Steppe Cement 1Q14 market update, Kazakhstan

Steppe Cement Ltd said it sold 198,607t of cement in the 1Q14 for KZT2486m (US$13.7m), compared to 166,121t of cement for KZT2272m in 1Q13, representing an increase of 20 and nine per cent, respectively.

The company reported that the Kazakhstan cement market remained broadly similar compared to the same period of 2013, although the weather was colder this year compared to last. Steppe Cement's market share increased from 15 per cent in 1Q13 to 17 per cent in the first three months of the year.

Last month the company reported the successful commissioning of its new dry-process Line 5 which will increase capacity by an expected 1.2Mta.

Steppe said its average price of delivered cement in the quarter just ended fell eight per cent to KZT12,516 (excl VAT) compared with KZT13.677/t in the corresponding quarter of 2013..

"This is the consequence of the volume over price strategy decided as Line 5 was coming into full operation against the strategy of higher prices in 2013 where production was limited," Steppe Cement said in a statement.

Ex-factory price for the current quarter stood at KZT10,243/t, compared to KZT 10,850/t tonne in 1Q13, a decrease of six per cent.

The company estimates that Kazakhstan’s cement market will grow by six per cent this year to 8.6Mt from the 8.1Mt recorded in 2013.

Loan agreement
On 11 April 2014, Karcement JSC (a subsidiary of Steppe) signed a US$30m loan agreement with VTB Bank (Austria) AG and VTB Bank (France) SA to refinance the current debt owed to EBRD and HSBC.

In addition, the VTB Banks have provided an additional US$15m loan to purchase up to 300 cement wagons to be delivered in the coming four months. The wagons will replace 40 per cent of the fleet currently rented by CAC JSC (a fully owned subsidiary of Steppe Cement).