What changes occurred in the cement industry last year and how the cement market presently feels
We continue the series of analytical publications regarding the condition of the construction materials market. In this article we shall consider the results of the cement production industry’s work in 2016 and the present condition of the market.
By January 1st, 2017, there were 58 full cycle cement plants and 7 grinding mills with a total capacity of 105.0 m tons of cement a year. Three of these plants closed down operations with very vague further prospects: Voskresenskcement (with a capacity of 1.9m tons), Zhiguliovsk construction materials (with a capacity of 1.7m tons) and Savinsky cement plant (with a capacity of 1.2m tons). Thus, by the beginning of 2017 the actual available capacity of cement production in Russia was 100.1 m tons.
The average number of workers of the organisations producing cement, excluding small businesses, decreased by 10.3% (-3 764 people) to 32 671 people.
The production of cement in 2016 totaled 55 m tons, which is 7 m tons less (-11.3%), than in 2015.
Cement import in 2016 was 1.9 m tons, which is 1 m tons less (-3.4%) than in 2015. Clinker import decreased by 0.1 m tons (-38.5%). The total volume of cement and clinker import was 2 m tons.
Cement export in 2016 totaled 1 m tons, which is 0.7 m tons (-41.4%) less than in 2015. Clinker export increased by 150.2% to 1.6 m tons. The total volume of cement and clinker export was 2.5 m tons.
Cement consumption in 2016 decreased to 55 m tons, which is 7.3 млн т (-11.6%) less than in 2015.
The cement producers’ average price in 2016 was 3,133 roubles ($53.7) a ton (excluding VAT and delivery), which is 258 roubles (+9,0%) higher than in 2015.
The average purchasing price of cement in 2016 increased to 4,099 roubles ($70.2) a ton (including VAT and delivery), which is 172 roubles more (+4,4%) than in 2015.
Main parameters of the cement market in 2015—2016, thous. tons
|
Index |
2015 |
2016 |
∆, % |
|
Production |
61 996 |
54 967 |
-11,3% |
|
Import |
2 903 |
1 932 |
-33,4% |
|
Export |
1 624 |
952 |
-41,4% |
|
Consumption |
63 274 |
55 946 |
-11,6% |
|
Railway transportation |
28 717 |
26 992 |
-6,0% |
Source: CM Pro Annual Report “Cement market-2016”
As far as the cement types are concerned, the tendency of Portland-blast-furnace cement’s production decrease has been noted for rather a long time.
In 1990 its share in the total volume of production was about 28%, whilst presently it is only about 3%. This results in the growth of its primary cost and, accordingly, in the price increase.
The consumption structure of different types of cement altered during the period of economic reformation in the 1990s. During the last seven years, the consumption structure has not changed as the Russian cement plants adapted to the market requirements.
It should be noted, however, that the current market demands do not seem well-grounded and are caused by a general decrease of the culture of cement application for the purpose intended.
Source: CM Pro Annual Report “Cement market-2016”
The import of cement in Russia achieved its historical maximum in 2008 with 7.3 m tons. The following fall of interior prices resulted in a significant reduction of the share of foreign producers on the Russian market.
However, starting with 2011 the volumes of import began to grow together with the growth of prices. In 2012 import grew dramatically for Russian producers’ growth. This resulted in the second historical maximum, in 2012—2013 (with 5 m tons a year each).
Starting with 2014 the cement import volume began to decline, and in 2016 it decreased by 33.4%, when compared with 2015, to 1.9 m tons.
Countries-suppliers of imported cement to the RF in 2016
(The country’s share for the given federal district)
Source: CM Pro Annual Report “Cement market-2016”
The chief suppliers of cement are Belarus and Kazakhstan (more than 85% of the total imported volume of cement).
The export volume in 2016 was only 1.7% of the production volume. The leader is Maltsovsky Portland cement (with 25% of the total export volume).
Cement export volume in 2015—2016, thous. tons
∆%1 624952-672-41,4%
|
Country |
2015 |
2016 |
Growth in 2016 |
|
|
|
|
|||||
| Total export | |||||
|
Kazakhstan |
1 105 |
517 |
-588 |
-53,2% |
|
|
Belarus |
392 |
240 |
-152 |
-38,9% |
|
|
Georgia |
63 |
85 |
+21 |
+33,5% |
|
|
Finland |
22 |
84 |
+61 |
+273,4% |
|
|
Azerbaijan |
32 |
19 |
-13 |
-41,4% |
|
|
Other countries |
9 |
9 |
-1 |
-5,9% |
|
Source: CM Pro Annual Report “Cement market-2016”
Cement consumption in 2016 was 55 m tons, which is 7.3 m tons (-11,6%) less than in 2015. About 75% of cement is consumed in the European part of the RF, and only 25% in the Asian part. Only 15% of cement is consumed on the territory to the east from the Urals.
None of the federal districts showed any growth of consumption in 2016. The greatest fall was registered in the Central FD (-12,2%) and the Volga FD(-13,7%).
As far as the delivery scheme is concerned, the share by railway was 48%, whilst automobile transportation and other kinds of transport amounted to 52%.
New production lines are expected to be put in operation at Volskcement (the Saratov region) and Yakutcement (the Republic of Sakha-Yakutia) plants, with the capacities being 1.5m tons and 2m tons, respectively.
Taking into consideration the forecasts of the economic and social development of the RF for 2017, and the further period of 2018 and 2019, as prepared by the RF Ministry of Economic Development, the volumes of cement production and consumption are likely to remain at the same level as in 2016.
Evgeny VYSOTSKY,
