mailed statement.

Oyak Group’s cement units include Mardin Cimento Sanayii & Ticaret AS, Unye Cimento Sanayii & Ticaret AS, Bolu Cimento Sanayii AS and Aslan Cimento AS.

Sabanci’s Cimsa Cimento agreed to buy Sancim Bilecik Cimento, a cement producer in western Turkey, from Sonmez Group for $220.7 million, it said in a public filing last month.

Wednesday, August 13, 2014

VIETNAM: Vissai Ninh Binh exporte 1,5 million de tonnes de clinker

La société de ciment Vissai Ninh Binh vient d’expédier un lot de 115.000 tonnes de clinker vers la France. 

C’est le premier lot de Vissai Ninh Binh inscrit dans le contrat de livraison de 1,5 million de tonnes de clinker à la société française Ciment de Bourbon au service de la construction d'une autoroute à la Réunion. 

C’est ce qu’a annoncé Nguyên Tiên Dat, directeur général adjoint du groupe The Vissai. Toujours selon lui, Vissai Ninh Binh est l'entreprise vietnamienne ayant obtenu le plus grand contrat d’exportation de clinker à l’étranger.

PARAGUAY: Comisión de Hidrovía Paraguay-Paraná está inactiva hace 3 años

La Comisión del Acuerdo de la Hidrovía Paraguay-Paraná, conformada para desarrollar un transporte fluvial más efectivo para sus miembros, dejó de reunirse hace tres años.

La inactividad del grupo, del que Bolivia es parte, concuerda con el año en que Argentina endureció sus trabas comerciales. En Paraguay y Bolivia coinciden en la importancia del flujo por ese canal.

La última reunión de esta Comisión, integrada por representantes de Paraguay, Brasil, Argentina, Uruguay y Bolivia, se desarrolló en Asunción en julio de 2011, reporta el diario paraguayo ABC en su edición electrónica de ayer y señala que, desde ese entonces, los gremios empresariales ligados al comercio fluvial paraguayo ya protestaban por el aumento de las trabas burocráticas y técnicas creadas por el Gobierno argentino, que dificultan la navegación de las embarcaciones paraguayas.

Antes de julio de 2011, la Comisión se reunía casi cada año, siguiendo los puntos establecidos y tratando temas enfocados en el Comité Intergubernamental de la Hidrovía Paraguay-Paraná (CIH), una organización formada en 1989 y que se reglamentó en 1992, de la que participan también los cinco países miembros.

ABC reportó que para los empresarios fluviales paraguayos las trabas argentinas son un boicot y que la situación de la hidrovía amerita una reunión del grupo, debido que su comercio muestra una tendencia alcista tanto en exportación como en importación; pero que no tiene en la hidrovía la libre navegabilidad requerida, libertad que se proclama en tratados internacionales vigentes.

El sector privado paraguayo pide a su Gobierno, un mayor interés en lo que significa el tránsito fluvial para el Paraguay la hidrovía, considerando el impacto económico que representa.

En Bolivia, el gerente general del Instituto Boliviano de Comercio Exterior (IBCE) señaló que la hidrovía es importante para el país porque sirve de salida para las exportaciones de soya y derivados, de alcohol e inclusive de madera y cueros y también para el hierro en bruto que sale del Mutún. Por otra parte, sirve para la importación de Clinker, cemento, trigo y diesel.

Rodríguez hizo el mismo cuestionamiento que los empresarios paraguayos al señalar que las trabas argentinas no son algo nuevo y que “hay países que hablan de integración, pero en la práctica se esmeran en poner restricciones”.

Para ilustrar la importancia de la hidrovía, el especialista en logística, Rafael Quintela señaló que hace unos 7 años Bolivia llegó a exportar 1 millón de toneladas por ese canal y a costos muy competitivos.

En 2012, en ocasión de la visita de la presidenta argentina Cristina Fernández, un comunicado conjunto sobre su reunión con el presidente Evo Morales, señalaba como uno de los puntos en agenda “la necesidad de revitalizar las actividades del Comité Intergubernamental de la Hidrovía Paraguay-Paraná (CIH) (...), así como del Grupo de Trabajo Político-Técnico encargado de examinar el efectivo cumplimiento del Protocolo adicional sobre condiciones de igualdad de oportunidades para una mayor competitividad, los reglamentos del Acuerdo e identificar los temas que impiden su cumplimiento”.





En mayo pasado, una comisión del Parlasur se reunió en Montevideo (Uruguay) para debatir sobre salud materna y el proyecto de Hidrovía Paraguay-Paraná; pero no se conocen resultados.

KENYA: Bamburi to Tap Kenya Infrastructure Boom as Profit Tumbles

Bamburi Cement's pretax profit slumped 28 percent to 2.3 billion shillings ($26.20 million) in the first half of 2014, the company said on Thursday, as it outlined plans to profit from Kenya's ambitious infrastructure spending plans.

Controlled by French firm Lafarge SA, Bamburi is the biggest cement maker in east Africa's largest economy, where a construction boom driven by infrastructure projects and real estate has helped boost demand for cement.

"We are optimistic that the business environment will progressively improve in the second half of the year," the company said in a statement, citing upcoming infrastructure projects in Kenya.

Bamburi said it expects Kenya's planned infrastructure projects, including roads, railways and a new Indian Ocean port in Lamu, to improve sales.

Kenya's government in June raised $2 billion through a debut Eurobond and said most of the proceeds would be used to finance infrastructure projects.

Bamburi said profit in the six months to end-June took a hit due to the higher cost of power and imported clinker.

Turnover grew to 17.3 billion shillings in the first half from 15.8 billion registered in 2013, buoyed by stronger sales both within Kenya and the region.

NIGERIA: Ashaka Cement Records 201% Rise In H1 Profit

Ashaka Cement, a unit of French Cement maker Lafarge, has posted a record H1 profit after tax of N3.51 billion ($25.14 million) in the first half of 2014, 201.41 percent higher than N1.15 billion ($7 million) it recorded in the corresponding period of 2013.

The manufacturing company enjoyed a pre-tax profit surge of 166.16 percent, from N1.65 billion ($10.1 million) in the first of half of 2013 to N4.39 billion ($26.9 million) in 2014. Earnings per share (EPS) tripled to N1.57k from 52k in HY 2013 as net margin, the measure of profitability and efficiency, spiked to 28.33 percent in 2014, from 9 percent in 2013.

The astronomical growth is in part thanks to the company’s switch to coal from the Maiganga Coal Mine in Gombe State for the generation of electricity, which for production, has been a cheaper alternative. This led to reduction in production costs as cost-of-sales margin dipped to 58.13 percent in 2014, from 80 percent in 2013, while cost of sales also fell by 22.44 percent to N6.71 billion ($41.1 million).

This is as Ashakacem, based in northern Nigeria, plans an aggressive expansion across the country, having secured a N50 billion credit facility. N100 billion is also earmarked for projects like capacity expansion and coal-fire captive power plant, which should be completed within two years, the company said in April.

NIGERIA: NLC Tackles SON over New Cement Policy

The Nigeria Labour Congress (NLC) has warned the federal government not to concede to any policy adjustment that will impose severe burdens on Nigerians, stating that the ongoing campaign against cement manufacturers in the country portends great danger to the nation's fragile economy.

The Congress in a statement issued by its President, Abduwahed Omar, expressed concern over recent campaigns orchestrated by the Standard Organisation of Nigeria (SON) "that incidents of building collapse in different parts of the country occur simply because the quality of cement currently in use in the country is not the 42.5 type."

The Congress described the campaign as a ruse and a violation of all principles and logic of standardisation in relation with public interest.

It argued that government exist in the interest of the public adding that it would be wrong for any agency of government to be promoting policies that are obviously destructive to the economy and particularly harmful to the government's determination to create jobs while sustaining existing ones.

The cement industry, it said, is a major employer of labour stressing that policies directed at the industry must consider the collective interest of Nigerians and particularly the socio economic implications in terms of benefits to the economy and citizens of the country.

Noting that subsisting infrastructural challenges have done much damage to industrialisation in the country, leading to closure of several factories, the NLC warned the Federal Government not not give in to pressure as to allow manipulations that will ultimately rubbish its attempts at reviving the economy and reducing unemployment and its attendant societal burden.

It maintained that the country is already battling with too many social crisis than to accept new policies that will create bigger crises.

It insisted that building collapses in Nigeria have nothing to do with the 32.5 type cement as this type of cement have been in use in Nigeria for over 70 years in building roads, houses and other private and public facilities including government houses that are still standing strong till this moment.

"Government should avoid manipulations that eventually harm our collective aspirations for a society that benefits the populace and not individual interests. The combination of the West African Portland Cement, UNICEM, Sokoto Cement, Ashaka Cement, PURECHEM and other cement companies that are presently surviving the hardships unleashed on the productive manufacturing sector in Nigeria do have thousands of people in their employment, scandalously too inadequate for an industry that is key to infrastructural development in a country with a population above 160 million," the NLC stated.

Indeed, it further argued that the acceptance of the proposed policy change will certainly shut down the existing cement firms as well as lots of construction companies in Nigeria.

Ultimately,it emphasised that rather than sustaining and creating more jobs, government would have burdened the economy with more liabilities and less national income.

"As at today, there are over 27 types of cement globally in use for different purposes, and none has been proved to be less in quality to the other for the same use. There are 12.5, 22.5, 32.5, 42.5, 52.5 types as well as sulphate resistant cement, oil well cement, white cement among others serving different purposes across the world with tested qualities and environment compliance.

"In any case, even if we must change, why not the 52.5 type? And if change must occur, it shouldn't be sudden, leading to factory closures of upward of two or more years as the current industry campaign implies. For the existing companies to upgrade to 42.5 type, they would need to close up and consequently discharge existing workers in their employment. This shouldn't be the case of a country already excruciatingly burdened with so much unemployment," it stated.

It warned that workers in the existing cement manufacturing firms will be added to the saturated unemployment terrain noting that workers in the construction industry, another major employment generating subsector will also be affected. And this will mean all ongoing public construction works in the country will stop.

"Collapse of buildings, whether public or private buildings in Nigeria are results of lack of efficient monitoring as well as improper contractual assessments. We believe the S.O.N need to engage in better critical investigations and monitoring than its obvious haste to destroy market competition.

"Government agencies should be more interested in policies that are capable of reindustrialising Nigeria and create more jobs than subsuming themselves to manipulations that discourage competition. Such manipulations can't help the desired investment hunt.The Standard Organisation of Nigeria should act on all issues in public interest and desist from actions and policy statements that are obviously inimical to the growth of our economy," the Congress stated.

IRAN: Cement output exceeds 23.8m tons in 4 months

Iran produced over 23.8 million tons of cement in the first four months of the current Iranian calendar year (March 21-July 22).

Moreover, more than 25.46 million tons of clinker -- lumps or nodules, usually 3–25 mm in diameter, produced by sintering limestone and clay during the cement kiln stage -- were produced in the mentioned time span, the IRNA news agency reported on Tuesday. 

Cement manufacturers purchasing clinker usually grind it as an addition to their own clinker at their cement plants. 

Iran exported around 18 million tons of cement in the previous Iranian calendar year, which ended on March 20, 2014.

The country ranked first in the Middle East and third in the world in terms of cement exports.

The country’s annual cement output is currently about 80 million tons, of which 50 million tons is used by domestic industries.

INDIA: Cement makers, developers face off over prices

Cement companies and realty developers in the Telangana-Andhra Pradesh region are at loggerheads over the sudden spiralling of prices of the building material in the last few weeks.

The bitter truth is that both cement and realty prices had hit near rock bottom before Andhra Pradesh was bifurcated on June 2. Cement prices plummeted to around ₹200 a bag of 50 kg, while real estate prices were stagnant in most places or down in some.

With hopes of economic revival following political stability after the bifurcation, cement companies scaled up prices.

In a span of 45 days (by mid-July), the average price was hovering between ₹290 and ₹320 a bag (up from ₹200-240) in Hyderabad.

In Bangalore, the current price is ₹345-370, while in Chennai it is sold at ₹310-340.

Builders’ view

This rise, at a time when there was no growth in demand, sparked opposition from builders’ associations, which alleged that the price increase was “unwarranted, unilateral” and a result of “cartelisation” in the cement industry.

In protest against the “unreasonable” price rise, builders boycotted cement purchases for three weeks last month.

“The price rise is only due to cartelisation. The Government must intervene and resolve the issue. We are also contemplating taking up the matter with the Competition Commission of India,” C Sekhar Reddy, National President, Confederation of Real Estate Developers' Associations of India, had said earlier.

Cement firms’ stand

Cement-makers have a different story to tell. According to S Anand Reddy, Joint Managing Director of Sagar Cements, over 42 per cent of cement price consists of excise duty and sales tax on which the manufacturers have no control. Further, the input costs (power, coal and diesel) had gone up substantially since FY-2012. The power tariff had risen by 89 per cent, domestic coal by 46 per cent and diesel by 39 per cent. Besides, term loans and working capital costs had increased by 18 per cent, say cement makers.

“If you factor in all these increases, the cement price is still lower than what it was during the same time last year. So, all these increases in inputs costs are adding to the losses of cement manufacturers,” Reddy told BusinessLine.

The cost of production per bag is ₹182.75. “We need to add ₹67.50 average freight cost and ₹40 excise duty and ₹45 VAT (value-added tax), which brings the price to ₹335.25. This is the minimum viable price at which cement has to be sold,” he argued.

Cement prices have been highly volatile in the last four years. It fluctuated from ₹140 to ₹280 during 2010-11. In the succeeding next two years, it hovered around ₹260-292, while in 2013-14, it was at ₹215-228.

Cement cost

Cement makers also say the commodity constitutes just 4-5 per cent of the entire construction in the non-luxury segment homes.

According to a recent study by UltraTech, an increase of cement price by ₹100 a bag results in an additional cost of ₹44.85 a sq ft (2.6 per cent for sq ft).

Severe crunch in capacity utilisation has also taken a toll on companies. Out of an installed capacity of 53 million tonnes (mt), the despatches in Andhra Pradesh are only at 8 mt. In Telangana, out of 28 mt total capacity, only 7 mt is the demand.

States’ intervention

The State Government of Telangana had tried to sort the issue out by holding talks with both sides.

It led to the cement firms partially rolling back prices. On the other side, the Andhra Pradesh Government is also asking the firms there to push down the prices.

The bottom line, however, is that the cement industry wants rebates from the Governments on taxes, while the builders want new projects and business sentiment to pick up with some welcome decisions from the Governments and consumers.

Tuesday, August 12, 2014

OMAN: Cement imports heat up competition

Surging cement inflows from neighbouring United Arab Emirates are fuelling fierce competition among local manufacturers for market share, according to the Sultanate’s largest cement maker.
Raysut Cement says it is responding to these challenges by shipping volumes overseas, as well as boosting sales in domestic markets.

“While there are positive vibes for development and growth in the construction industry across the GCC countries including Oman, the supply base of cement is currently overtaking demand in the UAE. This is leading to a large volume of supplies coming from the UAE to Oman, creating undue competition in the local market,” said Shaikh Ahmed bin Alawi al Ibrahim, Chairman of the Board of Directors, Raysut Cement Group.
“Given this background, the Company has met with the challenges effectively by holding on to its sales and enlarging the profit for the group as a whole by optimising sales in varied markets,” he added in the Chairman’s report of the Group’s performance for the half year ended June 30, 2014.

The Group posted a pretax profit of RO 17.48 million for the first six months of 2014, compared with RO 16.38 million earned during the corresponding period of last year, entailing an increase of about 6.7 per cent. Pre-tax earnings by the parent company stood at RO 15.17 million, against RO 13.89 million in 2013. Profit earned by subsidiaries like Pioneer Cement stood at RO 2.85 million (against RO 2.42 million in 2013), Revenue earned by the group for the first six months of 2014 totalled RO 49.50 million (net of inter-company transactions of RO 2.21 million) against RO 49.52 million (net of inter-company transaction of RO 2.34 million) in the corresponding period of 2013.

Sales revenue generated by the parent company out of its Salalah operations totalled RO 35.61 million during the period ended June 30, 2014, against RO 36.33 million achieved during the corresponding period of last year. “In spite of competition in the northern markets and volatility in the export markets, the parent company could largely match the revenue of the previous period, albeit with a 2 per cent decline,” he said.
Pioneer Cement generated revenues of RO 14.54 million during the first half of 2014, against RO 14.19 million earned during the corresponding period of last year, an increase of 2.5 per cent.

According to the Chairman, severe competition from UAE suppliers impacted sales in the northern market, but the company managed to sell the shortfall in the southern market as well as in export segments. The Yemen and African markets provided opportunities for larger volumes during the period, he noted.

In all, the group produced 1,663,600 tons of Clinker and 1,971,737 tons of Cement during the first half of this year, against 1,676,399 tons of Clinker and 1,955,121 tons of Cement produced during the same period last year.

Pioneer Cement in the UAE produced 590,996 tons of clinker and 720,738 tons of cement this year, against 589,124 tons of clinker and 692,379 tons of cement produced last year. “Pioneer also has faced severe competition in the UAE market due to a surge in supplies relative to demand. Consequently Pioneer explored supplies in the North Oman market to keep its higher volume sales,” said Al Ibrahim.

Meanwhile, the company is pursuing a number of initiatives to augment its capabilities and overall performance, according to the Chairman. Projects in hand include the installation of a distribution terminal in Duqm, additional silo capacity at the Salalah plant, and installation of an offshore wheel loader system in the north to facilitate bulk cement handling.

“The projects are in various stages of development, and the company will reap benefits from these (ventures) in the early part of next year. The company is also exploring avenues for developing the potential of market beyond Oman,” he added.

PAKISTAN: Cement sales decline by 14pc in July

The sales of locally produced cement in domestic and international markets fell by 14 percent to 2.23 million last July on year-to-year basis an industry report said.

In the local market, the sales of cement dropped by 6.5 percent to 1.73 million tons, while exports also saw a decline of 32.9 percent to 503,000 tons, according to the figures released by All Pakistan Cement Manufacturer Association (APCMA) on Monday.

Despite the slump in the cement industry, analysts brushed aside any likelihood of price revision by manufacturers.

“The domestic sales [of cement] fell largely because of a lull in construction activities in the month of Ramadan and fewer working days due to Eid holidays,” said Furqan Ayub of JS Research.

Ayub cites the shrink in international demand to the political unrest in Afghanistan, withdrawal of NATO forces and stiffer competition. He also predicted that sales of local cement will continue to remain low in the current month.

“We expect cement sales to remain relatively subdued in August 2014 as well, because there is shortage of labor in the post-Eid holiday’s scenario and the political temperatures in the country continues to remain high,” he said.

He further adds: “however, we are reasonably confident that industry players will not compromise on pricing despite weak sales trend and rising cost pressure environment.”