Two information tales advantage a more in-depth take a look at Argentina this week. Firstly, Loma Negra fired up the kiln on its new 2.7Mt/yr manufacturing line on the L’Amalí cement plant in Olavarría. Work on the US$350m began in 2017 however was delayed as a result of coronavirus pandemic. Notably, engineers from China-based Sinoma Worldwide Engineering, who constructed the plant, precipitated a stir once they arrived in Argentina in full private protecting tools in late 2020 to proceed work on the venture. Full commissioning of the second line on the plant is scheduled for July or August 2021.
Virtually on the similar time, the Argentine authorities introduced it had persuaded native constructing supplies producers to stay to reference costs for development supplies, together with cement, as a way to management inflation. Loma Negra, Cemento Avellaneda and Petroquímica Comodoro Rivadavia (PCR) had been stated to be on board with the ‘voluntary’ plan. Constructing supplies costs typically had been reported to have risen 85% year-on-year in Might 2021 in comparison with a nationwide inflation fee of 49%. The brand new association is deliberate to final till the tip of 2021 with revisions to the reference costs each two months.
Graph 1: Cement gross sales in Argentina together with imports and exports, 2016 – 2021. Observe that the 2021 determine is an estimate. Supply: Asociación de Fabricantes de Cemento Portland (AFCP).
Information from the Asociación de Fabricantes de Cemento Portland (AFCP) doesn’t present any apparent indicators of disruption from inflation up to now in 2021. Cement gross sales grew by 50.5% year-on-year to 4.55Mt within the 5 months to Might 2021 from 3.02Mt in the identical interval in 2020. The cement market in Argentina didn’t shut down however it hit a low of 0.41Mt in April 2020 earlier than compensating with a robust second half of the 12 months, most probably because of pent-up demand because the financial system reopened following native coronavirus-related lockdowns. On the time of writing the AFCP has forecast that cement gross sales will attain 11.3Mt in 2021, a slight rise over the 11.1Mt reported in 2019, when the market was extra secure. Nevertheless, cumulative gross sales to Might 2021 are barely behind related gross sales in 2019.
Loma Negra’s improve at its L’Amalí plant follows Holcim Argentina’s inauguration of a brand new 0.5Mt/yr clinker manufacturing line at its Malagueño cement plant in Cordoba in Might 2021. This venture additionally added a 0.63Mt/yr cement grinding unit on the website in addition to a brand new 120,000 bag/day despatch unit. Altogether it had a value of US$120m. This adopted the announcement in late April 2021 that the subsidiary of LafargeHolcim was planning to open 1000 new branches of its Disensa retail chain within the nation by 2024.
Loma Negra reported a 13% drop in gross sales to US$436m in 2020 from US$500m in 2019. Nevertheless, its adjusted earnings earlier than curiosity, taxation, depreciation and amortisation (EBITDA) rose by 3% to US$139m from US$136m. This was partly aided by the gross sales of its Paraguayan operations throughout 2020. At face worth, Cemento Avellaneda had a more durable time of its in 2020 with its gross sales down by 22% to Euro111m and EBITDA down by 9% to Euro37m. Nevertheless, as soon as adjusted on a like-for-like foundation with fixed currencies and with out a hyperinflation adjustment, its gross sales and earnings really rose by 22% and 45% respectively.
Holcim Argentina’s director Christian Dedeu was interviewed by national news agency Télam in May 2021Holcim Argentina’s director Christian Dedeu was interviewed by national news agency Télam in May 2021 across the time of the improve on the Malagueño cement plant was formally accomplished. When requested by the corporate had made the funding he stated that the nation had potential for each the residential and infrastructure sectors. He additionally identified that the subsidiary of Switzerland-based LafargeHolcim had been compelled to import clinker at instances of excessive demand beforehand. The bulletins for each the Loma Negra and Holcim Argentina new traces had been made on the finish of 2017 when the market hit a excessive in gross sales volumes. Since then the nation has confronted rocketing inflation, additional delays to it debt reimbursement programme to the Worldwide Financial Fund (IMF) and the coronavirus pandemic. Producing extra commodities, comparable to clinker, domestically actually appears attractive with excessive inflation and unfavourable international foreign money alternate charges. So, the brand new manufacturing traces from Loma Negra and Holcim Argentina are properly timed on this sense except they get hit by any mounting enter prices, from imported uncooked supplies for instance. Alternatively the federal government’s measures to curb inflation comparable to reference costs for cement might constrain the cement producers’ flexibility. Because the native development business slowly recovers after 2020, continued uncertainty lies forward.