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Annexure Monthly Report - May, 2018

Cement sector overview, Annexure deal flow, monthly news picks, etc.

· Monthly report

Overview of Uzbek cement sector

Cement sector is concentrated with top 4 players producing 93% of the total cement (9.2 MT/year as of 2018) in Uzbekistan. Qizilqum Cement (3.6 mln MT/year as of 2017), Akhangarancement (owned by Russia’s Eurocement; 2.2 mln MT/year as of 2017), Bekabad Cement (1.1 mln MT/year) and Almalyk (1.0 mln MT/year) are the top 4 cement companies in Uzbekistan. New entrants to the industry with smaller production capacity are Djizzakh Cement, Karakalpak (Titan) Cement and Turon Eco Cement. Very large portion of cement produced in the country serves the internal demand of Uzbekistan while small portion is exported to Central Asian countries and Afghanistan. Add paragraph text here.

Uzbekistan cement production growth

Source: UzBuildingMaterials, Decree of Cabinet of Ministers

For the past 4-5 years, cement production in Uzbekistan has been growing at high single digits which is in line with economic growth of Uzbekistan. Uzbekistan plans to increase annual cement production to 22 mln MT/year by 2022E, which translates into 2018-22E CAGR of 17%. We also expect significant growth in demand in near future driven by 1) high growth in real estate sector – both government (massive housing program for low-income population, large infrastructure projects like “Tashkent City”, etc.) and private sector (many residential and commercial real estate projects are being developed and planned by leading players like Golden House, Murad Buildings, etc.). 

New Projects in Cement Sector

Of the new projects announced recently, new cement plant with 3.0 mln MT/year capacity by Eurocement is the most important one. In November, 2017, Akhangarancement, subsidiary of Russia’s Eurocement signed a $160 mln deal with Beijing Triumph International Engineering, a subsidiary of China National Building Material’s (CNBM) to build a new cement plant which is expected to completed by 2020. According to the media, JV of Uzbek, Chinese and Saudi Arabian investors has started cement grinding plant (Popcement) in Namangan region with the capacity of 0.5 mln MT/year. The completion schedule for the project is September 2018. Another new cement plant which was planned to be built in Andijan by Chinese investors (Shangfeng-Bridge of Friendship, an Uzbek-Chinese JV) seems to be cancelled according to the industry experts we have spoken to. We are not sure about the new cement plant in Karakalpakstan by Korean investor, Evergreen Holdings as it is not involved in this sector. China Anhui Conch has been also showing an interest in cement sector of Uzbekistan but we haven’t seen any action plans from this company yet.

Large infrastructure and real estate projects are double-edge swords. While these project drive the demand for cement significantly, they might also affect market price mechanism negatively. Recently, Uzbekistan government via resolution set a price cap on cement price for approved suppliers to sell 2 mln MT in the country in order to support real estate, housing and other infrastructure projects in the country. The resolution also includes increased rate of tax for the cement manufacturing companies.

Please contact us at sales@annexurefs.com if you would like to get support from Annexure Financial Solutions on topics including but not limited to:

  • Detailed research and analysis of cement sector in Uzbekistan
  • Entry strategies into Uzbekistan’s cement sector
  • Cement projects for potential investors.

Annexure will be focusing on certain sector overview for each monthly report. If you are interested in particular sector, please let us know in advance so that we can cover that sector in our next issues.

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