VIETNAM: Vietnam's cement market to face difficulties in 2012: experts

Vietnam's cement market will remain sluggish in 2012 because of continuing difficulties in production and business this year, reported the Vietnam News Agency on Monday quoting experts from the Vietnam Cement Association (VCA) as saying.

The VCA estimated that the domestic market would need 55-56.5 million tons of cement and 4-4.5 million tons of clinker and cement for export next year.

Meanwhile the industry will still experience many difficulties in production and business because of high input costs related to electricity and coal prices.

Tran Du Lich, a member of the National Assembly's Economic Committee, said that next year, the building material market would continue its slow growth due to the frozen property market, tightening credit policies and cuts in public construction project investment.

The loosening policy on credit would have little effect on the building material market, Lich said.

The domestic cement market has retained large stocks with a capacity hitting 60 million tons on a demand of 50 million this year.

Nguyen Tran Nam, deputy minister of construction, said that production costs had been driven up, increasing the retail price of cement, and the industry is in need of modern technology to increase production and lower operational and logistical costs.

Tran Van Huynh, chairman of the Vietnam Building Materials Association, said that the government and ministries should limit licensing wasteful cement factories with a small capacity of between 350,000-600,000 tons per year, and the Vietnam Cement Industry Corporation should link with joint ventures to manage demand and supply on a monthly basis.

The Ministry of Construction called on the Ministry of Industry and Trade and the Market Watch Team to adjust selling prices for electricity, coal and petrol while ensuring sufficient supply towards the cement industry to ensure market stability.

TAIWAN: Taiwan Cement Acquires China-based Tai Chang

Taiwan Cement Corporation, Taiwan’s largest cement producer, recently announced it has offered 700 renminbi, or NT$3.5 billion, to acquire Tai Chang Group which is located in Sichuan province, China. 

Tai Chang is situated in southern part of Chengdu of Sichuan Province, where there are few cement plants but cement demand there is on the rise because of the implementation of several large-sized public works, including hydropower plants and expressways. 

Thanks to the acquisition, Taiwan Cement will see annual production capacity increase by three million metric tons of cement to reach 60.3 million metric tons, becoming one of the top-three cement conglomerates in Sichuan province. 

Taiwan Cement said it will continually launch merger and acquisition cases because cement demand in southwestern China will be on the rise in the wake of increased construction of public works there. 

The company has projected to boost annual production capacity to 100 million metric tons in China in 2016, becoming one of China’s top-three cement producers. Up to date this year, the company has completed four acquisition projects in China. 

Institutional investors believed Taiwan’s leading cement producers, including Taiwan Cement and Asia Cement Corp., will be able to make more profits in 2012 than 2011 because of their expansion in the lucrative China market.

PAKISTAN: Cement performance tumbling in hard times

Last month had been a rather lull one for the cement sector of the country.

On a year-on-year, as well as on a month-on-month basis, cement dispatches largely depicted a falling trend.

Relative to October 2011, both local and export dispatches declined considerably, with a major dent witnessed from the southern region in local dispatches, and in exports to India.

Interestingly, it seems that the optimism observed when MFN status was granted to India has little weight looking at the 50 percent month-on-month decline in dispatches to India.

As for a year-on-year comparison with November 2010, the last month witnessed a dip of about ten percent in total exports, and five percent in local dispatches.

The year-on-year decline in local dispatches was led by a decline in northern sales, which dipped about seven percent versus the same month last year.

On the export front, while exports via sea and to Afghanistan decreased, those to India increased in November 2011 relative to November 2010.

The volumetric decline in local dispatches is plausibly attributed to very low government spending, with the management of some companies foreseeing subdued volumetric growth in the wake of curtailed PSDP expenditures.

On the export front, lower export prices in international markets, particularly in the Middle East and Africa, were responsible for impinging on export sales.

While Afghanistan witnessed a decline in November 2011 on a month-on-month and year-on-year basis, cement manufacturers are hopeful that construction work in Kabul and other areas will help bring up dispatches during the year to over 5 million tons.

A comparison of 5MFY12 against 5MFY11 makes this year appear better.

However, is likely due to the low-base effect of the previous year, during which sales were much-affected in the first half due to the floods.

Going forward, it appears that the cement industry will be facing a tough FY12.

There aren a lot of positives on the export side, except for hopes of exports to Afghanistan picking up, while local dispatches are likely to be affected because of lower PSDP allocations this fiscal year.

INDIA: Indian cement demand will be in double digits

Undettered by oversupply in the industry, Reliance Cement is planning ahead. Mr Sumit Banerjee vice chairman discusses with Pooja Sarkar the Anil Dhirubhai Ambani Group’s subsidiary plans of adding capacity and scouting for new locations measures that will pay off once the demand scenario improves in 2013-14.

Q - Please elaborate on the progress of your new projects.

A - We are setting up two plants one each in Madhya Pradesh and Maharashtra. Each will be of 5 million tonne capacity. The physical work at the MP plant has begun; it will start at the Maharashtra one in another six months. They will commence commercial operation by 2013 and end-2014 respectively. Besides, we are setting up a grinding plant at Butibori near Nagpur; that will be connected with our Maharashtra plant. We are bringing the grinding plant early, so as to couple it with the fly ash and power from the next door sister company, Reliance Power. It will start generation by mid 2012. The Butibori plant will also get commissioned and start kicking supplies in the Vidharbha market by the middle of 2012.

Q - What are your plans regarding investment in West Bengal and other parts?

A - We have plans of setting up plants in many parts of the country, including West Bengal. We are interested in Bengal, as it is the gateway to the markets of eastern India. Plus, there is a huge infrastructure gap in this area. We expect consumption demand in this region to grow significantly in the near future. We have given our proposal to WBIDC (the state’s industrial development corporation); we are awaiting the government’s approval. It will be a grinding unit, as there are no limestone reserves in the state but fly ash and slag are readily available.

Q - How much money has Reliance Cement expended till date? What are your CAPEX plans? And, are you looking for mergers and acquisitions?

A - This is a private limited company and the numbers will come in the public domain only when we go for an IPO. However, we have already spent a substantial amount of money and are committed in terms of placing of orders and putting up capacities, etc. That would entail much bigger amounts of money for our first two cement plants. We also believe in creating our own new capacities, as one can create according to one’s choice of scale, technology and design, choice of location, etc.

EEUU: Cement plant is fined $1.4 million

A CalPortland cement plant near the desert community of Mojave, Calif., has agreed to pay a fine of $1.4 million and spend $1.3 million on equipment needed to reduce emissions of pollutants that cause asthma and generate smog, the U.S. Environmental Protection Agency announced last week.

The penalties were part of a settlement that capped an investigation by the EPA and the U.S. Department of Justice into the CalPortland Co. facility, one of the largest emitters of nitrogen oxide pollution in California.

"This is one of the biggest fines against a cement facility," said Jared Blumenfeld, the EPA's regional administrator for the Pacific Southwest. "It comes at a time when the EPA is focusing on cement production as a sector which can make significant improvements in air quality nationwide."

CalPortland Vice President Scott Isaacson said, "We've chosen to settle this matter and we are not going to quarrel with EPA. Our focus will be implementation and resolution of the settlement, a process that will unfold over the next few years."

The 58-year-old plant employs 130 people and is one of the largest businesses in the unincorporated community of about 4,000 people best known as home to the Mojave Air and Space Port, a campus of more than 60 companies engaged in aerospace development, manufacturing and flight testing.

The EPA probe revealed that CalPortland made significant modifications at the plant that increased emissions of nitrogen oxide, sulfur dioxide and carbon monoxide without first obtaining a pre-construction permit and installing pollution control equipment required by the Clean Air Act. It also failed to submit accurate and complete permit applications, the EPA said.

The settlement ensures that the proper equipment will be installed to reduce annual pollution by at least 1,200 tons of nitrogen oxide and 360 tons of sulfur dioxide, said Ignacio S. Moreno, assistant attorney general for the environmental and natural resources division of the Department of Justice.

The plant, about 95 miles northeast of Los Angeles in Kern County, now emits about 3,200 tons of nitrogen oxides and 1,200 tons of sulfur dioxide per year, the EPA said.

CalPortland has one year to install and operate emission controls for nitrogen oxide and sulfur dioxide, the EPA said.

Nitrogen oxides are linked to health problems, visual impairment and asthma. Sulfur dioxide, in high concentrations, can affect breathing and aggravate existing respiratory and cardiovascular diseases.