INDIA: Cement firms step up exports to S Asia

ACC Ltd, Holcim-controlled market leader in the Indian cement sector, plans to step up exports to cash in on the record depreciation in the rupee and tide over damp demand in the local market.

The company is looking to sell in the South Asian market till the domestic situation improves.

“The current rupee depreciation surely opens up a lot of export markets. The countries that we are mainly targeting are Maldives, Mauritius and Bangladesh,” said Ramit Budhraja, chief executive-south-west region, ACC.

The Indian rupee has depreciated by close to 20% against the US dollar since July.

“This would not be a very significant percentage of our total volumes,” he said.

Since the Indian port capacities are constrained, there is a limited option of sending huge export quantities as big ships cannot berth at Indian ports, he said.

One of the major issues being faced in the export markets is competition from other countries like Pakistan and China. Budhraja said the rupee depreciation, which gives a price edge, will help outwit competition from other cement producers.

Among the other Indian companies targeting the export markets is French Vicat group-controlled Bharathi Cement, which has a facility in India. The company has started exporting to markets such as Sri Lanka, where it has exported close to 1,300 tonne in the last two months and plans to take it to close to 10,000 tonne a month shortly.

“The end of the war in Sri Lanka is opening up a lot of funds towards building infrastructure. Cement from India has a quality advantage over that from the Chinese players,” said Ravinder Reddy, director-marketing, Bharathi Cement.

He, however, does not expect this to turn into a significant percentage of the company’s total production volumes. Ultratech and Holcim group, which holds a controlling stake in ACC and Ambuja Cements, also supply to this market.

In spite of the efforts to offset the lull in the domestic market, a senior industry official said the Indian cement sector cannot be a noteworthy export story.

“For exports, one needs to have a plant close to the port, which is not the case with most cement companies. Secondly, while markets such as Sri Lanka, Nepal and Bangladesh were always there, other markets are not viable. Farther markets such as Middle East involve huge freight costs and are struggling with their own domestic over-capacities,” he said.

The official said demand from markets like Mauritius is as small as those generated in the Mumbai market alone and these markets also witness supplies from European countries. The industry does not expect other cement companies to increase focus or consider export markets in spite of the currency prop.

INDIA: Cement firms to face action for not cutting prices

DHARAMSHALA: Facing stiff opposition from the Congress on the issue of high cement price in the state in comparison to neighboring states and seeing the proceedings of the recently concluded assembly session being disrupted on the issue, state government on Saturday warned cement companies of facing stern action on failing to reduce prices.

Industries minister Kishan Kapoor said all three companies having their plants in the state were instructed to either cut cement prices or the facilities being provided to them by the state government would be withdrawn. Kapoor said that the government would not tolerate exploitation of people of the state. "Cement companies have been asked to reduce prices immediately by at least Rs 30 per bag or the government would withdraw facilities given to them," he said.

He added that if they fail to act immediately, facilities like subsidy on electricity and transportation of cement would be withdrawn. The minister said that according to the Central Tariff Commission, production cost of cement bag weighing 50 kg comes to only Rs 136 and if current price index was added even then production cost in Himachal does not exceed Rs 150.

"If we calculate the production cost by adding all the components like Value Added Tax (VAT), freight charges, and dealers' margin even on the higher side, the price comes out to be around Rs 225 at most of the places in Himachal," Kapoor said.

He said despite the low production cost, companies were selling cement at much higher prices ranging between Rs 305 to Rs 335 and that was sheer exploitation of people who sacrificed their land and environment for setting up these cement plants. "As there are only three cement companies operating in the state, they were trying to create monopoly by increasing cement prices time and again, which is not tolerable," he added.

IRELAND: Cement subsidiary makes €14m loss

ACCOUNTS FOR a Dublin-based subsidiary of Australian building materials company James Hardie made a loss of $17.8 million (€13.7 million) for the year ended March 31st, 2011. This compares to a $25.5 million (€19.7 million) profit for its 2010 financial period.

James Hardie International Finance Limited provides finance and treasury services, including the advancing and lending of money, to various subsidiaries of its parent company, James Hardie.

It incurred a foreign exchange loss of $43.5 million (€33.6 million) on the retranslation of monetary assets and liabilities during the year, the accounts state.

Since year end, the company has received a capital contribution of $329 million from its parent company, as well as $453 million from a subsidiary, James Hardie Technology NTL Limited. The company has continued to advance loans and enter into new facility agreements with other group undertakings since year end, the accounts state.

James Hardie International Finance, which has a registered address on Harcourt Street in Dublin, employed an average of nine people during the year. It paid $760,000 in salaries, with social welfare and pension costs pushing its payroll bill up to $834,000.

James Hardie International Finance Limited is part of the James Hardie Industries group, which moved its headquarters from the Netherlands to Ireland last year for tax purposes. The company, which has operations in Australia, New Zealand, the US and Europe, is one of the world’s biggest cement companies.

James Osborne, who was recently appointed as chairman of Independent News and Media and is also a director of Ryanair, is a non-executive director at James Hardie.

Former Greencore chief executive David Dilger is also a non-executive director of James Hardie, as well as a director of James Hardie International Finance.

MALAYSIA: Cement short: Sibu worried despite arrival of 2,000 tonnes from Kuching

SIBU: The shortage of cement for the construction industry is expected to remain, despite the arrival of 2,000 tonnes from Kuching yesterday.

Industry sources said there was more than 50% less cement in the market compared to three weeks ago when the crisis first started.

They estimated that Sibu required between 15,000 and 17,000 tonnes monthly.

“The output for our ready mixed concrete factory is more than 60% lower this month,” its director, who declined to be named, told The Star.

He said under normal circumstances, his factory required more than 3,000 tonnes a month.

“Our factory is open everyday, but the workers have no work to do.”

According to him, the shortage began in early December when he was notified by the state’s sole cement manufacturer, CMS Cement Sdn Bhd, that its Bintulu factory had broken down.

It took the Bintulu factory, which had a daily production capacity of 1,800 tonnes, about four days to resume production, but it could not cope with the overwhelming demand in Bintulu itself and also from Miri and the Murum dam in Belaga.

The Bintulu factory supplied most of the cement by land for the ready mixed concrete industry while the Kuching factory supplied construction and building industries in Sibu.

The director said the problem was aggravated by the poor weather in Kuching which prevented or delayed the loading of cement into cargo vessels bound for Sibu.

He said the most affected were the 13 ready mixed cement factories in Sibu.

“We all are incurring heavy losses and still in the dark as to when supply will return to normal.”

A contractor, Alan Kong, said he had to stop all work before Christmas because there was totally no cement for the past several days.

“I am worried because our suppliers could not assure me when supply would return to normal,” Kong said, adding that many of his clients wanted to move into their new homes or start doing business in their new shops before the Chinese New Year.

Kong said he was also worried about how to pay his workers when they returned from the Christmas holidays.

“In our line of work, no cement means no work, and no work means no income and no money to pay salaries.”

INDIA: Cement firms offer discounts to meet sales target

The sharp rally seen in cement prices, post monsoon, has been arrested. This is being attributed to the discounts offered by top companies to reach sales target.

Prices of the building material touched an all-time high of Rs 280 for a 50-kg bag, in November. However, during this month the average price then declined to Rs 270 a bag.

Cement makers and industry analysts term it a normal phenomenon, and add that by January-end, prices are likely to rise again. According to analysts, the strategy of offering discounts is being adopted to push sales.

“Prices in Kolkata have slipped to Rs 300-310 per bag, from Rs 330 a month before,” said Hrriday Goswami, a stockist. Adding: “This is the month when cement companies, with a January-December accounting period, focus on meeting sales target rather than maintaining prices.

“ACC, Ambuja and Lafarge are selling cement in the wholesale market at Rs 295, while UltraTech is selling at about Rs 10 less than other players,” Goswami added.

The northern and eastern markets have taken a price cut of around Rs 20. In Delhi, cement is available at Rs 250, against Rs 270 a bag last month. In the East, prices are hovering around Rs 300 a bag, compared to Rs 320 in the previous month.

H M Bangur, managing director of north major, Shree Cement, said, “Prices have eased a little by Rs 10-15 per bag and are likely to stabilise in January. But we expect prices would move up from February-March.” A Mumbai-based research head agreed, “I do not think prices would correct further. I understand that by as early as mid-January the prices would rally again.”

Industry officials attributed the downward movement in price, to weak demand due to very cold weather. One of the dealers in Mumbai said, “Though prices in the western region managed to sustain, incremental supply from the northern market has gone up.”

Cement prices in Mumbai, have remained consistent at Rs 276 per bag for wholesale buyers and retail prices have increased to Rs 280-282 per bag. In Gujarat, cement is selling at Rs 255 per 50-kg bag.

In the South, Chennai is feeling the pressure, as prices are expected to come down from the present Rs 290 in the wholesale segment. In Hyderabad, prices remained unchanged at Rs 275-280 per 50-kg bag.

CHINA: Taiwan Cement: Demand in China to Slow in 2012

To implementation of macro-economic control and delayed execution of some infrastructural projects, cement demand in China in the fourth quarter of this year has slowed. Taiwan Cement Corp. predicts China’s demand for cement will grow 7% to 8% in 2012, compared to double-digit growth in the past few years, and annual production capacity in China to total around 2.2 billion tons in 2012. 

The China Cement Association predicts China will churn out 1.88 billion tons of cement in 2012, accounting for 56% of global output, with China’s cement production to reach 2.07 billion tons this year. 

Taiwan Cement said China’s cement sector will see moderate recovery in the second quarter of 2012 after an off-peak season in the first quarter, believing sizable demand growth will be in the third quarter of 2012. 

Despite the expected sagging cement market, Taiwan Cement still believes cement prices to remain stable in the first half of 2012 because several large cement producers will engage in annual repair and maintenance in the first quarter. 

Institutional investors say Taiwan Cement will score 1.12 billion renminbi in after-tax earnings in the first three quarters of this year, with annual earnings to reach 1.4 billion renminbi in 2011. 

Taiwan Cement said it will see annual production capacity reach 60 million tons in China in 2012, and will speed merger and acquisition to raise capacity, targeting to be a top-10 cement producer in China by 2016.

INDIA: Cement demand will pick up by 2014, says Maloo

NAGPUR: Murli Industries, a city-based business group, which recently forayed into cement sectorplans to double the capacity utilization of its plant to 80% by 2012.

The company came up with a 3 million tonne a year plant at Chandrapur in 2010 which is now being run at 40% capacity. A 50 MW power plant has also been set up as a part of the venture.

Company's executive director Murli Maloo was conferred with Emerging Entrepreneur for 2011 award by Power Brands at a function held in London. Power Brands is a private research firm on Indian business brands headed by management guru Arindam Chaudhari. The award was received on Maloo's behalf by a company's representative in London at a function held on December 12.

Talking to TOI after receiving the award, Maloo said that the cement industry was expected to remain sluggish in the country till 2014. However, the western region which includes Maharashtra and Gujarat has scope of growth due to considerable demand-supply gap in the region.

There is a total demand of 20 million tonnes a year in the western region but the production stands at 12 million tonnes. Chandrapur is a major cement cluster with Murli Industries being the only greenfield project here in last 10 years.

"The overall demand is sluggish due to low infrastructure work carried out throughout the country. The situation is expected to improve only after 2014. Another 50 million tonnes capacity is declared to be added in the country's cement sector. The present installed capacity is 200 million tonnes," said Maloo.

The plant at Chandrapur has been set up with an investment of Rs 1,000 crore of which 70% is debt. About the challenges faced by the industry, he said rising interest rates were hitting the margin. Supply of coal, which is the major raw material for the industry, has been a constraint too. Western Coalfields Ltd has not been providing adequate quantity under the linkage system. Linkage is assured coal supply to an industry.

However, linkage itself is fixed at 75% of total requirement and the amount supplied finally is even less at only 25% of the linked quantum, said Maloo. Rest of the requirement is met through e-auction and imported coal which is a costly proposition, he said.

Murli Industries, which started off with a solvent extraction plant in 1992, now has stake in paper business too, with the total turnover standing at Rs 1,000 crore.

AFRICA: Portland Cement severs clinker supply deal with Bamburi

East Africa Portland Cement Company (EAPCC) has severed a multi-million shilling clinker supply contract with Bamburi, its anchor shareholder, ending a four-year deal that had raised questions over potential conflict of interest due to common shareholding and market rivalry of the two listed firms.

The cement maker has signed a new deal for supply of the raw material with rival National Cement, which will see EAPCC save bout Sh270 per tonne. Information on the signing of a new contract with National Cement is contained in EAPCC’s annual statement, and was also confirmed by embattled managing director of the cement firm, Kephar Tande. “We found out that other players were offering lower prices which means we could leverage on lower clinker costs to improve our profitability,” said Mr Tande mid this month.

Although EAPCC is a listed firm, it is still considered a state corporation since majority of its shares are held by the government — making it difficult to import its own clinker due to stringent Public Procurement Oversight Authority’s rules.

EAPCC’s decision to single source the supply of clinker, a key raw material used in the manufacture of cement, from Bamburi raised eyebrows when it was signed in 2007. Bamburi, through its parent company Lafarge, controls 41.7 per cent of EAPCC.

Lafarge also holds a 73 per cent interest in Bamburi Cement and until 2009 held a 15 per cent stake in the country’s other cement maker, Athi River Mining. Cross ownership of the three cement companies has in the past led to accusations of unfair business practices, including collusion in setting prices. EAPC and Bamburi have previously been embroiled in battles over control, with EAPC seeking to cut back on Bamburi’s say on its strategy, especially on the procurement of clinker. Mr Tande said Bamburi’s prices were higher than the average market’s. Last year alone, EAPCC bought clinker worth about Sh256 million from Bamburi.

No formal contract

Officials of Bamburi said that the supply deal with EAPCC was on a need basis, where the clinker would be delivered after payment has been received, claiming that there was no formal contract.

The government controls more than half of EAPCC’s stake, 25 per cent directly and 27.5 per cent through the National Social Security Fund, NSSF.

National Cement imports its clinker but has announced plans to build a clinker plant in Kajiado at a cost of Sh10 billion, to be funded through a syndicated loan from KCB and Standard Chartered.

National Cement MD Raval Narendra said EAPCC was now their biggest client. “We are the biggest clinker importers in the region now because we have established contacts in Europe and the Emirates, we signed a supply contract with EAPCC for 150,000mt for this year,” said Mr Narendra.

EAPCC also plans to set up a clinker plant in Kitui next year after it acquires a limestone-rich parcel of land in the medium term to ensure self-sufficiency. Increased competition has pushed EAPCC, which is estimated to control about 25 per cent of the local market, to seek production efficiency.

PARAGUAY: Al reparar horno, INC gastó G. 2.000 a G. 3.000 millones

Entre 2.000 y 3.000 millones de guaraníes costaron a la Industria Nacional del Cemento (INC) las reparaciones del horno de clínker, los mantenimientos realizados así como los ajustes para su mayor producción, según datos oficiales de la estatal.

De acuerdo con los informes de gerencia industrial, en principio se había previsto gastar aproximadamente 1.500 millones de guaraníes, pero luego vieron que los 2.000 millones fueron fácilmente superados. Incluso, la suma pudo haber llegado a los 3.000 millones de guaraníes, según los datos de INC.

De acuerdo con las explicaciones, esta vez no se realizaron mantenimientos comunes que siempre se realizan al paralizar el horno, sino que también se hicieron ajustes para poder producir mayor cantidad de clínker, que finalmente se traducirá en más ganancia para la empresa.

De hecho, el horno está produciendo su capacidad nominal de 2.000 toneladas por día desde su reinicio, que se realizó el 21 pasado tras 35 días de paro, según lo informado por José Benítez, funcionario de la planta de Vallemí. 

La idea es llegar a la capacidad máxima de 2.200 toneladas por día a partir del lunes, agregó Benítez, ya que se realizaron todos los ajustes correspondientes y, sobre todo, se tiene el fueloíl necesario para asegurar la marcha del horno.

Stock para dos meses

En ese sentido, indicó que a Paraguay ya llegaron 12.500 metros cúbicos de fueloíl para la producción de clínker, de los cuales más de 3.500 metros cúbicos se encuentran en planta y lo demás está siendo trasladado desde el puerto de San Antonio hasta Vallemí, por vía fluvial.

Esta cantidad de fueloíl asegura la producción hasta fines de febrero, apuntó el funcionario de planta, por lo que desde marzo quedará a cargo de Petropar la provisión del combustible.