Russia: Eurocement expects further fall in cement demand

Cement demand in Russia will slump by 8-10 per cent in 2016 after falling 12 per cent in 2015, the owner of leading Russian cement producer Eurocement Group, Filaret Galchev, said in an interview on TV channel Rossiya 24.

Eurocement controls about a third of the Russian cement market, and will sell about 20Mt of cement in Russia and about 3.5Mt in other regions such as Uzbekistan and Ukraine in 2016, Mr Galchev said.

Average production costs at the group, which will maximise the use of modern dry-process capacity and mothball inefficient wet capacity given the situation on the market, is RUB1600-1650/t, he said.

Elsewhere, Mr Galchev said that the sale of a 6.1 per cent stake in LafargeHolcim held by Eurocement Group came as a surprise. Eurocement was a shareholder in Holcim and received the LafargeHolcim stake after that company was formed in a merger. The stake was subsequently transferred to Sberbank of Russia in January after the shares, which he had acquired with financing from Bank of America, lost over 40 per cent of their value in half a year. At the beginning of February, Sberbank sold the 6.12 per cent LafargeHolcim stake to investors from the UK, Switzerland, the US and other countries.

"We had agreed with Sberbank that we would safeguard this investment, but it turned out a little differently. What has happened is happened," Mr Galchev said in an interview with Rossiya 24 television.

"No, I did not expect it [Sberbank's sale of the stake on the market]. We analysed the situation for a long time, but that is the decision that was made," he said. However, he has no complaints against Sberbank, which restructured Eurocement's debt shortly after sale of the LafargeHolcim stake. "It would be wrong to reproach anyone now," he said.