PPC lobbies for tariffs on cement imports

Listed cement producer PPC is lobbying the International Trade Administration Commission, a government body, for the imposition of tariffs to curb the influx of cement imports.

For PPC, the cement imports, which jumped 80% between January and November 2018, worsened the subdued consumer environment and gloomy construction sector. The increase comes on the back of a 71% increase in imported cement in the six months to end-September 2018.

The company said the majority of cement imports were from Vietnam, China and Pakistan.

“PPC is lobbying for appropriate tariffs for imports for all countries, which will level the playing field. Currently, tariffs are only levied on cement imports from Pakistan. Furthermore, considering the current muted economic environment, a total ban would be appropriate,” PPC said in a statement.

The company pointed to overcapacity in the local market, saying current capacity was about 18-million tons a year, compared to a demand of approximately 14-million tons a year “with the growth outlook being muted”.

PPC said imports into Cape Town increased 48% to approximately 209,000 tons. This, however, was still substantially lower than the imports into Durban, which increased 84%.

PPC said in the nine months to end-December 2018 cement volumes slumped between 2% and 3% “against the backdrop of estimated market contraction of [between] 4% and 5%”.

PPC attributed the fall in cement sales for the nine months to an “uncharacteristically weak” December and subdued construction activity.

PPC’s dropoff in volumes followed the latest FNB/BER civil confidence index rising by one point to 18 in the fourth quarter of 2018 and remaining below 20 for the sixth consecutive quarter. The index reflects the state of business conditions in the civil engineering industry.

The group, which also makes aggregates, ready-mix cement, lime and limestone, as well as fly ash, said average cement prices only increased 1%-2% in Southern Africa. The company also implemented price increases of between 8% and 12% on January 15 in certain regions.

PPC said its lime business has shown resilience in profitability, while the aggregates and ready-mix business remains under pressure.

Volumes at its Zimbabwean business experienced operational problems in the third quarter, resulting in lower growth of volumes. It raised alarm over the impact of the fuel hikes in that country, which it said had placed Zimbabweans under strain.

PPC shares were up 0.36% to R5.65 on Tuesday.