Cement import growth of 85% is driven by Vietnam
It said a total of 927809 tons of cement was imported into South Africa last year, which was an increase of 425144 tons compared to 2017.
South African cement exports declined by 3percent year-on-year last year, with a total of 747120 tons exported largely to Botswana, Swaziland, now called Eswatini, and Lesotho. Imports exceeded exports by about 180689 tons last year, which meant South Africa had become a net importer of cement.
Industry Insight said cement imports during November and December last year were solely from Vietnam and there have not been any cement imports from China since June last year. It added that the rand exchange rate to the US dollar was relatively stable on average for the year and not much of a driver to encourage these higher levels of cement imports.
“The main driver therefore is the new entry into South Africa, which is Vietnam,” it said. Industry Insight said Vietnam started exporting cement to South Africa from March last year, averaging 50000 tons a month.
It said listed cement and lime producer PPC was in negotiations with government authorities again regarding the adverse impact of cement imports to ensure the sustainability and stability of the domestic industry.
South Africa's cement industry previously faced a challenge from imports from Pakistan, which dropped significantly after the imposition of anti-dumping duties by the International Trade Administration Commission. However, the industry was then confronted by a new import challenge from Chinese cement producers, with Vietnam now added to the list.
Industry Insight said Vietnam in total reported record high levels of exports last year, which rose by 55percent year-on-year to 31.65million tons, with cement being shipped to more than 40 different countries.
It added that Vietnam's Ministry of Construction had estimated that cement production would rise by 6 to 8percent this year, to about 99million tons, including 69million tons for the domestic market and the remaining 30million tons for export.
“As such, the main export markets in the year ahead are expected to be the Philippines, Bangladesh, China, Taiwan and Peru. However, experts have warned Vietnamese cement exporters of risks from the Chinese market, according to Vietnam News,” Industry Insight said.
The firm said there was much talk in the State of the Nation address this month about the importance of capital/infrastructure spending and that it would become a priority going forward.
However, Industry Insight said this was not evident in the figures in the Budget, with only a modest increase in infrastructure spending in nominal terms over the medium term expenditure framework period.
It said overall allocations for infrastructure spending increased from R834.1billion to R864.9bn, which was an increase of just 3.7percent in nominal terms that would do little to stimulate the overall environment from current levels.
The firm said this was off the back of massive declines in spending, which was slashed at last year’s Budget from R947.2bn to the R834.1bn quoted.
“This was one of the main drivers of the disarray the civil construction sector found itself in, in such a short space of time last year. This year’s figures suggest there will be some stabilisation in the civil sector going forward, which is relatively positive all things considered,” it said.
- BUSINESS REPORT