Steppe Cement 1Q17 volumes down as Kazakh market contracts

Steppe Cement reported a 35 per cent YoY decline in cement sales volumes to 124,669t in the first quarter of 2017 as cement consumption in Kazakhstan fell five per cent YoY.

In March 2017 alone, domestic consumption was down by 12 per cent, partly due to extended holidays, Steppe Cement said in a trading update released last week.

The company added that it continued its strategy of increasing prices at the expense of market share. As a result, its market share fell from 16 per cent in 1Q16 to 10 per cent in 1Q17.

The average price in 1Q17 for delivered cement was KZT12,257/t excluding VAT (US$39 ex VAT) compared with KZT10,494/t in the corresponding quarter of 2016, an increase of 17 per cent. The ex-factory price for 1Q17 stood at KZT10,500/t versus KZT8689/t in 1Q16 (+21 per cent).

Steppe Cement estimates that the Kazakh cement market will decline by 4.5 per cent this year to 8.5Mt from 8.9Mt in 2016. However, it noted that exports from Kazakhstan increased by 75 per cent in the first quarter, a trend that is likely to continue for the remainder of the year, the company added.