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Cement industry trends: Asia

World Cement,


Indonesia

In May 2012, Semen Gresik, Indonesia’s largest cement producer, outlined plans to spend US$756 million on new cement plants in Sumatra and Java. The investment will take advantage of the country’s expanding economy and government plans to inject money into updating and expanding an inadequate infrastructure network. Semen Gresik and other cement producers in the country plan to invest US$5.3 billion over the next three years to boost production. The aim is to produce an additional 30 million tpa each year to reach 90 million t in 2017. China’s Anhui Conch Cement plans to begin construction of a 2.5 million tpa plant in South Kalimantan this year and is preparing to acquire land in Manokwari, West Papua, where it will build another plant.

Myanmar, Cambodia, Thailand and Laos

Semen Gresik is also planning to construct a cement plant in Myanmar where the local industry can only meet half of the domestic demand. Construction of the new 600 000 tpa plant might start in 2013 and be completed in three years. Thailand’s Siam City Cement Company (SCCC) is also looking to expand its investments in Myanmar, but at present the company is further ahead with its plans to invest US$150 million for the construction of a cement plant in Cambodia. Lao and Chinese entrepreneurs expect to invest more than US$100 million to develop the cement industry in Laos in response to the growing demands of the construction industry. An agreement on the prospecting and exploration of raw materials for a 1 million tpa plant in Ban Khoun Ngeun in Khounkham district, Khammuan province was signed between government representatives and the joint venture company in Vietiane in April 2012.

Vietnam

Overcapacity in Vietnam is causing major problems for the country’s cement producers. The industry has design production capacity for 70 million tpa, and plans to produce 60 – 62 million tpa, but domestic consumption is estimated to be 47 – 48 million t. The Vietnam Cement Industry Corporation (VICEM) has said that if exports reach 7 – 8 million t, the sector will still have 6 million t of surplus cement.

India

Over the past two years, the cement industry in India has experienced subdued demand growth and declining operating rates. While demand remained healthy across the north, west, east and central India, there was sluggish demand in the south. Almost 63 million t of capacity has come on stream over the past two years, of which 23 million t was commissioned in the southern region. It is reported that subdued demand coupled with higher than commensurate capacity additions has seen operating rates fall from 85% in 2009 – 10 to 74% in 2011 – 12. In 2012 – 13, muted demand together with excess capacities is likely to see capacity utilisation fall further. However, Crisil Research expects pan-India demand to grow by almost 8% y/y in 2012 – 13. This is likely to be spearheaded by demand from the west and the east. Gradual growth in the south is also predicted.

China

Investment in China’s cement industry dropped 8.3% y/y to US$22.85 billion in 2011. The Ministry of Industry and Information Technology (MIIT) reported that this was the first drop in five years amid the government’s suppressive policies to curb the industry’s overcapacity. The China Cement Association is saying that the country will produce 1.88 billion t of cement this year (compared with 2.07 billion t in 2011), accounting for 56% of global output. The government is continuing with moves to eliminate 250 million t of outdated production capacity during 2011 – 15 according to the MIIT’s five-year plan. Taiwan Cement has said it will see its annual production reach 60 million t in China this year and will speed up M&As to raise capacity, as it targets a position in China’s top 10 cement producers by 2016. In May, Italcementi announced that it had strengthened its presence in the country by becoming one of the main shareholders and strategic partner of West China Cement in Shaanxi Province.

Pakistan and Sri Lanka

The problems that beset Pakistan’s cement industry last year seem to be continuing in 2012. Although there has been a pick up in the domestic market, up 8.51% on the same period last year, exports have declined by 8.91%. Increased competition from the Middle East has badly affected the country’s export market. Earlier we mentioned that a Pakistani company was involved in setting up a cement plant in Iraq. It is another company, Karachi-based Thatta Cement, that will be setting up a cement grinding and packing plant at the Port of Hambantota in the south of Sri Lanka. The country’s war-torn north will get a small boost as the government is to re-open the cement plant at Kankasanthurei. The plant ceased operations in 1990 when the war between the security forces and the Tamil Tigers intensified. Sri Lanka currently imports about 10 000 t each month and the government wants to increase the production capacity of the local cement producers to stem the inflow.

Nepal

The news from Nepal is that several businesses have entered the cement market. The Cement Manufacturers Association of Nepal (CMAN) has said that the growing number of corporate houses moving into cement production will go a long way to making the country self-sufficient in cement production.

Central Asia

In 2012 – 16 the cement market in Azerbaijan is expected to grow annually by 2.5%. Wide scale infrastructural projects realised by the government, alongside extended civil construction should promote cement consumption. The country seems to have escaped the crisis in the Eurozone and is proving attractive for construction investment. Cement production in Kazakhstan is now about 8 million t and is expected to increase to 12.6 – 13 million t in the coming years. HeidelbergCement is currently building a 1 million tpa plant in Shetpe, near Aktau and this should begin production next year when demand dictates it will add a second line. The company is also converting a wet process plant in the north to the dry process. The Turkish company Polimeks is building a 1 million tpa plant in the Lebap region of Turkmenistan. The plant will manufacture special cement for the oil and gas industry. It is reported that Almalyk Mining and Metallurgical Complex and SC Uzstroymateriali will build a 600 000 tpa plant in Uzbekistan. The plant will also produce 100 000 t of white cement. Other current projects in the country include a new 1 million tpa dry process line that Bekabadcement should be completing as this issue goes to press; a US$128 million plant in Karakalpakstan which is scheduled for completion next year, and a production overhaul at Ahangarancement which is nearing completion.

Sources

Company reports and press releases, online news agencies, Reuters, the PCA, The Daily Star, The Jakarta Post, Business Standard and other newspapers, World Cement (April & June 2012 issues).

Written by Paul Maxwell-Cook.

This article is an abridged version of the full article, which appeared in the July 2012 issue of World Cement. Subscribers can view the full article by logging in

Read the article online at: https://www.worldcement.com/asia-pacific-rim/09072012/cement_market_export_expansion_asia_1160/


 

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