2012 CemWeek Middle East and Africa Cement Sector Sentiment Survey

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The release of the CW Group’s “2012 Middle East and Africa Cement Business Sentiment Survey” marks the third year the survey has been undertaken. The report shares a synopsis of current and emerging trends in the African and Middle Eastern region. Survey data was collected from key industry contributors throughout North Africa, Sub-Saharan Africa (SSA), the GCC States, other Middle East countries, and Turkey.

Text of 2012 CemWeek Middle East and Africa Cement Sector Sentiment Survey

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    GLOBAL CEMENT INDUSTRY. KNOWLEDGE. DECEMBER 2012

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  • KHD PROVIDES FULL RANGE OF

    PLANT SERVICES:

    Spare parts

    Plant audits

    Training

    Operations and maintenance

    Get more out of your cement plantthrough our full range of plant services.

    Professional maintenance of process machinery and equipment is very critical

    and helps maintain trouble-free production. At KHD, we not only provide

    innovative, cost-efficient and environmentally friendly technologies, we offer

    solutions to our customers that help increase their cement plants efficiency,

    reduce operational downtime, ensure quality and thus, save money!

    Our experience of over 150 years in creating innovative technologies allows

    us to better understand the needs and requirements of our customers. We

    carry out a complete spectrum of plant inspections, reconditioning, annual

    maintenance contracts for particular machines, kiln alignment (hot/cold), and

    plant and equipment upgrades. Such a wide range of services along with our

    onsite audit and expert review ensure that our customers get more out of

    their cement plants.

    To get more out of your cement plant, visit www.khd.com

  • FOREWORD

    emWeeks third annual 2012 Middle East and Africa Cement Business Sentiment Survey provides a snapshot of emerging and developing trends that have dominated the African and Middle Eastern cement sectors in recent months, along with those themes likely to be important in the short-term. Using quantitative data and

    qualitative observations, the survey highlights the sentiments and experiences of individuals working within the African and Middle Eastern cement sectors.

    The survey reveals changing business strategies, operations, sales and marketing activities and other attitudes that are influencing the cement sector, from cost to capacity concerns and employment projections. Data was obtained from survey respondents hailing from key industry contributors, including major corporations such as Lafarge, Holcim, Dangote and Asec to name just a few.

    This document is meant as a summary of the themes reported by respondents, and the full data of tabulated responses provides insights that are more detailed. The CW Group is happy to assist you with a custom deep-dive review to help your organization uncover and understand trends and market dynamics in your country or region to help improve your competitive positioning.

    To further understand the micro-trends and obtain more detail on the answers uncovered in this survey, please contact us at inquiries@cemweek.com.

    diana Heeb bivonaCW Publication Managerdhb@cemweek.com

    KHD PROVIDES FULL RANGE OF

    PLANT SERVICES:

    Spare parts

    Plant audits

    Training

    Operations and maintenance

    Get more out of your cement plantthrough our full range of plant services.

    Professional maintenance of process machinery and equipment is very critical

    and helps maintain trouble-free production. At KHD, we not only provide

    innovative, cost-efficient and environmentally friendly technologies, we offer

    solutions to our customers that help increase their cement plants efficiency,

    reduce operational downtime, ensure quality and thus, save money!

    Our experience of over 150 years in creating innovative technologies allows

    us to better understand the needs and requirements of our customers. We

    carry out a complete spectrum of plant inspections, reconditioning, annual

    maintenance contracts for particular machines, kiln alignment (hot/cold), and

    plant and equipment upgrades. Such a wide range of services along with our

    onsite audit and expert review ensure that our customers get more out of

    their cement plants.

    To get more out of your cement plant, visit www.khd.com cemweek 2012 middle east & africa cement sector surveycemweek.com 1BMWeekBMWeek

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  • This years survey respondents hailed from North Africa, Sub-Saharan Africa (SSA), the GCC States, other Middle East countries and Turkey.

    The survey analyzed a series of principal sentiments and trends across the region. General findings in this survey include:

    Sixty percent of respondents indicated the cement industry had met their expectations, performing ok over the past six months.

    Roughly 90 percent expressed optimism that the industry would perform about the same, somewhat better or much better over the next 12 months.

    Emphasis on controlling costs, improving domestic sales, finding new export opportunities and reconstruction ranked as the most important themes in the months ahead for respondents.

    In terms of employment projects, respondents did not express any concern that their careers were at risk. In fact, 60 percent were either fairly or highly confident that their careers would receive a boost in the next 12 months.

    Fifty-five percent indicated their companys workforce numbers would remain the same. Another 44 percent indicated they would be hiring a bit more to a lot more in the near future.

    Regarding capital expenditure, 66 percent anticipated budgets would remain the same, with 11 percent suggesting an increase.

    Seventy-seven percent of respondents considered compliance with U.S. or European environmental regulation to be important.

    SURVEY INTRODUCTION

    2012 Middle east and africa ceMent Business sentiMent survey

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  • OF A REGIONSNAPSHOT

    SNAPSHOT OF A REGION

    AFRICAThe changes in the landscape of the African cement market in just a short period are astounding. It was not too long ago that Africa was often referenced as the worlds last cement frontier, running a significant supply deficit. Strong economic growth throughout the region and an intense focus by regional and global producers, however, have helped to narrow that once substantial deficit throughout much of the continent.

    The political and economic backgrounds of each region, while sharing many similarities (strong infrastructure spending, solid economic growth, logistical challenges, etc.), do have their own unique challenges as well.

    NORTH AFRICAThe political protests and revolution witnessed by Libya, Egypt and Tunisia have left an indelible mark on the development of these nations. Instability and ongoing uncertainty have hampered short- and mid-term construction projects to varying extents. Like most industries, cement has scrambled to adapt to changing demand levels and input costs due to unreliability and/or shortages.

    CW Group analysts estimate that the North African cement market capacity for 2012 is roughly 122 mtpa, with demand sitting around 102 mtpa. With actual production trending at 98 mtpa, imported cement is still a necessity. As Libya and Tunisia strengthen their recovery, growth rates of 15 percent and 9.5 percent, respectively, are expected for 2013, but the continued political and social unrest plaguing Egypt places a gray cloud over the industry.

    WEST AFRICAWhen speaking about cement growth in West Africa, there is one country leading the pack. Nigeria has been at the forefront of rapid expansion and growth, witnessing a breakneck pace in the increase of production capacity. Local maximum output for the Nigerian cement industry jumped from around 15 mtpa in 2011 to more than 22 mtpa in 2011, with the prospect of exceeding 31 mtpa by the end of 2014. Such an increase assists in explaining why Nigerias cement industry accounts for close to 64 percent of the regions cement output, and the motivation behind investors pouring in even more money to further boost production capacities.

    That investment may be on target and justified if the government moves forward with plans to upgrade and build new public infrastructure and to address the current housing deficit. The massive capacity increase in Nigerian cement has transformed in a matter of a few years one of the region's major importers into a fierce exporting force. However, in a sign that capacity is outstripping demand, units recently for the first time in a long time started idling and complaining cheaper imports.

    Dangote Cement is the uncontested leader in the region with regard to spearheading capacity expansion growth. Over the last six years, the company has invested well over US$6.5 billion in ramping up production capacity and building market share. Through its aggressive expansion strategy, it has not only established a presence in 14 other African countries, but has become the

    Dangote is the uncontested leader in the region with regard to spearheading capacity expansion growth.

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  • dominant force in many of them. The company already controls around 61 percent of the 2012 estimated Nigerian nameplate cement capacity. Therefore, suggestions that Dangote may well reach a production capacity of 50 mtpa by 2020 are plausible.

    EAST AFRICA The cement industry in East Africa is expected to attract Sh320 billion in investmen