Cement demand could be at peak

The current South African cement boom, driven largely by the consumer-housing boom, is possibly at its peak, commented Aveng CEO Carl Grim yesterday. Grim, addressing media and analysts during a site tour, indicated that consumer spend was already showing signs of a slowdown. He cited the slowdown in passenger car sales, as an example, and also indicated that house-price growth had halved during the year, an indication of a downturn in economic demand.

While the company, which has not yet announced plans to expand cement capacity, unlike its competitors, continually reviews the nature and timing of additional capacity, it is unlikely that the firm will be joining other firms, such as PPC and Lafarge, who have already announced plans. Grim added that the board of directors would be meeting next week to relook the situation but that, in two-and-a-half years’ time, there would already be 20% extra capacity and the signs do not indicate that extra capacity is necessary.

In fact, Aveng’s cement operations would lose some production this year as it shuts down Dudfield Kiln Two - which has an output of 2500tpd - between February and May next year. The shutdown is in line with a R165-million upgrade to meet emission standards.

Holcim, the cement firm in which Aveng has a 45,65% interest, is looking at importing spare cement in case the stockpile is not at levels that it would like to see levels at. Samples of cement have already been sent to the South African Bureau of Standards so that cement can be imported, if need be. Holcim is South Africa’s number two cement producer with between 30 per cent and 34 per cent of the market share and is currently running at capacity. It has 4.1Mt of cement capacity and a revenue of R4-billion.

During the firm’s recent results presentation, Grim indicated that cement sales were likely to level off, going from seven per cent by the end of the year to two per cent in December 2006.