Cement Industry 2

CEMENT INDUSTRY

PRESENTED BY  FOZIA ALAM  NAZISH ANWAR  SHEHLA AMIN

AGENDA          

WHAT IS CEMENT HISTORICAL DEVELOPMENT PRODUCTION PROCESS TWO MAJOR CEMENT USED IN PAKISTAN PRICE & TAX ANALYSIS INPORT & EXPORT ANALYSIS DEMAND & SUPPLY ANALYSIS GOVT. & BUDGET POLICY CURRENT ISSUES & NEWS RECOMMENDATIONS

OVERVIEW OF CEMENT INDUSTRY 

Cement industry is correlation with aggregate economic activity.

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It is used as major ingredient of physical infra-structure of the country.

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There are 29 cement companies up to May 2007.

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In which 19 are situated in north zone and 10 are situated in south zone.

CONTD… 

Out of 29 companies 21 companies are listed in Karachi stock exchange.

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Around 20 types of cement produced worldwide.

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Pakistan produces only five types of cement i.e. ordinary Portland cement, slag cement, super sulphate resisting cement, sulphate resistant cement and white cement.

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The total installed cement production capacity is 36.841 million tons.

WHAT IS CEMENT? 

A Cement is a binder, a substance which sets and harden independently.

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It also binds other material together.

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These are generally combination of lime stone, shells or chalk and shale, clay, sand or iron ore.

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The word “cement” comes from the term “opus caementitium” i.e. “masonry which resembeled concrete and was made from crushed rock which burnt lime as binder”.

CONTRIBUTION TO NATIONAL ECONOMY BY CEMENT SECTOR Direct and Indirect Taxes

Rs. 23.50 Billion

Value of Fixed Assets Deployed

Rs. 85.21 Billion

Loans from Financial Institutions

Rs. 79.53 Billion

Shareholders Equity

Rs. 80.00 Billion

Employment (Direct & Indirect)

150,000 (Approx.)

Direct and Indirect Taxes

Rs. 23.50 Billion

Value of Fixed Assets Deployed

Rs. 85.21 Billion

Loans from Financial Institutions

Rs. 79.53 Billion

Shareholders Equity

Rs. 80.00 Billion

Employment (Direct & Indirect)

150,000 (Approx.)

HISTORICAL DEVELOPMENT OF CEMENT INDUSTRY 

1947(Bad era): Only one or two units were producing grey cement in the country.

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1948-58: The number of cement units increased to six.

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1958-68(Boom era/Ayub era): The cement units increased from 6-9.

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1971-77(Nationalization/Bhutto era): No new units were setup.

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1977-78(Denationalization): Cement units increased from 9 to 23.

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90’s(Dark era/Cement sector had to bear massive losses): 24 units

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Current scenario: 29 players are operating.

REVIVAL IN CEMENT SECTOR 

Increase in cement demand.

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Projects started by federal & city district government.

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Export doubled to Afghanistan.

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Conversion in cement industry (from wet to dry plant).

RAW MATERIALS 

Main raw materials of cement include:

1.

Lime Alumina Iron Laterite

2. 3. 4. 

Preparation of raw material includes following steps:

1.

Raw Mill Fuels Burning Cooler units Filters

2. 3. 4. 5.

PRODUCTION PROCESS There are three types of process: 

Dry process:

1.

It is the most popular process in the Pakistan cement industry. The fuel requirement is about 800 Kcal per kg of clinker. The raw material is preheated and partially calcined resulting in higher kiln efficiency. The kiln being shorter in length requires less space in erection and easier to maintain.

2. 3. 4.

CONTD…. 

1. 2. 3.

WET PROCESS This process has become obsolete due to: Constraints of kiln dimension Large water requirements Extremely poor heat efficiency

SEMI-WET PROCESS 1.

This process is situated for materials with sufficiently high plasticity.

2.

The process has become outdated due to high fuel/energy consumption.

3.

Main utilities for cement production are: Fuel oil Natural gas and coal Electricity Water

d. e. f. g.

CEMENT MANUFACTURING PROCESS

KEY STAGES IN CEMENT PRODUCTION 1. 2. 3. 4.

Raw materials Pre-heater Kiln Cooling/finish grinding

TYPES OF CEMENT There are two types of cement: • Hydraulic • Non-hydraulic cement

TWO MAJOR CEMENT USE IN PAKISTAN 

ORDINARY PORTLAND CEMENT

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SULPHATE RESISTANT CEMENT

ORDIANARY PORTLAND CEMENT 1.

It is made by heating a mixture of limestone and clay, to a temperature of 1450 degrees centigrade.

2.

These results in partial fusion and formation of nodules called clinker. This clinker when ground with a certain percentage of gypsum results in cement.

3.

Ordinary Port Land Cement is suitable for all modern types of construction, including all kinds of masonry, concrete works, prestressed concrete, repair works etc.

SULPHATE RESISTANT CEMENT 

It is also used wherever there are constructions that are in direct contact with clay soil, which contains a large amount of sulfate salt, such as foundations and pillars.

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This special cement is very resistant to attack from sodium and magnesium sulphates found in ground water.

World’s Cement Production (Qty = 000 tonnes) Countries

2001

2002

2003

2004

2005

United States

90,450

91,300

92,600

99,000

99,100

Brazil

39,500

39,500

40,000

38,000

39,000

China

626,500

705,000

750,000

934,000

1,000,000

Egypt

24,500

23,000

26000

28,000

27,000

France

19,839

20,000

20000

21,000

20,000

Germany

28,034

30,000

28000

32,000

32,000

India

100,000

100,000

110,000

125,000

130,000

Indonesia

31,100

33,000

34,0000

36,000

37,000

Iran

26,650

30,000

31,000

30,000

32,000

Italy

39,804

40,000

40,000

38,000

38,000

Japan

76,550

71,800

72,000

67,400

66,000

Korea

52,012

55,500

56,000

53,900

50,000

Mexico

29,966

31,100

31,500

35,000

36,000

Pakistan

9,876

9,985

11,410

13,344

17,112

Russia

35,100

37,700

40,000

43,000

45,000

Saudi Arabia

20,608

21,000

23,000

23,000

24,000

Spain

40,512

42,500

40,000

46,800

48,000

Thailand

27,913

31,700

35,000

35,600

40,000

Turkey

30,120

32,600

33,000

38,000

38,000

Others

351,014

350,015

348,590

367,656

374,888

World total

1,700,000

1800,000

1,860,000

2,130,000

2,220,000

PAKISTAN CEMENT PRODUCTION Year

Cement Production

1991 (June)

7.649

1992 (June)

8.115

1993 (June)

8.348

1994 (June)

8.158

1995 (June)

8.159

1996 (June)

9.458

1997 (June)

9.539

1998 (June)

9.29

1999 (June)

9.546

2000 (June)

9.969

2001 (June)

9.876

2002 (June)

9.988

2003 (June)

11.410

2004 (June)6yr

13.344

2005 (June)

17.112

2006 (June)

19.512

PRICE & TAX ANALYSIS 

The current price of cement in Pakistan is 290 per bag.

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Presently, the cement industry of Pakistan is heavily burdened due to levy of federal exercise duty @ RS 750 per ton

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General sales tax @ 15% on duty paid value

IMPORT & EXPORT ANALYSIS IMPORTS & EXPORTS Cement Imports Nil (Custom Duty @ 25%) Cement Exports In 2001, after five slack years, the industry has started picking up the pace. According to the State Bank’s report, cement exports rose to 158,666 tones during first half (H1) of 2003–49% higher than the same period of previous year–and earned $3.5 million against $0.6 million of the same period in 2002. INVESTMENT Presently the cost of a new project is around Rs 6 billion (Chinese Plant of 3300 tonnes per day) CAPACITY UTILIZATION Overall capacity utilization of the industry has increased to 88%, in 2006, as compared to 91%, in 2005.

DEMAND ANALYSIS  1.

2.

LOCAL MARKET DEMAND: Sustainable growth in allocation of budget for PSDP. Profitability of cement sector 2003……..2 2004…..…4 2005……..6(in PKR billions)

3. High sales

DEMAND & SUPPLY ANALYSIS 



Continued improvement in macro economic climate of the country. Up surge in real state sector.

GOVERNMENT & BUDGET POLICY 2007-08 

Govt. expected to have surplus of 10 MILLIION TONES by the end of 2007.

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A specialized coal, clinker & cement terminal is planned to be setup in PORT QASIM KARACHI.

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Record increase in PSDP

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Central exercise duty remain at preceding level

CURRENT ISSUES 

BUDGET (2007-08)-IMPACT ON CEMENT SECTOR.

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IMPACT OF GDP GROWTH ON CEMENT CONSUMPTION.

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INCREASED PER CAPITA CONSUMPTION.

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CONSTRUCTION & IMPACT BIG DAMS ON CEMENT SECTOR

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EXPORT POTENTIAL.

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CEMENT DISPATCHES

CURRENT NEWS 

Cement Dispatches Cross 2.25m Mt In March

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Now Govt. Should Improve Law & Order To Support Export

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Cement Industry Contribution To Gdp Under-reported

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Ban Likely To Be Place On Cement Import

CONT… 

NO CHANGE IN CEMENT IMPORT AND EXPORT POLICY.

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CRISIS: COUNTRY FACES ENERGY CRISIS, ANOTHER WEEKLY HOLIDAY UNDER-STUDY.

COMPARATIVE ANALYSIS OF ALL UNITS

RECOMMENDATIONS 

Short term measures Freight subsidy  Duty drawback  Port charges 

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Medium term measures 

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Abolishing of /reduction in central excise duty

Long term measures 

Infrastructure at ports

THANK YOU!