Kenya’s cement consumption falls to 1.4Mta in 2Q18

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Cement demand in Kenya has fallen to 1.4Mta in the second quarter of the year, according to a report from the Kenya National Bureau of Statistics (KNBS). The agency attributes the drop to a continued slowdown in real estate activity.

In the first quarter of 2017 domestic cement consumption reached 1.5Mt but has since decreased. Furthermore, the continuing decline was also reflected in a 15.7 per cent drop in cement imports as well as in an eight per cent fall in clinker imports during the first quarter of the year.

The market contraction has affected several cement producers in the country. Athi River Mining (ARM) dismissed 700 staff last year as it noted a US$65m loss. East African Portland Cement reported a US$15m, the first since 2014, while market leader Bamburi Cement’s profit shrunk by a third to US$20m.

Source: CEMNET

Cement cos’ profits likely to crumble under cost pressure

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Despite a robust demand, cement companies’ profits are expected to come under pressure in June quarter due to a sharp rise in input costs especially that of pet coke and diesel.

Led by a sustained pick-up in infrastructure spending and firm rural demand, sales volume of top cement producers such as UltraTech Cement, ACC, Ambuja Cement, Shree Cement, JK Cement, JK Lakshmi Cement, India Cement and Ramco Cement are expected to register an average 20 per cent growth in the June quarter.

Input costs rise

However, the average cement prices during the quarter was down five per cent year-on-year even as cost pressures increased due to high energy prices and depreciating rupee.

The all-India average cement prices declined by ₹3 per 50 kg bag to ₹328 in June, after a ₹4-5 increase in the previous two months.

Petcoke prices have been increasing for the last 15 months and cement companies have managed to pass on the incremental cost partially by hiking cement prices.

However, after a certain level they were not able to increase prices due to excess supply in the market. The sector is bogged down by excess capacity.

Binod Kumar Modi, Senior Research Analyst, Reliance Securities, said further hike in cement prices looks imminent to sail through high cost pressure, as any meaningful reduction in fuel prices seems unlikely in the medium term.

To tide over the rising logistics cost, cement companies have changed commercial terms on freight to FOB (free on board) from ex-factory. Under the new terms, cement dealers are made to share logistic costs and this improved cement companies margins in the last quarter.

Monsoon progress crucial

Going ahead, a normal monsoon is important to sustain demand in rural regions which has seen construction activities reviving in the last couple of months.

While progress of the monsoon was moderately below normal last month, it has recovered and has been widespread across the country which bodes well for cement demand, he said.

Capacity addition

Pritam Deuskar, Fund Manager, Bonanza Portfolio, said the industry is expected to add about 126 million tonne production capacity to take the overall capacity to 600 mt by FY20.

The capacity addition is being largely led by UltraTech Cement, Dalmia Bharat, JK Cement and Ambuja Cement.

With the current capacity utilisation hovering at 72 per cent, the new capacity addition may be delayed by a few months but it will add more pressure on cement companies.

Source: THE HINDU BUSINESSLINE

Dalmia Bharat Cement eyes premiumisation; acquisitions on radar

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Dalmia Bharat Cement may soon abandon the mass cement segment as it tries to move up the value chain with premiumisation while weighing options on organic and inorganic growth to enter newer markets of North India. “Premium and super-premium cement brands account for 60 per cent of revenues and in the next two years it would rise to at least 80 per cent. Ideally, we will go 100 per cent,” Dalmia Bharat Senior Executive Director Marketing B K Singh said. He was in city to launch a new premium cement brand ‘Dalmia FBC’.

The company is currently present in East, Northeast and South India. “It has been the objective of this company to emerge as a pan-India player and not limit itself to certain geographies,” Singh said.

With the fate of Binani Cement hanging in the balance, Dalmia Bharat Cement had not ruled out options of acquisition of other cement companies or units for the North India foray.

We had been trying to enter north (India) and attempt for Binani was a step towards that, Singh said.

The company, however, declined to divulge alternate plans for foray into the northern Indian market if its bitter legal battle with UltraTech under the Insolvency and Bankruptcy Code to win over Binani Cement fails.

The company’s consolidated production capacity stands at 26 million tonne per annum (mtpa) but is limited to south, east and the northeast.

If Dalmia Bharat Cement wins over Binani Cement, it can open a readily available market comprising Rajasthan and Gujarat for the company giving it a sizeable presence with its 6.25 mtpa cement plant in Rajasthan. Acquisition has been a key strategy for the company in scaling up its business as well as enter new geographies.

Last year, it acquired only integrated clinker capacity in Bihar Kalyanpur Cements, marking its foray into the state.

As of now, Dalmia Bharat is the only cement company which owns at least one plant in each of the four key eastern states of West Bengal, Bihar, Jharkhand and Odisha.

“We command a 15 per cent market share in the east making it the second largest cement company in this zone while its consolidated market share in South India stands at 11-12 per cent,” Executice Director, sales and marketing (east) Indrajit Chatterjee said.

Its bid to enter the west Indian cement market has also been successful after it acquired the three million tonne stressed assets of Murli Cement which is expected to open up the Maharashtra market for the company.

Both the acquisitions could be ready by the third quarter of this year, the company expects.

Source: PTI

US coal production dips 11.7pct drop year to date – EIA

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Weekly US coal production totaled an estimated 13 million short tons in the week ended July 7, down 11.1% from the prior week and up 4.1% from the year-ago week. Energy Information Administration data showed that this was the highest week-on-week drop year to date, followed by the week ended June 2, which saw a 10% decrease. It was also the second lowest week of production all year, since the week ended January 6.

For the recently-concluded week, coal production in Wyoming and Montana, which is mostly made up of production from the Powder River Basin, totaled an estimated 5.9 million short tons, down 8.6% from last week and down 2.2% compared with the year-ago week.

On an annualized basis, production in the two states would total 335 million short tons, down 4.5% from last year.

In Central Appalachia, weekly coal production totaled an estimated 1.6 million short tons, down 14.1% from last week and up 21% from last year. Annualized production would total 97.3 million short tons, up 6.2% from 2017.

Weekly coal production in Northern Appalachia totaled an estimated 1.7 million short tons, down 13.8% from last week and up 8.2% compared with last year. Annualized production would total 100.5 million st, down 4.3% from last year.

In the Illinois Basin, weekly coal production totaled an estimated 1.4 million short tons, down 16.2% from last week and up 9.1% from last year. Annualized production in the basin would total 102 million short tons, down 1.3% from 2017.

Through the first 27 weeks of the year, US coal production totaled an estimated 389.8 million st, and would total an estimated 750.7 million short tons on an annualized basis, down 3% from last year.

Source: PLATTS

China June coal imports jump 18 percent as utilities speed buying

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China’s coal imports in June rose 18 percent from a year ago to 25.47 million tonnes, according to customs data on Friday, as utilities went on a buying spree to shore up electricity generation.

June’s imports also rebounded from 22.33 million tonnes in May, the data from the General Administration of Customs showed, after traders said China relaxed customs checks to let in foreign supplies.

Robust imports led to higher inventories at port and power plants, easing worries that China’s electricity output might not be able to meet surging demand from provinces such as Hebei and Shandong due to hot weather.

Major Chinese cities such as Wuhan in Hubei and Hefei in Henan province last month reported heavy loads on their power grid and indicated that they might started rationing electricity.

In the first half, coal imports rose to 146.19 million tonnes, up 10 percent from a year earlier, data showed.

Source: REUTERS

China June coal output dips to lowest since October

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China produced 298 million tonnes of coal in June, down 1.4 percent to an eight-month low, the National Bureau of Statistics said on Monday, as government checks on heavy industry aimed at cutting pollution curbed mining of the fuel.

Year-on-year output was up 1.7 percent, the bureau said.

Output over the first six months of the year reached 1.7 billion tonnes, up 3.9 percent compared with the same period of last year.

In recent months, miners have ramped up output as heatwaves across southern China and strong growth in power consumption in industrial sectors fuelled demand for coal-fired power.

The production of coke used in steelmaking fell 4.7 percent in June to 36.13 million tonnes, with year-to-date output reaching 212.0 million tonnes, down 3.2 percent.

Source: REUTERS

JSW Steel restarts coking coal mining in US

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JSW Steel has restarted coking coal mining in the US after a gap of almost three years. Operations in the mines located in West Virginia were suspended after coking coal prices dropped below production cost.

The recent rise in coking coal prices has made it viable for the company to restart production. Though JSW Steel will not import the coking coal produced in the US to India it will provide a financial hedge as it will be sold in the open market.

Seshagiri Rao, Joint Managing Director, JSW Steel, told BusinessLine that the US coking coal mine has started production and the plan is to ramp up production from 2.40 lakh tonne per annum to one million tonnes gradually.

Uptrend in price

Coking coal prices have increased to $200 a tonne from $76 in the last few years. With a strong demand and disruption in supply due to logistics issues there are no chances of it coming down any sooner, he added.

JSW Steel had invested $35 million to set up a prep plant (washery) with a capacity of 2.4 mtpa near the coal mine.

Going ahead, Rao said JSW would source raw coal produced by small miners in the neighbourhood wash it at the prep plant and sell it in the open market to reach the one-million-tonne target.

JSW Steel acquired the concession for nine coking coal mining in the US in 2010. These mines have total resources of 123 million tonnes and estimated reserves of 45 million tonnes in the area where drilling was already done.

Rao said that the company has no plans to restart iron ore mining in Chile that has been under care and maintenance for the last few years.

Global scenario

Dwelling on global plans, he said the Group wants to have 10 mtpa steel production capacity in the US and Europe put together.

“We have taken over 1.3 mtpa rolling facility in Europe for €80 million and will invest another €150-200 million in backward integration to raise its capacity to 1.5 mtpa,” he said.

The Group had already invested $150 million in modernising the existing one mtpa plate and pipe mill and another $350 million was pumped in for a slab making facility to complete backward integration at Baytown in the US.

“We have acquired 3 million tonne hot strip mill with one arc furnace and casting facility for $1 billion. These investments will take our capacity in the US to 4 million tonnes in two-three years, he said.

In all, he added the Group had invested $1.5 billion to reach 5.5 mtpa capacity.

Source: THE HINDU BUSINESSLINE

Anil Agarwal says Vedanta, Anglo American could join hands to mine coal in India

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Mining majors Vedanta Limited and Anglo American Plc could together mine coal in India. The firms might table joint bids at the next round of auctions, according to a media report.

Billionaire Anil Agarwal is Anglo American’s largest shareholder. Vedanta will reportedly play the role of  a “catalyst” if Anglo American decides to set foot on the Indian subcontinent. “I have told them [Anglo American] that you should look at India also. They are considering participating in coal auctions and are open to other opportunities,”  Vedanta chairman Agarwal told The EconomicTimes.

Talking about his company’s inoperative copper smelter in Tuticorin, Tamil Nadu, Agarwal said that those who have been hit by the shutdown will unite and that “they will do whatever they need to in approaching the government…”

Last week, the Mint reported that Volcan Investments Ltd, the trust controlled by Agarwal, was mulling to acquire control of Anglo American’s South African business. The report claimed that the merger will create an entity worth about $7 billion.

In February 2018, India decided to auction coal blocks to private companies, a move that will end Mumbai-traded Coal India Limited ’s (CIL) near-monopoly status.

In March 2017, Agarwal said he had no plans to buy assets in South Africa from Anglo American, or to push for a board seat after announcing a plan to acquire a 13 percent stake in the mining giant.

He had said that he’d be happy to help Anglo American move into India if they wished “at some point in time to expand their business.”

In February that year, Vedanta held talks with the Indian government on developing clean coal, as coal is “a core part” of India’s energy mix despite its high level of carbon emissions.

Vedanta CEO Tom Albanese said back then that coal is still needed in the global energy mix but that it would be phased out unless carbon capture technology was rolled out more widely. “Unless there is a new technology breakthrough, coal is likely to be phased out over a period of decades,” he told Reuters in an interview.

Carbon capture and storage (CCS) has struggled to get off the ground as firms with limited spending power see no advantage in being the first to work on technology that is likely to become affordable only when developed on a large scale.

Source: FIRSTPOST

Power woes push up coal imports

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Coal imports, which had declined over the last four years, are expected to shoot up, with power plants running short on stocks.

Earlier this month, the Union power ministry advised states to consider importing coal for the next 2-3 years to run their power plants.

Many states, including Bengal and Maharashtra, run coal-fired electricity units of their own, besides having public sector NTPC and private power producers.

Officials said that while coal imports were discouraged over the last few years, the norms would be relaxed as stocks at power plants are running out with little chances of them being fully augmented.

Electricity plants have been cutting back on imported coal which they mix with the domestic variety to produce power because of the fall in the value of the rupee and rise in global prices.

However, with India unable to generate the amount of coal needed in the near future, coal ministry officials feel there is no way but to go ahead with larger imports.

Coal import is likely to increase to 145 million tonnes (mt) in 2018 and the uptrend will continue in the next four years, says a report prepared by the Minerals Council of Australia. The imports stood at 137mt last year.

Power units imported 8.64mt of coal in the first two months of this fiscal. Plants, which run solely on imported coal, imported around 5mt, while the ones which mix the fuel accounted for the rest.

“After several years of declining imports, the outlook for thermal coal import demand in India is improving because of strong demand growth and the inability of domestic supply to keep pace,” the report said.

Though one of the cornerstones of the Modi government’s economic policy had been to reduce coal imports, domestic mining has been unable to keep pace with the demand. Last year, India imported coal worth $22 billion. This is expected to go up 20 per cent in the coming years.

Mining plans

Coal ministry officials said they were stepping up plans to auction mines to encourage private mining which may help fill the gap.

“We need to re-energise the sector as Coal India Ltd will possibly not be able to produce 1 billion tonnes by 2020. If we need to have more coal on the table to satisfy demand, private sector participation through auctions to push production is a must,” said officials.

Private power producers have been allowed to switch their existing coal source with alternative mines nearer their plants to reduce time and cost of transportation as well as to ease the pressure on the railways.

Source: THE TELEGRAPH

Coal India expects 322 million tonne from ongoing projects in FY19

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Coal India Ltd on Saturday said as many as 119 major ongoing coal projects are expected to contribute about 322 million tonnes (mt) to its estimated production in the current fiscal. Among ongoing projects, there are operating large projects like Kusmunda Opencast with 50 million tonnes a year (mty) and Gerva Expansion Project with 70 mty capacity.

Out of 65 new projects with a targeted capacity of 247.66 mty, which were identified in 2014-15, about 26 projects having an ultimate capacity of 105.29 mty have been approved. “119 major ongoing coal projects are under implementation…expected contribution of about 322 mt in FY2019 (financial year 2019),” CIL said in a regulatory filing.

According to it, the contribution from the ongoing projects has been planned to reach a level of 378 mt in FY 2020. “Out of these 65 future projects, 26 projects having an ultimate capacity of 105.29 mty have been approved,” the filing said.

The miner, which owned 369 mines with 177 open cast, 174 underground and 18 mixed mines, had produced around 567 mt of coal last financial year. Of which, 536 mt was produced from open caste mines and underground mines contributed 31 mt. CIL said it was operating 15 washeries and of which, there were 4 non-coking coal beneficiation facilities with a throughput capacity of 16.22 mtpa (million tonnes per annum) and 11 coking coal beneficiation units with a capacity of 20.58 mtpa. Future programmes include 18 new washeries with a capacity 95.6 mty, it added.

Source: IANS