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Analysis of Cement Production in Central Asian Countries
2011-04-14
Analysis of Cement Production in Central Asian Countries
Analysis of Cement Production in Central Asian Countries
 
General Situation of Cement Production in the world

   At present, the cement output of the world is increasing as 4-6% each year. As statistics, the cement output of the world is 250 million ton. Main producing area: China (44% of the general output), EU (10%), India (6.2), America (4%), Japan (2.7%), Russia (2.2%).
   According to the forecasting, general output of the world in 2010 will reach 300 million tons, annual increasing ratio will be 4.7%, and calculate as the comparable worth, in 2010, worldwide cement value will be approach to 25000 million US Dollars. Except China, worldwide famous cement producing enterprises are: Lafarge (France), Holcim (Switzerland), HeidelbergCement (Germany), Italcementi (Italy), RMC (England), Siam Cement (Thailand) and Taiheiyo (Japan), the output of them accounts for one-third of the worldwide output, and two-third products are sold to international market.
As one of the important building material, cement are widely used in constructing & improving industrial project, building, hydraulic engineering and urban infrastructure, which become important indicators for industry developing speed and absorption of foreign capital for partial area. At the same time, the demand of cement reflects the activity of economic construction for one area, at present, China, Northeast of Asia and central Asia are included in the fastest economic increasing area in the world, and the demand of these areas are the largest.
二、General information of cement production and market for various ares of Central Asia
At present, there are 14 cement factories in Central Asia and annual production capacity is 17500 thousand tons.

1、Uzbekistan

There are 6 cement factory in Uzbekistan which belong toАК?Узкурилишматериаллари? Group Company producing 12 grades cement including Portland Cement (accounts for 99.3% of national cement output), White Cement and Slag Cement. M-400 Cement accounts for the whole grades cement output 98.6%, while White Cement and Slag Cement accounts for 0.087% and 0.61%.
Cement output of Uzbekistan is on the top in Central Asia areas, in 2006, the output is 5582 thousands tons, increasing 10.2% compared to the output in 2005. In Uzbekistan, the main cement enterprises are: ОАО ?Кызылкумцемент?, annual cement output accounts for 49% of national cement output; ОАО ?Ахангаранцемент?, annual cement output accounts for 23% of national cement output; ОАО ?Кувасайцемент?, annual cement output accounts for 18% of national cement output, ОАО ?Бекабадцемент?, annual cement output accounts for 10% of national cement output.
Cement quality of Uzbekistan is superior and exported to various foreign markets. After meeting the demand locally, rest cements are exported to: Tajikistan (accounts for 31.1%), Kazakstan (accounts for 20.8%), Turkmenistan (accounts for 20.3%), Afghanistan (accounts for 17.3%), Kyrgyzstan (accounts for 10.2%), and so on. Stable local demand and increasing exporting create a very good condition for enlarging production scale, in Uzbekistan.

2、   Kyrgyzstan

   At present, there is only one cement factory in Kyrgyzstan, annual production capacity is 1500 thousand tons. As Statistics, in 2006, real annual cement output is 1210 thousand tons and in 2005, the cement exporting volume is 366 thousand tons (increasing 4% compared to last year), main market for exporting is Kazakstan; at the same year, the cement importing volume is 105 thousand tons, the main market for importing is Uzbekistan, and a little part of them is imported from China. In 2007, Kyrgyzstan plans to export 1000 thousand tons cement.

   In the south of Kyrgyzstan, ОАО ?Южно-Кыргызский Цемент? And ЗАО ?Ак-СайЦемент? are under construction with the Chinese loans, after finishing, the production capacity of both factories will be 2800 thousand tons, products could not only meet local demands, but also be exported to Tajikistan and Afghanistan.

3、Taijikistan

    Now there is only one cement factory - Душанбинский цементный завод in Taijikistan, built in 50s of last century and designed annual output is 1000 thousand tons. Due to real long history, no good maintenance and serious abrasion, real ouput is only 20-25% of the designed ouput. In 2005, cement ouput is 253 thousand tons (increasing 130% compared to last year), at the same time, cement importing volume is 509 thousand tons. If the government begin the construction of Рогунская ГЭС and Санктудинская ГЭС, annual increasing demand of cement will be about 1600 thousand tons in Taijikistan before 2010.

4、Turkmenistan

Before 2005, cement output of Turkmenistan is about 300 thousand tons. Then Keliyajin Cement Factory invested to useКелятинский цементный завод, annual production capacity is one million tons, main grade of cement is M-400, M-500, M-600 and various grade Portland Cement and Slag Cement. In 2005, cement importing volume is 29 thousand tons, increasing 5.5 times compared to 2004.
 
三、Analysis on Cement Industry in Kazakstan

 1、Cement Market Development in Kazakstan

   
Cement production in Kazakstan is developing fast during recent years. In 2001, national output is only 1690 thousand tons, however, in 2006, national output is more than 4.9 million tons. Cement demand of Kazakstan is about 6 million tons, and in 2007, the expected output is 7.5 million tons. At present, they should import the lacking 25% cement, according to experts’ predicting, the lacking cement volume will be 1.5 million tons for 2007.

Concerning price, the retail price of cement in Almaty and so on has approach to 180-200 US Dollars per ton.

2、Cement production in Kazakstan

Cement factory were built in 50s of last century in Kazakstan, designed producing capacity is one million tons, utilizing wet process producing method, the process is medieval, and electricity consumption is twice than dry process producing capacity. The abrasion of equipment highly reached 50%. At present, national output is less than 5 million tons and the capacity is less than 50% of designed capacity.
According to the market research, at present, imported building material accounts for 70% in the market of Kazakstan, imported producing machine for building material accounts for 80%, local raw material used for building material production accounts for 60%.
There are 5 cement factories in Kazakstan now, they are: ОАО ?Central Asia Cement? (?CAC?, бывший Карагандинский цементный завод);ОАО ?Шымкентцемент?;ЗАО ?Семейцемент?;ОАО ?Восток-цемент? (бывший Усть-Каменогорский цементный завод)] ;?Сас-Тюбинский цементный завод?. The main product of each factory is M-400, and except ?Сас-Тюбинский цементный завод?, other factories could produce colored cement online.
From the factories’ location, two of them located in the east, one in north and one in south, others, ОАО ?Шымкентцемент? is near to Almaty which could meet the needs of this area.
The most important element for cement market is district while the key element of price is transportation. It is economical to convey the cement in 200 kilometer, which became important refer to choose the address of factory. 
 As Astana, Aktau and some other rock oil cities are located on the bank of Caspian Sea, and no local cement factory nearby, cement mainly depends on importing for a long time. For example, the price of imported cement from Russia to AKTYUBINSK is 3 USD/t, while the price of local cement from Wusijika is 18 USD/t. The cost of imported cement is more competitive after comparing.

3、The problem for cement industry development for Kazakstan now
President of Nazarbayev make the instruction for building industry at Sept. 5th, 2005, which means should develop national building industry specially cement and brick production.
As the importing volume of building material are increasing gradually, especially is cement, so Kazakstan are facing two hard choice:

    1)Improve the current factory and the investment is less, investment returning is faster which could relax market demand. But the problem is that Kazakstand actively enter into WTO, after joining in WTO, building material market will be open to outside, so foreign enterprise will enjoy the same treatment as local enterprise, so the cost of cement produced by wet process is lack of competition, so this couldn’t reach the target for developing national enterprises.

    2)Invest to build new modernized cement production line, as calculation, if to build a modernized production line with one million tons annual output, total investment should be 10 million USD. From the long-term investment perspective, if the profit is 10 U.S. dollars for per ton cement, the investment can recover for 10 years. However, cold winter in most parts of Kazakhstan does not facilitate the construction, cement production will be at a standstill, this will inevitably lead to a longer recovering time for the investment, which is investors have had to consider.

3)The bothering caused by imported cement

    Cement Enterprises are facing over 30% annual increasing of cement demand in Kazakstan and actively take various ways to enlarge the production and increase marketing quota, reduce the market space for imported cement. During 1996-2000, cement enterprises suffered in the hardest time in Kazakstan, total local demand is only 680 thousand tons, and no any cement factory could operate normally at that time.
The economic developing of west Kazakstand is higher than national average speed, so the cement demand is huge, but there is no cement factory at that part, this market are occupied by neighbor country very easily. In 1004, government of Kazakstan signed contract with Адани company to build a cement factory with annual output of 1.2 million tons, but until now the factory hasn’t been finished. 
Another big problem is conveyance, due to overtime usage and less maintenance for a long time, cement conveying railcar of Kazakstan Railway Company can’t be put into operation, cement factory don’t have such fund to purchase railcar.

 四、Several suggestions to Chinese Enterprises
At present, lots of local enterprise has the intend to cooperate with Kazakstan on building cement production project, but before investment, we should make a good market research and feasibility study, well understand the cement production and market situation of Kazakstan, specially pay attention to that Kazakstan is the largest land-locked state with a large ground, but most of area have the character of cold and dry. And make a good research on transportation condition, marketing distribution, address demonstration, climate condition and raw material supply, as these elements will concern to products quality and competition of price.   
West of Kazakhstan is the rank of Caspian Sea and the power industry base, at present, there is lack of large modernized cement factory, at the same time the demand of cement are the largest, with the basic condition for building a cement factory. But as there is cement producing capacity for its neighbor countries of Russia and Uzbekistan, and they have the geographical advantage, the quality of their cement is good, and the distance is short, and their products have a traditional effective for this area. Chinese enterprises should consider to use advanced production process to build modernized large cement producing enterprise to manufacture better products and keep products’ competition.
President of Kazakhstan advance to build local building material enterprises, including the guiding ideology of cement enterprises which supply a very good chance for cooperation between Chinese advanced leading enterprises and craft brother in Kazakstan. 
 
As the producing capacity of cement factory in Kazakhstan couldn’t meet the local needs at present, we suggest Chinese Large Enterprise who has conditions, after a good market research, cooperate with Kazakhstan. 
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