cement industry 2

8/14/2019 Cement Industry 2

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CEMENT INDUSTRYCEMENT INDUSTRY

PRESENTED BYPRESENTED BY

FOZIA ALAMFOZIA ALAM

NAZISH ANWARNAZISH ANWAR

SHEHLA AMINSHEHLA AMIN


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AGENDAAGENDA

WHAT IS CEMENTWHAT IS CEMENT HISTORICAL DEVELOPMENTHISTORICAL DEVELOPMENT PRODUCTION PROCESSPRODUCTION PROCESS TWO MAJOR CEMENT USED IN PAKISTANTWO MAJOR CEMENT USED IN PAKISTAN PRICE & TAX ANALYSISPRICE & TAX ANALYSIS INPORT & EXPORT ANALYSISINPORT & EXPORT ANALYSIS DEMAND & SUPPLY ANALYSISDEMAND & SUPPLY ANALYSIS

GOVT. & BUDGET POLICYGOVT. & BUDGET POLICY CURRENT ISSUES & NEWSCURRENT ISSUES & NEWS RECOMMENDATIONSRECOMMENDATIONS


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OVERVIEW OF CEMENTOVERVIEW OF CEMENT

INDUSTRYINDUSTRY

Cement industry is correlation withCement industry is correlation with

aggregate economic activity.aggregate economic activity.

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

There are 29 cement companies up toThere are 29 cement companies up to

May 2007.May 2007.

In which 19 are situated in north zoneIn which 19 are situated in north zone

and 10 are situated in south zone.and 10 are situated in south zone.


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CONTDCONTD Out of 29 companies 21 companies are listed inOut of 29 companies 21 companies are listed in

Karachi stock exchange.Karachi stock exchange.

Around 20 types of cement produced worldwide.Around 20 types of cement produced worldwide.

Pakistan produces only five types of cement i.e.Pakistan produces only five types of cement i.e.ordinary Portland cement, slag cement, superordinary Portland cement, slag cement, supersulphate resisting cement, sulphate resistantsulphate resisting cement, sulphate resistantcement and white cement.cement and white cement.

The total installed cement production capacity isThe total installed cement production capacity is36.841 million tons.36.841 million tons.


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WHAT IS CEMENT?WHAT IS CEMENT?

AA CementCement is a binder, a substanceis a binder, a substancewhich sets and harden independently.which sets and harden independently.

It also binds other material together.It also binds other material together.

These are generally combination ofThese are generally combination oflime stone, shells or chalk andlime stone, shells or chalk and

shale, clay, sand or iron ore.shale, clay, sand or iron ore. The word cement comes from theThe word cement comes from the

term term opus caementitiumopus caementitium i.e.i.e.masonry which resembeled concretemasonry which resembeled concreteand was made from crushed rockand was made from crushed rock

which burnt lime as binder.which burnt lime as binder.


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CONTRIBUTION TO NATIONAL ECONOMYCONTRIBUTION TO NATIONAL ECONOMY

BY CEMENT SECTORBY 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.)


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HISTORICAL DEVELOPMENT OFHISTORICAL DEVELOPMENT OF

CEMENT INDUSTRYCEMENT INDUSTRY

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

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

1958-68(Boom era/Ayub era):1958-68(Boom era/Ayub era):

The cement units increasedThe cement units increased

from 6-9.from 6-9.

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

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

to 23.to 23.

90s(Dark era/Cement sector had to bear massive losses):90s(Dark era/Cement sector had to bear massive losses):24 units24 units

Current scenarioCurrent scenario: 29 players are operating.: 29 players are operating.


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REVIVAL IN CEMENTREVIVAL IN CEMENT

SECTORSECTOR

Increase in cement demand.Increase in cement demand.

Projects started by federal & cityProjects started by federal & city

district government.district government.

Export doubled to Afghanistan.Export doubled to Afghanistan.

Conversion in cement industry (fromConversion in cement industry (fromwet to dry plant).wet to dry plant).


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RAW MATERIALSRAW MATERIALS Main raw materials of cementMain raw materials of cement

include:include:

1.1. LimeLime

2.2. AluminaAlumina

3.3. IronIron

4.4. LateriteLaterite

Preparation of raw materialPreparation of raw materialincludes following steps:includes following steps:

1.1.

Raw MillRaw Mill2.2. FuelsFuels

3.3. BurningBurning

4.4. Cooler unitsCooler units

5.5. FiltersFilters


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PRODUCTION PROCESSPRODUCTION PROCESSThere are three types of process:There are three types of process:

Dry process:Dry process:1.1. It is the most popular process in the PakistanIt is the most popular process in the Pakistan

cement industry.cement industry.

2.2. The fuel requirement is about 800 Kcal per kgThe fuel requirement is about 800 Kcal per kgof clinker.of clinker.

3.3. The raw material is preheated and partiallyThe raw material is preheated and partiallycalcined resulting in higher kiln efficiency.calcined resulting in higher kiln efficiency.

4.4. The kiln being shorter in length requires lessThe kiln being shorter in length requires lessspace in erection and easier to maintain.space in erection and easier to maintain.


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CONTD.CONTD.

WET PROCESSWET PROCESSThis process has become obsoleteThis process has become obsolete

due to:due to:

1.1. Constraints of kiln dimensionConstraints of kiln dimension2.2. Large water requirementsLarge water requirements

3.3. Extremely poor heat efficiencyExtremely poor heat efficiency


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SEMI-WET PROCESSSEMI-WET PROCESS

1.1. This process is situated for materials withThis process is situated for materials withsufficiently high plasticity.sufficiently high plasticity.

2.2. The process has become outdated due to highThe process has become outdated due to high

fuel/energy consumption.fuel/energy consumption.

3.3. Main utilities for cement production are:Main utilities for cement production are:

d.d. Fuel oilFuel oil

e.e. Natural gas and coalNatural gas and coal

f.f. ElectricityElectricity

g.g. WaterWater


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CEMENT MANUFACTURINGCEMENT MANUFACTURING

PROCESSPROCESS


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KEY STAGES IN CEMENTKEY STAGES IN CEMENT

PRODUCTIONPRODUCTION

1.1. Raw materialsRaw materials

2.2. Pre-heaterPre-heater3.3. KilnKiln

4.4. Cooling/finish grindingCooling/finish grinding


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TYPES OF CEMENTTYPES OF CEMENT

There are two types of cement:There are two types of cement:

HydraulicHydraulic Non-hydraulic cementNon-hydraulic cement


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TWO MAJOR CEMENT USETWO MAJOR CEMENT USE

IN PAKISTANIN PAKISTAN

ORDINARY PORTLAND CEMENTORDINARY PORTLAND CEMENT

SULPHATE RESISTANT CEMENTSULPHATE RESISTANT CEMENT


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ORDIANARY PORTLANDORDIANARY PORTLAND

CEMENTCEMENT1.1. It is made by heating a mixture of limestoneIt is made by heating a mixture of limestone

and clay, to a temperature of 1450 degreesand clay, to a temperature of 1450 degreescentigrade.centigrade.

2.2. These results in partial fusion and formation ofThese results in partial fusion and formation ofnodules called clinker. This clinker whennodules called clinker. This clinker whenground with a certain percentage of gypsumground with a certain percentage of gypsumresults in cement.results in cement.

3.3. Ordinary Port Land Cement is suitable for allOrdinary Port Land Cement is suitable for allmodern types of construction, including allmodern types of construction, including allkinds of masonry, concrete works, pre-kinds of masonry, concrete works, pre-stressed concrete, repair works etc.stressed concrete, repair works etc.


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SULPHATE RESISTANTSULPHATE RESISTANT

CEMENTCEMENT

It is also used wherever there areIt is also used wherever there are

constructions that are in direct contact withconstructions that are in direct contact with

clay soil, which contains a large amount ofclay soil, which contains a large amount ofsulfate salt, such as foundations and pillars.sulfate salt, such as foundations and pillars.

This special cement is very resistant toThis special cement is very resistant to

attack from sodium and magnesiumattack from sodium and magnesium

sulphates found in ground water.sulphates found in ground water.


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Worlds 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


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PAKISTAN CEMENTPAKISTAN CEMENT

PRODUCTIONPRODUCTIONYear 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


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PRICE & TAX ANALYSISPRICE & TAX ANALYSIS

The current price of cement in Pakistan isThe current price of cement in Pakistan is

290 per bag.290 per bag.

Presently, the cement industry of Pakistan isPresently, the cement industry of Pakistan isheavily burdened due to levy of federalheavily burdened due to levy of federal

exercise duty @ RS 750 per tonexercise duty @ RS 750 per ton

General sales tax @ 15% on duty paid valueGeneral sales tax @ 15% on duty paid value


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IMPORT & EXPORTIMPORT & EXPORT

ANALYSISANALYSISIMPORTS & EXPORTS

Cement ImportsNil (Custom Duty @ 25%)

Cement ExportsIn 2001, after five slack years, the industry has started picking up the pace.

According to the State Banks report, cement exports rose to 158,666 tones during firsthalf (H1) of 200349% higher than the same period of previous yearand earned $3.5million 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, ascompared to 91%, in 2005.


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DEMAND ANALYSISDEMAND ANALYSIS

LOCAL MARKET DEMAND:LOCAL MARKET DEMAND:

1.1. Sustainable growth in allocation of budget forSustainable growth in allocation of budget for

PSDP.PSDP.

2.2. Profitability of cement sectorProfitability of cement sector

2003..22003..2

2004..42004..4

2005..6(in PKR billions)2005..6(in PKR billions)

3. High sales3. High sales


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DEMAND & SUPPLYDEMAND & SUPPLY

ANALYSISANALYSIS

Continued improvement in macroContinued improvement in macro

economic climate of the country.economic climate of the country.

Up surge in real state sector.Up surge in real state sector.


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GOVERNMENT & BUDGETGOVERNMENT & BUDGET

POLICY 2007-08POLICY 2007-08

Govt. expected to have surplus of 10Govt. expected to have surplus of 10

MILLIION TONES by the end of 2007.MILLIION TONES by the end of 2007.

A specialized coal, clinker & cementA specialized coal, clinker & cementterminal is planned to be setup in PORTterminal is planned to be setup in PORT

QASIM KARACHI.QASIM KARACHI.

Record increase in PSDPRecord increase in PSDP Central exercise duty remain atCentral exercise duty remain at

preceding levelpreceding level


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CURRENT ISSUESCURRENT ISSUES

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

IMPACT OF GDP GROWTH ON CEMENT CONSUMPTION.IMPACT OF GDP GROWTH ON CEMENT CONSUMPTION.

INCREASED PER CAPITA CONSUMPTION.INCREASED PER CAPITA CONSUMPTION.

CONSTRUCTION & IMPACT BIG DAMS ON CEMENT SECTORCONSTRUCTION & IMPACT BIG DAMS ON CEMENT SECTOR

EXPORT POTENTIAL.EXPORT POTENTIAL.

CEMENT DISPATCHESCEMENT DISPATCHES


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CURRENT NEWSCURRENT NEWS

Cement Dispatches Cross 2.25m Mt InCement Dispatches Cross 2.25m Mt In

MarchMarch

Now Govt. Should Improve Law & Order ToNow Govt. Should Improve Law & Order To

Support ExportSupport Export

Cement Industry Contribution To GdpCement Industry Contribution To Gdp

Under-reportedUnder-reported

Ban Likely To Be Place On Cement ImportBan Likely To Be Place On Cement Import


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CONTCONT

NO CHANGE IN CEMENT IMPORTNO CHANGE IN CEMENT IMPORT

AND EXPORT POLICY.AND EXPORT POLICY.

CRISIS:CRISIS: COUNTRY FACES ENERGYCOUNTRY FACES ENERGY

CRISIS, ANOTHER WEEKLY HOLIDAYCRISIS, ANOTHER WEEKLY HOLIDAY

UNDER-STUDY.UNDER-STUDY.


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COMPARATIVE ANALYSISCOMPARATIVE ANALYSIS

OF ALL UNITSOF ALL UNITS

CO O S


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RECOMMENDATIONSRECOMMENDATIONS

Short term measuresShort term measures Freight subsidyFreight subsidy

Duty drawbackDuty drawback

Port chargesPort charges Medium term measuresMedium term measures

Abolishing of /reduction in central excise dutyAbolishing of /reduction in central excise duty

Long term measuresLong term measures Infrastructure at portsInfrastructure at ports


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THANK YOU!THANK YOU!

cement industry 2

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