World Cement - cloudfront.net

January 2018

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ADVA NTAG E 4+ 4 LM 70.4+4 CS The United Cement Company of Nigeria (Ltd), UNICEM, commissioned their new cement plant successfully: The Loesche mill type LM 70.4+4 CS in operation with the new COPE drive at the cement plant 2 Mfamosing in Cross River State, Nigeria. With the state-of-the-art COPE drive the LM 70.4+4 CS reached the guaranteed values after only 40 operational hours.

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CONTENTS ADDITIVES & GRINDING AIDS

03 Comment 05 News 12 Keynote: Elusive Growth Imran Akram, IA Cement, looks at the cement industry in 2018. 88 Five Minutes With... Per Mejnert Kristensen President of the Cement Division, FLSmidth.

REGIONAL REPORT: RUSSIA & CIS 17 Cement in the CIS Alexander Ignatov, Ignatov & Co. Group, analyses the largest cement markets in the CIS. 24 Launching a New Line Alexander Sharonov, LafargeHolcim, discusses the construction of a new line at LafargeHolcim’s cement plant in Volsk.

LOGISTICS 29 The Keys to Successful Terminal Design Javier Martinez Goytre, GlobBULK Consulting, outlines the key points to consider in cement terminal design.

AUTOMATION & PROCESS CONTROL 37 It’s not a Small Project Jens Büschl and Oliver Kurtnacker, Axians, explore the world of automation, and the best ways to make it smarter. 43 Displaying the Benefits Joel Benzing, Eaton, details the application of dashboards in electrical equipment operation. 48 Fuzzy Logic: Anything but Old Fashioned Tim Fröhlich and Tobias Wehry, OPTERRA Zement GmbH, and Dirk Schmidt, KIMA Echtzeitsysteme, describe the application of advanced mill control systems at the OPTERRA Karsdorf cement plant in Germany.

53 Improving Strength with a New Grinding Aid Denise A. Silva and Richard Sibbick, GCP Applied Technologies Inc., discuss testing of a new grinding aid and early-strength enhancer for cements.

ALTERNATIVE FUELS 57 A Market for Waste Rod Savage, International Waste-to-Energy, discusses the global refuse-derived fuels (RDF) markets. 60 A New Year for Alternative Fuels Peter Streinik, UNTHA, asks what 2018 will hold for alternative fuel production. 65 Economical RDF Joachim Wunsch, ALBA Nordbaren, answers questions on the company’s new RDF plant and the Linder Polaris 2800 single-shaft shredder at its heart.

WORLD CEMENT INTERVIEW 68 Success in the Sands of Kuwait World Cement speaks to Ahmad Ghassan Al Khaled, CEO of Kuwait-based building materials company, ACICO Group.

AIR POLLUTION CONTROL 73 Effective DSI Ian Saratovsky, Gerald Hunt, and Martin Dillon, Lhoist North America, discuss the critical criteria contributing to dry sorbent injection system effectiveness.

PLANT MAINTENANCE 79 The Battle against Corrosion Greg Odenthal, International Technical Ceramics LLC, and Steve Williams, JC Industrial Services, summarise baghouse corrosion and provide a solution for its elimination.

STORAGE FACILITIES 83 Data-Driven Decisions Lana Erickson, BinMaster, describes the available options for wholistic inventory management.

January 2018

THIS MONTH’S COVER FIVES TECH + FIVES TEAM FIVES’ EXPERTISE COMBINED WITH FCB PIONEERING SOLUTIONS TO GET THE HIGHEST LEVELS OF EFFICIENCY AND PLANT PERFORMANCE www.fivesgroup.com Cement | Minerals

As a supplier of high-performance technologies for cement and minerals industries, Fives provides tailor-made solutions for optimised efficiency of installations. Besides the reliable and steady FCB B-mill, the FCB Horomill® is designed for maximising the use of cement additives or extenders, without water injection. The FCB TSV™ classifier further improves the mill efficiency, leading to significant specific energy savings. In the field of pyroprocessing, Fives integrates the FCB Zero-NOx Preca, designed to maximise the use of alternative solid fuels, with no NOX production. In addition, the TGT® Filter limits the plant’s emissions to the lowest levels.

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SUBSCRIPTIONS Annual subscription (published monthly): £160 UK including postage/£175 (e245) overseas (postage airmail)/US$280 USA/Canada (postage airmail). Two year subscription (published monthly): £256 UK including postage/£280 (e392) overseas (postage airmail)/US$448 USA/Canada (postage airmail). Claims for non receipt of issues must be made within 4 months of publication of the issue or they will not be honoured without charge. Applicable only to USA and Canada WORLD CEMENT (ISSN No: 0263-6050, USPS No: 020996) is published monthly by Palladian Publications, GBR and is distributed in the USA by Asendia USA, 17B S Middlesex Ave, Monroe NJ 08831. Periodicals postage paid New Brunswick, NJ and additional mailing offices. POSTMASTER: send address changes to World Cement, 701C Ashland Ave, Folcroft PA 19032 Copyright© Palladian Publications Ltd 2017. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the copyright owner. All views expressed in this journal are those of the respective contributors and are not necessarily the opinions of the publisher, neither do the publishers endorse any of the claims made in the articles or the advertisements. Uncaptioned images courtesy of www.shutterstock.com Printed in the UK.

JONATHAN ROWLAND, EDITOR The opening of a new year always provides an opportunity to reflect on what may lie ahead. Here’s my pick of things to watch. Mergers and acquisitions (M&A). 2017’s big deal saw Irish multinational CRH launch a successful US$3.5 billion bid for the largest remaining independent US producer, Ash Grove Cement. Beyond this, however, the trend was for smaller deals. These smaller, regionally-focused deals seem more likely to continue in 2018, especially with CRH, a perennial dealmaker, apparently swearing off further major deals (at least for now), after last year’s splurge. LafargeHolcim. With a new man in charge and intent on making his mark, the Swiss multinational could be in for further changes beyond the leadership and organisational shakeup announced at the end of last year (see p. 5). A strategic review, expected to report back in March and announced with the company’s full year results, will give more details of the company’s direction under Jenisch. The company also remains embroiled in a scandal over alleged payments that predecessor company, Lafarge SA, made to terrorist groups in Syria when operating a cement plant in the country. The scandal has already claimed the job of former CEO Eric Olsen. He resigned last year, after a highly critical internal report admitted that the company made “significant errors of judgment”, although the company said at the time that it did not hold Olsen responsible. Any hope that Olsen’s departure might draw a line under the story have been dashed, however, as French investigators placed him under formal investigation towards the end of last year, charging him with funding terrorist groups. It’s a story that seems likely to rumble on through the year: not a happy prospect for the man now occupying the CEO’s chair. US tax cuts and midterms. 2018 should also continue to be a lively year in US politics. President Donald Trump will be buoyed by the successful passage of tax reform through Congress and into law: the first major legislative achievement of his term in office. Additional accomplishments may be difficult, however, as eyes begin to turn to the midterm Congressional elections in November. A Republicans loss in the House of Representatives (a distinct possibility on current poling), would stymie any furthering of Trump’s legislative agenda, likely forcing the president to rely on executive orders to pursue his aims. It would also renew talk of impeachment – although the chances he will be removed from office are slim. Meanwhile, the US economy seems likely to continue ticking over nicely, despite the shenanigans in Washington DC, with analysts expecting growth of around 2.5% – partly on the back of Trump’s tax reform. This should support rising cement demand. Whatever happens, World Cement – now in our 90th year – will continue to provide the industry coverage you have come to expect with our blend of industry news, technical articles, and plant tours. Observant readers will also notice a change to the end of the magazine: ‘Five Minutes With…” is a new series of short interviews with key players in the global cement industry. Per Mejnert Kristensen, President of FLSmidth’s Cement Division, kicks us off on p. 88 of this issue. Do let me know what events and trends you will be watching this year – either by email ([email protected]) or through our various social media channels. I look forward to accompanying you on the journey through 2018.

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WORLD NEWS South Africa PPC to remain independent South Africa’s largest cement producer, PPC, will remain independent, after rebuffing is final suitor, LafargeHolcim. According to a release to the Johannesburg Stock Exchange, the PPC board has advised the Swiss multinational that “it does not wish to pursue a transaction.” LafargeHolcim also confirmed in a press statement that is was not longer in talks with PPC. “The independent board is of the view that PPC shareholders’ value is best served by optimising its current business strategy,” the South African company said. PPC’s business strategy includes the construction of a “mega plant” in the Western Cape of South Africa,

a semi-brownfield project the company announced at the end of November. The new plant will be located at the company’s current Riebeeck site. PPC will also focus on developing its existing investment pipeline in the rest of Africa, as well as optimising operations to “further improve competitiveness in a subdued market.” LafargeHolcim was the fourth company to withdraw its interest in PPC, following Nigeria’s Dangote Cement, Ireland-based CRH, and Fairfax Africa Investments, a Canadian investment company that had hoped to force a merger between PPC and its rival, South Africa’s second-largest cement maker, AfriSam.

International Jenisch shakes up LafargeHolcim’s Executive Committee New CEO, Jan Jenisch, continues to put his mark on LafargeHolcim, announcing a series of changes to the company’s management team as part of a shake up of the company’s Executive Committee. The changes include a rationalisation of regional groupings to reflect geographic and business similarities, as well as new heads of the North American and European businesses. The 30 largest country organisations will also now report directly to the Executive Committee. “Countries will be fully empowered and accountable for market strategies, cost discipline, and results,” said Jenisch is a press release. The new Executive Committee will comprise Jenisch, as well as the heads of five regional businesses and three corporate divisions, including new Chief Finance Officer (CFO), Géraldine Picaud. Marcel Cobuz and René Thibault will also join the Executive Committee as Head Region Europe and Head Region North America, respectively. A 17-year veteran of the building materials giant, Cobuz replaces Roland Köhler, who is retiring after more than three decades with company, although he will continue in the role of Chairman of the LafargeHolcim Foundation for Sustainable Construction and as a non-executive director in local subsidiaries. A Romanian and French citizen, Cobuz has previously held operational roles in six countries, including as Country CEO in Indonesia and Iraq. He is currently Country CEO of Morocco.

Thibault replaces Pascal Casanova, who is leaving the group. A Canadian citizen, Thibault joined LafargeHolcim in 1989 and has been CEO of Western Canada since 2012. In other changes to the regional businesses, LafargeHolcim’s Mexican business will join Region Latin America, while Australia and New Zealand – previously part of Region Europe – will join Region Asia. China and Trading will report directly to the CEO. In addition, the company will merge its two global business functions – Performance & Cost and Growth & Innovation – into one new corporate department, Growth & Performance. The new department will be headed by Urs Bleisch, currently Head of Performance & Cost and a Member of the Executive Committee. Gérard Kuperfarb, Head of Growth & Innovation, has decided to pursue a career outside the Group. The change “will enable us to simplify the interfaces with the countries and to operate a more agile global platform for best demonstrated practice,” the company said. In a final announcement, the company said Picaud had joined this month, earlier than previously announced. She took over the CFO responsibilities on January 3. Picaud is joining from Essilor International, an ophthalmic optics company, where she has been Group CFO since 2011. She had been due to join LafargeHolcim on 1 February.

January 2018 World Cement

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WORLD NEWS IN BRIEF

EVENTS Slag & AshTrade Americas Conference & Exhibition 2018 22 – 24 February 2018 Cancun, Mexico www.gmiforum.com Alternative Raw Materials & Fuels 2018 22 – 24 February 2018 Cancun, Mexico www.gmiforum.com bauma CONEXPO Africa 2018 13 – 16 March 2018 Johannesberg, South Africa www.bcafrica.com AFCM Symposium & Exhibition 2018 04 – 06 April 2018 Bandung, Indonesia www.afcm2018indonesia.com Africa CemenTrade Summit 2018 18 – 19 April 2018 Dakar, Senegal www.cmtevents.com/ aboutevent.aspx?ev=180415& Hillhead 2018 26 – 28 June 2018 Buxton, UK www.hillhead.com International VDZ Congress 2018 26 – 29 September 2018 Düsseldorf, Germany www.vdz-online.de/ en/latest-news/events/vdzcongress-2018/

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India UltraTech starts construction on Rajasthan plant UltraTech Cement has begun construction on a new greenfield cement plant in Pali in the Indian state of Rajasthan. The 3.5 million tpy plant will bring the company’s capacity in the state to more than 13 million tpy. The start of construction was marked by an innovative digital groundbreaking ceremony performed by the Chief Minister of Rajasthan, Vasundhara Raje Scindia, from her officer in the state capital, Jaipur. The Chief Minister was joined by Chairman of UltraTech Cement, Kumar Mangalam Birla, and the company’s Managing Director, K. K. Maheshwari. “Rajasthan has emerged as one of the fast-growing markets in north India, owing to several ongoing government infrastructure development initiatives,” said Birla. “UltraTech is proud to partner Rajasthan in its growth initiatives, by adding to its existing capacities of cement plants.” The investment in the new cement plant is one of a number undertaken by UltraTech’s parent company, Aditya Birla Group, in the state. To date, these investments has totalled more than INR90 billion with nearly INR100 billion in further CAPEX planned, including the Pali plant. “The country is in a positive mood today,” concluded Birla, who welcomed recent structural changes to the Indian economy made by the government of Prime Minister Narendra Modi. These reforms “lay a strong foundation for the next round of growth for the nation and the states.” The plant will bring the company’s portfolio to 50 cement plants across India, as well as 103 ready-mixed concrete plants.

Bolivia FLSmidth receives order for VRM Danish engineering company, FLSmidth, has received an order from Cooperativa Beoliviana de Cemento, Industrias y Servicios (COBOCE Ltda) in Bolivia for a new OK 43-4 vertical roller mill (VRM). The VRM will be installed at the COBOCE cement plant in Irpa Irpa in central Bolivia. The order includes engineering, procurement, and supply of a complete range of equipment from mill feeding bins, grinding, and cement transport. FLSmidth MAAG Gear will supply the planetary gear units, FLSmidth Airtech will supply the fabric filters, and FLSmidth Automation will supply plant automation.

India J.K. Cement to expand its Mangrol plant J.K. Cement is to begin work on expanding its Mangrol cement plant by the end of the current fiscal year, according to Rajnush Kapur, the company’s Head of Grey Cement. Speaking to the Economic Times, Kapur said the 3.5 million t expansion project would be commissioned by the end of 2019. The Mangrol plant in Rajasthan currently has capacity of 2.25 million tpy of grey cement and is the third largest in J.K. Cement’s fleet, behind Nambahera, also in Rajasthan, and the Muddapur plant in Karnataka. The Mangrol expansion is only one of a number of projects currently in the works at J.K. Cement, which is aiming to almost double its cement production capacity to 18 million tpy over the next four years. According to the company’s 2016/17 Annual Report, it had 10.5 million tpy of capacity with production of 6.77 million t in the 2016/17 fiscal year.

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WORLD NEWS Nepal Chaudhary Group orders VRM from Loesche for new cement plant

India Penna Cement Industries orders new VRM for Boyareddypalli plant

Loesche, has received an order from the Chaudhary Group for a vertical roller mill for coal grinding. Chaudhary Group is a Kathmandu-based company with a cement plant in the Palpa region of central Nepal. The mill will have a capacity of 25 tph. The order was received via German engineering company, KHD Humbuldt Wedag, which is constructing a new clinker plant for Chaudhary Group. The LM 26.3 D mill will be in operation by the end of 2018 with a throughput of 50 tph, 25% R on 90 µm. The new production unit has been designed with a capacity of 3900 tpd of ordinary portland cement. Limestone will be extracted from a nearby quarry. Founded in 1968 by Lunkaran Das Chaudhary, Chaudhary Group is a diversified industrial conglomerate. In addition to cement, the company operates in the biotech, education, electronics, food and beverages, telecoms, and financial services sectors, among others.

Loesche has won an order from Penna Cement Industries Ltd. The vertical roller mill (VRM) is to be used at the cement plant in Boyareddypalli in the state of Andhra Pradesh, around 200 km north of Bangalore. The VRM, which will be equipped with four rollers, will grind petcoke with a throughput capacity of 52 tph, 3% R on 90 µm. The delivery of the order will be managed by Loesche India and is to take place at the beginning of next year. Founded in 1991 and commissioned in 1994, Penna Cement Industries is one of the largest cement manufacturers in India with a production capacity of 7 million tpy. The family-run company is primarily active in the expanding south and west of the country. As a result of positive market developments, Penna Cement is increasing production capacity at the Boyareddypalli plant, which was erected in 2008, from 2 million tpy to 4.6 million tpy.

Poland LafargeHolcim invests PLN 160 million in modernisation projects LafargeHolcim invested PLN160 million into its Polish business in 2017, the company said in a recent press release, including a PLN150 million upgrade of the Kujawy cement plant. Located in the Pomeranian Special Economic Zone, the Kujawy project included the reconstruction of the kiln, construction of new cement loading terminals, the creation of a fully-automated laboratory, and construction of an alternative fuel (AF) preparation hall. “This year’s investment in the Kujawy cement plant is one of the most important and biggest projects executed by the LafargeHolcim Group,” said Stanisław Sobczyk, Director of the Kujawy plant. “Our aim is to make the facility located in Kujawy the most modern plant of this type in the world. That is why, after the project is completed, we plan to continue investing in the modernisation and expansion of the facility.” The construction of a new 2.5 ha. preparation hall for AFs will allow the plant to burn plastics, paper, textiles, or shredded tyres. These AFs will satisfy 80% of the plants overall heat requirements for firing clinker. The hall will house AF production machines and installations, as well as acting as a storage area for both waste and processed fuels.

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“Based on our experience, the fuel supplied by external manufacturers does not meet the quality standards and the irregularity of shipments does not ensure stable operating conditions for the kiln.” said Marek Michalski, Fuel Preparation and Production Director at Lafarge in Poland. “The plant’s demand for AFs increases each year. Our aim is to have full control over the process, from acquisition of waste, through processing and storage, to burning to generate power. The amount of fuel will not be increasing, thanks to the high-quality process that will become more and more efficient.” In addition to the Kujawy upgrate, Lafarge in Poland invested PLN10 million in modernisation works at its Małogoszcz plant in the south of the country. The work was aimed at optimising processes at the plant, as well as reducing its environmental impact. According to Jacek Patyk, Director of the Małogoszcz plant, the work included the modernisation of the intake channel to the radiator of the rotary kiln, renovation of the kiln exhaust and the installation of a new raw mill drive. The exhaust stack of rotary kilns #1 and #2 also underwent extensive renovation, which extended its useful life by at least 10 to 15 years.

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WORLD NEWS IN BRIEF

IN BRIEF CEMEX Holdings Philippines has received the Environmental Compliance Certificate for a new cement production line in Antipolo in Rizal Province, to the east of the Philippine’s capital, Manilla. The environmental certificate was granted by the Philippines Department of Environment and Natural Resources and covers a 1.5 million tpy cement production line.

Australian cement maker, Adelaide Brighton, has signed new gas and electricity contracts, covering the supply of electricity to the Birkenhead and Angaston cement plants, as well as the Klein Point quarry. Electricity will be supply by Infigen Energy, an ASX-listed energy company, specialising in renewable energy. Gas will be supplied by Beach Energy, an Adelaide-based oil and gas E&P company.

Nigerian cement maker, Dangote Cement, is to offer its cement for sale online, following an agreement with e-commerce platform, Jumia Nigeria. Under an initial pilot scheme, customers in Lagos, Abuja, and Port Harcourt will now be able to purchase 50 kg bags of Dangote Cement on Jumia. A minimum order of 300 bags will apply. The new initiative also aims to reduce online scams, said Chux Nogbolu, Key Account Director at Dangote Cement. “Dangote Cement decided to work with Jumia Nigeria based on its credibility and excellent performance over the years in online shopping management.”

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India NCB seminar takes place in New Delhi The 15th NCB International Seminar on Cement, Concrete, and Building Materials was held on 5 – 8 December at the Manakshaw Centre in New Delhi, India. The event attracted more than 1200 delegates, including 90 overseas delegates from 21 countries. Nearly 80 companies also took part in the associated exhibition. The conference was inaugurated via video link by Suresh Prabhu, India’s Minister for Commerce and Industry, who drew attention to the country’s depleting limestone and other resources. The minister called for conservation of these natural resources through the development of alternative building materials, while also asking the cement industry to make use of alternative fuels and raw materials. Speaking in his presidential address, Dr S. Chouksey, Chairman of the NCB and Director of JK Lakshmi Cement, pointed to the current overcapacity within the cement industry in India, which currently stands at around 100 million t. Outlook for demand is more positive, continued Dr Chouksey, noting that a number of Indian government policies, including the Make in India, Clean India mission, and 100 Smart Cities programmes, have the potential to spur cement demand to over 600 million t in 2022. Further keynote presentations included one from Ajay Kapur, Managing Director of Ambuja Cements, who provided ‘The Industry Perspective’, while Mahendra Singhi, CEO of Dalmia Cement (Bharat) spoke on the ‘Future Outlook and Challenges’. Both also picked up themes mentioned by the minister. Kapur noted that thermal substitution rates for alternative fuels at Indian cement plants is currently around 4%, compared to 40% at European cement plants. “I am positive that the cement industry can provide a permanent and sustainable solutions for waste management,” said Kapur. “This is why it is imperative for government support in the form of policy initiatives to promote the use of alternative fuels and raw materials.” Singhi meanwhile commented on the underutilisation of flyash in India, noting that some 100 million tpy remains unused today, with a significant increase in flyash production from the coal-fired power industry expected in the next few years. “There is a huge potential for utilising flyash by the cement plants, which will not only help the environment, but will also help release significant areas of land from having to be used as dumps by the thermal power plants.” On the technical side, Ashutosh Saxena, Director General (Acting) of the NCB provided ‘A Technological Perspective on the Cement Industry’. Almost 200 additional technical papers in 25 sessions were also presented at the conference. In addition, a special technical session and panel discussion was held by the World Business Council for Sustainable Development at the event. National Awards for Energy Efficiency, Environmental Excellence, and Quality Excellence rounded off the event with Dalmia Cement picking up six awards: four for the Dalmiapuram plant and two for the Aliyalur plant. UltraTech Cement’s Kotputli and Vikram plants were also among those plants recognised by the NCB.

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$LUSIVE &ROWTH Introduction

Cement demand is struggling. Global growth is likely to be flat in 2017 and up by just 1.5 – 2% in 2018. This would represent five years of sub-trend growth. Western Europe is the principal bright spot, with demand expected to accelerate towards 3% in 2018. Global GDP is growing much faster than cement demand, with forecasts of 3.7% in both 2017 and 2018. Cement consumption struggled in 2017, with the big markets of the US, China, and India all below expectations. Middle Eastern demand fell sharply, due to regional tension and low oil prices. African consumption is expected to record its first decline in more than 20 years, due to sharp falls in its largest markets. In contrast, pricing trends were far more positive. There were major increases in a number of emerging markets, with a bottoming out in markets where prices had fallen sharply. Seaborne trading markets recorded a significant rebound in pricing in 2017, as exports from China dropped sharply, improving the supply-demand balance. Total trading volumes are sluggish, due to a lack of import demand. Freight costs continue to rise sharply from their lows, reducing the viable transport radius.

Western Europe: the only positive surprise The long-awaited recovery in Western European cement demand is finally occuring. Despite the impact of Brexit and some political uncertainty, IA Cement expects strong growth of 2.5 – 3% in 2018 cement consumption. Pent-up demand and an end to government austerity programmes are the key drivers. As a result of the economic rebound, the European Central Bank (ECB) will halve its quantative easing (QE: money printing) from E60 billion to E30 billion per month from January – and may phase it out altogether in 2018. The German economy is firing on all cylinders, with strong cement demand likely, irrespective of political uncertainty. The French construction market is also recording solid growth, with tax incentives for property investment recently renewed for another four years. The Brexit vote has led to UK growth drying up; demand is

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Imran Akram, IA Cement, looks ahead to the cement markets in 2018.

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expected to be flat in 2018. Spanish housing is finally recovering, leading to a strong turnaround in cement demand, albeit from very low levels. Growth in the Nordic countries remains solid, despite ongoing concerns about overheated housing markets. Italy is still struggling, due to a lack of credit, but even here the market is predicted to recover slightly in 2018.

tax rate is expected to be cut from 35% to 20%, alongside a host of other measures totalling US$ 1.4 trillion over the next decade. This could deliver a boost to commercial construction, helping US consumption break out of its current modest growth range.

Latin America: recovery underway Eastern Europe: Russia stabilises The Russian market appears to have weathered the effect of sanctions, and housing is recovering after significant reductions to interest rates. Several Eastern European countries face labour shortages, which is driving up wages and housing demand. Austerity programmes have largely come to an end, and infrastructure spending is rising once more. Poland has struggled to spend much of its allocated EU subsidies thus far; there could be a catch-up effect over the next three years. IA Cement anticipates solid growth in cement demand of 2 – 2.5% in 2018 across Eastern Europe.

After three painful years, a better outlook beckons for Latin American cement consumption in 2018, with growth of 1%. Argentina is growing strongly, following the reforms enacted by President Mauricio Macri. In Mexico, a small growth in volumes is predicted, while price increases are expected to moderate in 2018. Colombia is poised for solid demand growth in 2018, as construction has begun on the first wave of 4G highways. Selling prices have plummeted in recent years, but are now edging higher once more. In Brazil, the market is expected to get close to the trough in 2018, having fallen 25% in the previous three years.

US: tax cuts could jumpstart growth

Middle East: struggling badly

US cement consumption is stuck in a low-growth range of 2 – 3%. A slight acceleration is anticipated in 2018, based on reconstruction spending following the hurricanes in 2017. Infrastructure spending is relatively flat at both the federal and state level. Housing demand has slowed, due to price increases and homebuilders struggling with labour and land shortages. Cement price increases are becoming more difficult to push through, despite a tighter supply-demand balance in many markets. In December 2017, President Donald Trump signed a sweeping tax reform bill into law. The corporate

The Middle East is the only region where cement demand is predicted to fall in 2018. Despite a rebound in oil prices, the region faces significant political tension and government austerity. Average Gulf Cooperation Council (GCC) budget deficits are expected to be close to 7% of GDP in 2018. The new 5% VAT in the GCC could have a significant detrimental impact on confidence. Moderate demand growth is expected in Turkey in 2018 ahead of elections, and in the UAE, where spending is rising in Dubai ahead of the Expo 2020. The recent crackdown in Saudi Arabia will likely make conditions worse

Estimated global cement demand outlook for 2018. Source: IA Cement.

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for its cement sector. Qatar remains in diplomatic isolation. Iraqi demand is likely to recover, following territorial gains against ISIS, while in Iran a moderate recovery in consumption is anticipated.

Africa: big markets turn negative In 2017, the downturn in Egypt and Nigeria is expected to lead to the first drop in cement demand for more than 20 years. IA Cement expects a turnaround in 2018, but only to the tune of 1%. Economic fundamentals have deteriorated across much of the continent, with few remaining bright spots. Demand is predicted to stabilise in Egypt in 2018, but the addition of 12 million t of capacity from the Army is imminent and is likely to result in another very difficult year for producers. The market in South Africa appears to have bottomed, and a small rise in volumes and prices is likely in 2018. Kenya is experiencing low growth, due to political uncertainty, government austerity, and a sharp decline in credit from the banking sector. In Nigeria, demand is being held back by pricing levels, which are likely to remain elevated. On a more positive note, demand growth is accelerating in smaller markets, such as Ethiopia and Ghana.

China: an uncertain future The Chinese cement market has slowed since the summer of 2017, following a renewed clampdown on the real-estate sector. At present, the government is micromanaging the property segment, imposing controls when price inflation picks up, but then relaxing them a few months later. Public infrastructure spending is increasing, despite already reaching a high level. Growth rates in commercial construction have slowed sharply, as the less cement-intensive service sector is now growing at twice the speed of manufacturing in China. The authorities maintain a tight grip on new cement supply, which is likely to be less than 10 million t in 2018. The eventual phasing out of grade 32.5 production will significantly reduce output levels. Overall, IA Cement expects a broadly flat cement market in 2018, with growth in a 0 – 1% range. Prices are expected to rise further after recovering sharply in 2017.

Asia: relatively promising Asian growth is likely to be broad based in 2018, with cement consumption forecast to increase by just over 3%. Japanese demand is expected to increase further ahead of the Tokyo Olympics. Vietnam is experiencing record inflows of foreign direct investment, with solid demand growth in cement, due to a number of mega projects. Prices in the north are under pressure, due to oversupply, however. Pakistan is likely to benefit from pre-election spending in 1H18. A number of markets that struggled in 2017 are likely to improve next year. A turnaround is likely in the Philippines, where the market slowed sharply in 2017, due to infrastructure delays. Indonesia has recovered very strongly in recent months due to higher public works. This is expected to lead to a recovery in the housing sector in 2018. The markets in Thailand, Malaysia, and Myanmar are also expected to stabilise after a difficult 2017.

Conclusions The year 2017 is set to be lacklustre in terms of cement demand growth. The biggest markets of China, India, and the US have all been disappointing. The only real bright spot is Western Europe, where the recovery looks firmly entrenched and broad based. Several emerging markets are struggling. IA Cement expects these will bottom out in 2018, providing a year of modest recovery, with hopefully stronger growth to come in 2019. Energy costs are still rising, although the industry seems increasingly determined to pass these on. On a more positive note, the industry has made good headway on pricing, seaborne trading markets are now more balanced, and M&A activity remains very strong.

Note This article presents a summary of IA Cement’s Cement 2018 research report, a comprehensive document looking at expected trends in 2018. The report takes a detailed outlook at consumption prospects around the world, as well as a review of key risks, competitive pressures and trading flows. It examines the world’s cement hotspots and leading producers, and looks at why cement demand growth is lagging so far behind GDP in a number of markets. The full report is priced at US$470. Details are available at www.iacement.com or by emailing [email protected].

India: better outlook in 2018 After a lacklustre 2017, there should be a resumption of demand growth in the range of 4 – 5% in the Indian cement sector in 2018. Government spending continues to increase, while rural demand will rebound further, following two consecutive good monsoons. Urban housing is unlikely to pick up, due to high levels of inventory. There is some disruption from the recent general sales tax (levied at 28% on cement) and a new real-estate law. These are unlikely to cause the same disruption as last years’ demonetisation, however.

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About the author Imran Akram is CEO and founder of IA Cement. Since 2011, IA Cement has operated in the space between cement companies and the financial markets, regularly advising both groups in the areas of market intelligence, demand and pricing analysis, feasibility studies, M&A valuations, and the stock market. Akram worked as a global cement research analyst for 10 years at Deutsche Bank in London, as a Director and Head of European Building Materials. He is a chartered accountant and a graduate of the London School of Economics.

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