Volumes sold locally by firms such as PPC, Lafarge, AfriSam and Sephaku rose to 3.39-million tonnes in the third quarter, but sales in the first nine months of last year were 1.7% behind those achieved in the same three quarters of 2013. Volumes sold in the first nine months of last year, bar imports and exports, were 8.91-million tonnes versus 9.06-million tonnes previously.
With demand hovering at just above 12-million tonnes annually, down from a high of 14-million tonnes in 2007, the industry looks set to have excess capacity for several years. With new entrants including Sephaku, which is backed by Dangote Cement, domestic capacity is estimated to grow to about 19-million tonnes before including imports.
Industry sources say the market share of imports rose from 2% in 2010 to an estimated 8% last year, with cheap imports from Pakistan affecting coastal cement markets. The International Trade Administration Commission (Itac) last year said it would probe alleged "dumping" of cement from Pakistan.
A Morgan Stanley research note sent to clients in November last year said that should the industry's plea for antidumping measures be successful, "a potential 2-million tonnes of demand could return to South African producers".
According to Pakistani media reports late last year, the south Asian country's cement exporters were considering halting coal purchases from SA in response to the investigation by Itac.
Itac said in response to Business Day questions last month that issues such as these "are matters which may be considered by the minister (of trade and industry) in making his final decision.
"The responsibility of the commission is to conduct trade remedies investigations in accordance with the domestic legislation and to make a recommendation to the minister of trade and industry," Itac said.
The Southern African industry had submitted "sufficient evidence and established a prima facie case" to warrant an investigation.
This was on the basis of "dumping", material injury and or the threat of material injury and "causality", Itac said.
To better compete in an oversupplied and difficult South African market, and to build scale elsewhere in Africa, AfriSam last month proposed a merger with PPC. The two companies are the largest South African producers, leaving analysts questioning whether competition authorities would approve a deal.
Sources close to the matter said last month AfriSam wanted to sell its business to PPC in exchange for new PPC shares, and envisaged a merged entity with a market value on the JSE of more than R25bn.
PPC was worth R15.5bn at the close of trade yesterday, after falling from R19.7bn prior to former CEO Ketso Gordhan's resignation in September last year and a subsequent tussle between shareholders and the board.
In AfriSam's merger proposal, which PPC says it is considering, AfriSam said the companies needed scale to compete against international conglomerates across Africa, including Nigeria's Dangote Cement and merging European giants Holcim and Lafarge.
Both PPC and AfriSam are searching for growth opportunities on the continent to offset the tough South African market.
The Public Investment Corporation (PIC), which holds 12.57% of PPC and has a controlling 66% stake in Afrisam, would be the largest shareholder of the merged entity.
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