PPC-released data shows Domestic cement sales grew 4.6% in Q3 of 2014 after contracting in the first two quarters, though sales for the full year were on track to come in lower than in 2013.
Volumes sold locally by PPC, Lafarge, AfriSam and Sephaku rose to 3.39-million tonnes in Q3, but sales in the first nine months of 2014 were 1.7% behind those achieved in the same period of 2013. Volumes sold in the first nine months of last year, bar imports and exports, were 8.91-million tonnes versus 9.06-million tonnes previously.
With demand just above 12-million tpa, down from a high of 14-million tonnes in 2007, the will likely have excess capacity for several years. With new entrants including Sephaku, domestic capacity is estimated to grow to about 19-million tonnes, excluding imports.
Market share of imports rose from 2% in 2010 ±8% last year, with cheap imports from Pakistan affecting coastal cement markets. The International Trade Administration Commission (Itac) last year said it would probe alleged “dumping” of cement from Pakistan.
A Morgan Stanley research note said that, should the industry’s plea for antidumping measures be successful, “a potential 2-million tonnes of demand could return to South African producers”.
Pakistan’s cement exporters were considering halting coal purchases from SA in response to the investigation.
AfriSam merger proposal
To better compete in an oversupplied and difficult South African market, and to build scale elsewhere in Africa, AfriSam last month proposed a merger with PPC. The two companies are the largest South African producers, leaving analysts questioning whether competition authorities would approve a deal.
The Public Investment Corporation (PIC), which holds 12.57% of PPC and has a controlling 66% stake in Afrisam, would be the largest shareholder of the merged entity.
By: Nick Hedley
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