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Construction materials market: cement production and consumption decrease

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Construction materials market: cement production and consumption decrease

The cement market condition over 9 months in 2016

The new joint project from the “Construction.ru” Russian online journal and the CM PRO independent investment and consulting company for the construction materials industry will show the monthly condition of the market for various construction materials. Today we present the results of the 3rd quarter of 2016 on the market for cement. 

 

Cement production and consumption is in difficulty this year. It decreased by 9% as compared with the same period of 2015: to 18.35m tons and 18.387m tons correspondingly.

This is mainly influenced by general tendencies of the construction complex: in particular, in the first 9 months of 2016 such important indices as “Construction work volume” decreased by 4%. And though putting housing in operation in the 3rd quarter grew by 1.7% as compared with the same period of 2015, the commissioning of individual housing decreased by 2.9%. Consequently, commercial concrete production fell by 0.8%, and reinforced concrete products and structures by 12.3%.

 

Production

The Siberian Federal District showed the largest decrease in cement production — 19.4%. The only federal district where a positive rate of growth was registered (+1.5%) was the North Caucasian Federal District. The majority of the RF had negative dynamics of production, except the Voronezh (+51.5%), the Kaluga (+37.1%), the Tula (+26.2%), and the Saratov (+16.8%) regions, the Chechen Republic (+14.8%) and some other regions.  

 

Table №1

Cement production in the RF regions in 2015—2016

RF Regions

Sept.16

Aug.16

∆, %

Sept.16

Sept.15

∆, %

Since beg. of 16

Since beg. of 15

∆, %

Russia’s total, thous. tons

5 681

6 115

-7,1%

5 681

6 346

-10,5%

43 544

48 858

-10,9%

Central Federal District

1 492

1 565

-4,7%

1 492

1 670

-10,7%

11 243

12 684

-11,4%

The Volga Federal District

1 283

1 319

-2,7%

1 283

1 427

-10,1%

9 469

10 882

-13,0%

Southern Federal District

891

933

-4,5%

891

964

-7,6%

6 769

7 529

-10,1%

Siberian Federal District

650

737

-11,8%

650

793

-18,0%

5 271

6 256

-15,7%

Ural Federal District

569

663

-14,2%

569

614

-7,4%

4 650

4 913

-5,4%

North-Western  Federal District

329

327

+0,8%

329

370

-10,9%

2 614

2 988

-12,5%

Far-Eastern Federal District

247

302

-18,1%

247

282

-12,4%

1 749

1 823

-4,1%

 North Caucasian Federal District

220

270

-18,5%

220

227

-2,8%

1 780

1 783

-0,2%

The following enterprises achieved a positive growth rate:  Atakaicement (+182.7%), Buinaksk cement producing plant (+87.2%), the “Podgorensky cementnik” plant (+51.5%), Lafarge-Kaluga (+37.1%), Sengiley cement producing plant (+31.7%), Tulacement (+26.2%), HeidelbergCement Volga (+22.4%), and Chechencement (+14.8%).

The maximum decrease of production volumes was registered at Teploozerskcement (–43.0%), Ulianovskcement (–34.1%), Maltsovsky portland cement (–31.1%), Iskitimcement (–29.6%), Oskolcement (–25.9%), Pikalevsky cement (–25.4%), and Topkinsky cement (–25.4%).

The analysis of corporate results over the III quarter of 2016 showed a decrease of production volumes at Iskitimcement (–29.6%), Siberian cement (–20.0%), Eurocement (–16.1%), Basel (—13.4%), Gornozavodsk cement (–13.1%), Gazmetallproekt (–12.0%), YUGPK (South-Ural mining and processing company) (–11.2%), LafargeHolcim (–4.5%), Vostokcement (–2.5%), and Dyckerhoff (–2.0%).

Production growth was registered at Asia Cement (+4.7%), HeidelbergCement (+8.0%), Sebriakovcement (+9.0%), United Cement Group (+12.3%), and INTECO (+64.9%) in the 3rd quarter of 2016.

The average capacity loading level in Russia was 70.4% in the 3rd quarter of 2016, which is 7.3 percentage points less than in the same period of 2015. The best performances were achieved at Tulacement (126.1%), Schurovsky cement (125.3%), Yakutcement (123.6%), Asia Cement (116.0%), Lafarge-Kaluga (111.6%) and others.

 

Consumption

Together with cement production, its consumption also went down in the 3rd quarter of 2016. by 8.7%. A cement consumption decrease was registered in all federal districts: the Volga FD (–17.1%), Siberian FD (–10.2%), Far-Eastern FD (–7.8%), Northwestern FD (–7.5%), Central FD (–6.7%), Southern FD (–4.8%), North Caucasian FD (–4.6%), and Ural FD (–4.5%).

 

Table №2

Cement consumption over the RF regions in 2015—2016

RF regions

Sept.16

Aug.16

∆, %

Sept.16

Sept.15

∆, %

Since beg.of 16

Since beg. of 15

∆, %

Russia’s total, thous. tons

5 793

6 288

-7,9%

5 793

6 496

-10,8%

44 364

49 781

-10,9%

Central Federal District

1 775

1 809

-1,9%

1 775

1 890

-6,1%

12 900

14 650

-11,9%

The Volga Federal District

1 076

1 129

-4,7%

1 076

1 273

-15,5%

8 027

9 372

-14,4%

Southern Federal District

655

740

-11,6%

655

741

-11,7%

5 244

5 737

-8,6%

Siberian Federal District

617

692

-10,8%

617

689

-10,4%

5 014

5 589

-10,3%

Ural Federal District

536

641

-16,4%

536

607

-11,7%

4 569

4 825

-5,3%

North-Western  Federal District

507

567

-10,7%

507

584

-13,3%

3 882

4 508

-13,9%

North Caucasian Federal District

372

410

-9,1%

372

409

-9,0%

3 035

3 233

-6,1%

Far-Eastern Federal District

255

300

-15,1%

255

302

-15,6%

1 694

1 867

-9,3%

As compared with the same period of 2015, import volumes decreased by 21.7% , including from the Republic of Korea (–99.8%), Germany (–95.7%), Latvia (–86.1%), Sweden (–79.6%), Lithuania (–77.1%), Iran (–56.3%), China (–37.3%), and Turkey (–17.8%).

At the same time, deliveries from the Customs Union countries increased significantly: Belarus (+8.3%) and Kazakhstan (from 100 tons to 89,000 tons).

As compared with the 2nd quarter of 2016 deliveries from Lithuania (15,800 tons), Latvia (11,800 tons), Iran (31,200 tons), Sweden (8,100 tons), and Egypt (12,000 tons) resumed.

The volume of exported cement went down by 46.2%. The main consumers of Russian cement are Belarus and Kazakhstan, and they decreased their consumption of Russian cement in the period under review by 58.5% and 35.7% respectively, as compared with last year’s same period. Deliveries to Georgia grew by 47% and to Finland, 11-fold.

The following holdings increased their share on the Russian market in the 3rd quarter of 2016 as compared with the 3rd quarter of 2015: Heidelberg Cement (+1.3 п.п.), Sebriakovcement (+1.0), LafargeHolcim (+0.6), Dyckerhoff (+0.5), Asia Cement (+0.4), Vostokcement (+0.4), INTECO (+0.4), and YUGPK (+0.4).

The shares of LafargeHolcim (+3.7%), Vostokcement (+1.7%), and Import (+0.9%) increased in the third quarter as compared with the 1st quarter of 2016.

 

Prices

Within the period under review, cement producers’ prices stayed at the same level — 3,370 roub./ton, which is higher than in the 2nd quarter by 5.5% on average, and by 13.5% compared with the average prices of the corresponding period of 2015. Since the beginning of the year the price has grown by 500 roubles a ton (+17.0%).

 

Table №3

Cement producersaverage prices over districts

 

Purchasing prices increased from 4,050 roubles a ton up to 4,200 roubles a ton (including VAT and delivery) and was on average 4,170 roubles a ton, which is higher by 3.2% than in the 2nd quarter, and by 5.3% than in the same period of 2015. Since the beginning of the year the price has grown by 500 roubles (+13.2%).

 

Table №4

Cement purchasing average prices over districts

 

The average price of imported cement to the RF decreased in the 3rd quarter from 3,300 roubles a ton to 3,100 roubles a ton. As compared with the 2nd quarter of 2016 the price fall was 4.5%, and compared with the same period of 2015 the price of imported cement went down by 18.4%. Since the beginning of the year the price has fallen by 300 roubles (–9.3%).

Evgeny GORCHAKOV

 

 

APROPOS

As “Kommersant” reports, within the first half of 2017, the Federal Agency on Technical Regulating and Metrology (Rosstandart) will carry out a series of unscheduled checks of the enterprises connected with cement production, sale and import.  The thing is that the market participants have noted a growth in counterfeit construction materials production, aggravating the situation on the market, which is far from being easy in the first place. In particular, according to experts’ assessments, the share of counterfeit cement on the market is now 18%, and on private markets, 50%.

 

EXPERT OPINION

Yekaterina Molodtsova, Head of Operative Marketing Department at LafargeHolcim Russia:

— The situation on the market is an objective reality. Our task is to find new growth points: new customers, new products, new markets.  Next year, we are not expecting any fall. Our prognosis for 2017 is that gradual recovery of the demand for cement will start, though if the rouble devalues further, the dynamics may not appear earlier than in 2018.  

As far as the struggle against counterfeits is concerned, it must be complex. The introduction of compulsory certification surely brought some positive results. But to change the situation crucially the struggle is to be carried out in all directions. It is important, in particular, that regulation in the sphere of retail trading should be enhanced. According to our data, a lot of uncertified cement was present on the market of packed products in 2016.  

 

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