Imports of cement and clinker into South Africa surged to near record highs in September as critical shortages of cement and other building and construction materials were reported in the domestic market.
Construction market intelligence firm Industry Insight said 183 159 tons of cement was imported in September, the highest level since November 2014 when 186 789 tons was imported.
This follows cement imports plunging to only 68 tons in both March and April, the height of the hard Covid-19 lockdown.
South Africa’s cement industry is still waiting to hear about the outcome of its application to the International Trade Administration Commission last year for protection against imported cement.
Industry Insight senior economist David Metelerkamp said Vietnam accounted for 59% or 107 189 tons of the cement imported into South Africa in September, and Pakistan 41% or 75 716 tons.
Metelerkamp said the tons of cement imported in the first nine months of 2020 is still lower than that of 2019 (6.8% lower at 679 748 tons) but the large increase in September has narrowed the gap between the volumes imported in this period in 2020 compared with 2019.
Shortages lockdown-induced
He said the industry has struggled with some shortages due to local producers cutting production to deal with Covid-19 lockdown regulations, but has slowly started to ramp up production during the last few months as cement demand increased at a stronger rate than expected, mainly due to an unexpected volume increase through retailers, typically the DIY market.
“The cement shortage was further exacerbated by transport problems caused by industrial action. Incidences were reported through our ongoing surveys among contractors where local cement could not be sourced by retailers, which resulted in negotiations with import suppliers to fill the gap,” he said.
Moneyweb reported earlier this month that critical shortages of building and construction materials, including cement, steel, bricks and timber, were suffocating the sector’s recovery from the Covid-19 lockdown and diminishing its impact on the recovery of the economy.
Demand underestimated
PPC South Africa MD Njombo Lekula said at the time that nobody anticipated the current demand for cement when the lockdown was implemented and nobody knows if the current demand will be sustained into the future.
Lekula said PPC continued to supply, and delayed the maintenance shutdown of its plants where possible to accommodate the growing demand, even while running at 50% capacity at Level 4 of the lockdown.
“The demand picked up mostly in the retail sector, where most of the extended cement products are sold and indications are that this is mainly driven by home improvement projects,” he said.
Lekula stressed the issues around supply are related to factors outside the control of the cement industry and, in PPC’s view, are temporary.
“Following a pessimistic view about the post-lockdown economy, we were pleasantly surprised by an unexpected increase in demand.
“While our plans were informed by the prevailing lack of supporting projects in the pipeline, we have managed to immediately reset to reposition ourselves and readjusted the plans at a cost. The untimely transport strike has an impact and … needs to be addressed,” he said.
Pressure
PPC CEO Roland van Wijnen said last month PPC faces overcapacity in South Africa and is experiencing increased competitive pressure because of imports and non-conforming products.
However, Van Wijnen said PPC Cement South Africa and Botswana had experienced double-digit year-on-year sales volume growth since June, with the volumes for the three months from July to September recording year-on-year growth of 20% to 25%.
South Africa’s building and construction material suppliers are expected to receive a major boost from the government’s multi-billion rand infrastructure expenditure plan that aims to stimulate the economy post Covid-19.
Further evidence emerged last week that this investment drive is starting to happen, with JSE-listed construction group Raubex confirming it has been awarded two major contracts by the SA National Road Agency (Sanral) valued together at R2.87 billion.
Raubex CEO Rudolf Fourie said on Tuesday both contract awards relate to projects that were among the 50 strategic infrastructure projects (SIPs) gazetted by the government and follows the company earlier this month being awarded another SIP road project valued at R1.48 billion.
Source: https://www.moneyweb.co.za/news/industry/cement-imports-surge-to-near-record-highs-amid-sa-shortages/
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