Steppe Cement sees continued improvement in Kazakhstan market

Kazakhstan-based cement producer Steppe Cement said that in 2011, sales continued to improve on the back of the cement market recovery which commenced in the second half of 2009. In line with both price and volume increases of 24% and 7% respectively, the company posted net profit of US$3.3m with a higher capacity utilisation rate of 80%.

During the year, cement price increases coupled with operational efficiencies more than offset the rising cost of fuel, transportation and especially electricity, the company said in a statement.

In terms of its domestic market, the economy has continued to rebound helped by higher commodity prices and according to the National Bank of Kazakhstan the GDP grew by 7% in 2011. Last year domestic cement sales reached 6.2Mt, an increase of 8% compared to 5.7Mt in 2010. As the government continues its programme of road and railway construction and infrastructure investment, the company notes: “Our expectations are that overall market demand in 2012 will increase by 6% to 6.6Mt. This increase in market size will mostly be taken up by the new entrants in 2010 and 2011 as well as ourselves, given that we have the spare capacity to do so.”

Imports declined again in 2011 and the share of local producers increased from 80% to 86%. Average cement prices increased by 24% compared to the previous year. Prices stood at US$67/t ex-factory or approximately US$78/t delivered.

Steppe Cement managed to maintain a 20% share of the cement market in Kazakhstan in? 2011 and this year it is seeking to maintain its market share and increase prices "although not as aggressively as last year," the company noted.

With domestic cement market growth is expected to continue, Steppe Cement is evaluating the possibility of completing its Line 5 refurbishment subject to the availability of financing on attractive terms.