EGYPT: Gas prices increase to $8 per million BTUs for cement industry

The government has raised gas prices for cement factories to $8 per million British Thermal Units (BTUs) compared to $6 previously, while fuel oil increased from EGP 1,500 to EGP 2,250 per tonne.

An official source from a cement company who requested anonymity anticipated cement prices to increase in the coming days due to higher production costs.

“Energy represents 60% of cement production costs and any increase in energy prices have a direct influence on final prices,” said the source, “We do not yet know the impact of increased energy prices on consumers as cement prices are also affected by supply and demand.”

“Gas is generally not available and we are experiencing a large and persistent deficit in its supply which has reduced our production capabilities,” he said.

He added that the problem faced by cement factories is not so much the price as its availability.

A number of cement companies operating in Egypt are looking to use coal as an alternative source of energy this year.

The source ruled out these companies’ resorting to importing gas at this time due to high prices for the process, valuing up to $ 14m BTUs.

VENEZUELA: Iran to inaugurate cement plant

Iran will inaugurate a cement plant in Venezuela within the next few months, Iranian Mines and Mining Industries Development and Renovation Organization Managing Director Mehdi Karbasian said.

The plant will have a capacity to produce one million tons of cement per year, the Mehr News Agency quoted Karbasian as saying on Saturday.

In 2012, IMIDRO signed an agreement to establish the cement plant in Venezuela and started the work, but the construction operations were halted due to budget deficit, he noted.

Iran exported around 18 million tons of cement to 24 countries, including Iraq, Azerbaijan, Turkmenistan, Afghanistan, Russia, Kazakhstan, Kuwait, Pakistan, Qatar, Turkey, the United Arab Emirates, Georgia, Oman, India, and China 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.

PAKISTAN: Cement sales likely to pick up further this year

Thanks to the uptick in domestic demand, cement sales have remained robust in line with expectations of the industry and analysts in fiscal year 2013-14 (FY14) as they have eclipsed the previous peak recorded in 2009-10.

With this, what is important to see is that the analysts are predicting even further pickup in sales in the new fiscal year in the face of growing construction activities as the government focuses its energies on building major dams and highways.

Overall, cement sales (domestic and overseas) jumped a healthy 2.51% in FY14, standing at 34.27 million tons compared to 33.43 million tons a year earlier.

“The increase of 2.5% in cement sales is a healthy growth and it will further rise in the next 12 months. I think demand will touch 35.5 million tons in 2014-15, recording a jump of 3.6%,” Saad Hashmi, analyst at Standard Capital Securities, told The Express Tribune.

“Only the recently inaugurated Dasu Dam is going to create a demand for one million tons of cement over the next five years,” he added.

On June 20, just before the close of the fiscal year on the 30th, the All Pakistan Cement Manufacturers Association (APCMA) – the lobbying group of all cement-makers in the country – expressed the hope that overall dispatches in FY14 were expected to remain at an “all-time high”.

Though sales hit a record high, they were just marginally higher than the previous peak touched in 2009-10. Sales in FY14 stood at 34.27 million tons compared to 34.24 million tons in FY10, up just 0.08%.

A gradual improvement in economy and growing construction activities, especially in the wake of higher allocation by the government for the Public Sector Development Programme, are the reasons behind the expected rise in cement demand over the next 12 months.

In FY14, the federal and provincial governments set aside over Rs1 trillion for development schemes with the Centre alone targeting to spend Rs525 billion.

The growing construction schemes are mainly visible in large cities. According to the Economic Survey of Pakistan 2013-14, the construction sector posted an exceptional growth of 11.3% in the fiscal year ending June 30, 2014 compared to a negative growth of 1.7% in FY13.

In the same way, analysts say, domestic cement demand, compared to overseas sales, will primarily support overall dispatches in the current fiscal year.

Based on local demand, prospects of the cement industry look better and this comes at a time when exports are dropping on the back of a sharp appreciation of the rupee against the dollar in the past six months.

Apart from growing appetite for cement, the local market is also offering improved profit margins to the companies in stark contrast to overseas markets where they face stiff competition from cheap Iranian and Chinese cement.

Another major reason why industry officials and analysts are upbeat is the increasing capacity utilisation in the industry over the years. It is touching 80%, a six-year high, something that the manufacturers had achieved in FY08.

GHANA: GHACEM still producing, despite cement shortage

GHACEM Limited has responded to the debate over the scarcity of cement on the Ghanaian market and refuted speculations that the company has reduced production. The company described as wrong, the notion that it has contributed to the scarcity by producing below expectation.

On the contrary, the company insisted it currently produces an average of about 58,000 tonnes of cement a week, a feat it described as commendable. In an interview with the company’s Strategy and Corporate Affairs Director, Dr. George Dawson-Ahmoah, he said GHACEM was currently facing two challenges in attempts to arrest the shortage.

It identified the first as erratic power outages affecting production especially at the Takoradi factory of the company, and the second as “the current pressure on the market.” He observed that “for one reason or the other, other cement manufacturers and importers of cement cannot meet the demand in supply” due to the depreciation of the cedi."

This, he said, has caused importers to refuse selling their products, with the congestion at the port in Togo also hindering the operations of Diamond Cement, Aflao, which imported its raw materials from that country.

Dr. Dawson said the aforementioned challenges have “pushed pressure” onto GHACEM because an average of about 40,000 tonnes of cement expected from other local manufacturers and the importers are now missing in the market “Now the pressure is on us to meet this huge shortfall in production,” he noted, calling for immediate action to address country’s electricity challenges and the depreciation of the cedi.

Ghacem he reiterated has the capacity, technical expertise, raw material and the ability to meet the country’s increasing demand for quality cement hence Government should do its part especially improving power supply in the Takoradi Factory.

NIGERIA: Cement Manufacturers Backs Reps On Quality Review

Major cement manufacturers have aligned with the House Representatives that the 42.5mpa grade should be the minimum quality standard produced in the country, while all expired ones be withdrawn forthwith from the market.

The manufacturers, including Bua, Ibeto and Dangote, said long before the quality review by the Standard Organisation of Nigeria (SON), they have been producing the new quality grade and nursed no intention to do otherwise.

It would be recalled that the Dogara ad-hoc Committee on Cement Composition and pigmentation, had after a public hearing from stakeholders submitted its report to the House of Representatives, in which it asked the SON to commence implementation of its cement standardization and that manufacturers should retool their machineries for the production of the higher grade of cement.

Its recommendation, according to the report, was based on the fact that if offered the chance of choosing between 32.5 and 42.5 grades of cement, consumers would choose the 42.5 higher grade and that because those employed for building structures are mostly non-professionals it would be in the national interest to adopt a cement grade that is less susceptible to wrong application.

Chairman of Bua Cement, Abdulsamad Rabiu said after a meeting in Lagos that what the lawmakers has done was a patriotic one that should be supported by all manufacturers with the safety and well-being of the people at heart.

According to him, Bua which operates the oldest cement plant in Nigeria, Cement Company of Northern Nigeria (CCNN) has been producing the higher grade of cement right from the time of importation till the era of local production and that his company sees nothing wrong with the Reps decision.

"As a responsible corporate entity, with the interest of the nation and its people at heart, we value the lives of our people more than profit, and therefore supports our lawmakers"

He said what cement manufacturers and indeed other stakeholders should do is to cooperate with the SON as the regulating authority so that the menace of structure failures could abate.

Rabiu said the BUA Cement brand is different from others because it is of 42.5 and 52.5 texture grade. This is the highest quality texture which mixes and dries easily. Most companies import lower quality. Our prices are also competitive within the industry and our delivery process is excellent.

In its own reaction, the management of Dangote Cement said it was poised to giving all necessary support to government and its agencies to succeed in the bid to stem the spate of building collapse through production of quality cement that can stand the test of time.

Its Group Managing Director, Devakumar Edwin explained that Dangote Cement has never produced a lower grade of cement and that the quality review by SON, which was also affirmed by the federal lawmakers who investigated the disturbing menace of structure failures only confirmed its long held view that Nigerians deserve the best quality of cement.

Corroborating the lawmakers, Edwin stated that the 42.5 grade of cement as the minimum standard to be produced is the best for the country, given that most builders are non-professionals who knew little or nothing about the right application of cement as a key component of construction.

"I say this because, with the strength of the 42.5, it will be less susceptible to wrong application and therefore saves the people the hassles of how best to apply cement. Anything contrary to promotion of 42.5 as the better grade by any manufacturer could only be motivated by profit.

"As for us in Dangote Cement, we have the understanding that the new standard which prescribes the production and use of the 52.5 grade of cement for the construction of bridges; the 42.5 grade for the casting of columns, slabs and moulding of blocks and the 32.5 grade for plastering only, is in line with the current prevailing international standards to which we pledge our full support.

"As a responsible and patriotic corporate citizen with the interest of Nigerians as our primary concern, we state our unreserved support for the new cement standards especially as this will help to further improve safety in the Nigerian building and construction industry."