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Yuan assets gaining favor in Russia, with yuan-rouble trading volume expected to overtake that of dollar-rouble in 2022

Yuan-denominated assets are gaining favor in the Russian market as bilateral trade gains momentum, a Chinese expert said on Thursday, after Russia’s largest bourse predicted that the trading volumes of Chinese yuan and Russian rouble would exceed that of the rouble and the US dollar next year.

Facing sanctions by the US-led West, Russia has been cutting its usage of US dollar and the euro, while increasing settlement in local currencies in foreign trade, Li Xin, director of the Institute for Eurasian Studies at the Shanghai University of Political Science and Law, told the Global Times on Thursday.

The country has not only increased the usage of yuan in the growing trade with China, it has also started to use yuan to settle its trade with other countries and regions, such as India, Li noted.

India’s biggest cement producer, UltraTech Cement, reportedly paid in Chinese yuan for a shipment of coal from Russian producer SUEK, Reuters reported on June 29.

In addition to trading settlement, some Russian business giants have started to issue yuan-denominated bonds as well. Russia’s largest gold miner, PJSC Polyus, has priced an issuance of 5-year yuan-denominated bonds at a coupon rate of 3.8 percent per annum, with a nominal value of bonds of 4.6 billion yuan ($644 million), according to a statement the company released on August 24.

Less than one month earlier, Russian aluminum company Rusal issued 4 billion yuan-denominated bonds in the Russian market. According to a Reuters report on Thursday, Rusal’s director of corporate financing, Alexey Grenkov, told a finance conference that 20 percent of the company’s loans were already in yuan.

In August, the trading turnover of yuan against the rouble exceeded 6.9 billion roubles ($118 million), 61 times higher than in last December, the report said, citing data from the Moscow Exchange.

China and Russia have enhanced cooperation in economic and trading areas over recent years. Except for a slight drop in 2020, bilateral trade recorded rapid growth in recent years. In 2021, bilateral trade stood at $146.87 billion, up 35.9 percent year-on-year, and China remained Russia’s largest trading partner for a 12th consecutive year, according to data from China’s Ministry of Commerce.

In the first eight months of this year, bilateral trade totaled $117.2 billion, up 31.4 percent year-on-year, according to data from the General Administration of Customs.

It is expected that bilateral trade between Russia and China will hit a new high this year, experts said.

Besides growing trading momentum, it is obvious that the yuan has advantages for Russian businesses seeking alternatives to the US dollar or euro, given China’s status as the world’s second-largest economy and the largest trading partner for over 120 countries and regions, according to Li.

Aside from Russian businesses, the yuan has also been gaining favor in the international market in recent years, especially in developing countries with Washington repeatedly weaponizing its dollar hegemony to attack others, Li said, predicting that the internationalization of yuan would be enhanced over the long term.

Pakistan cement demand expected to rise in floods aftermath

Sindh Chief Minister Murad Ali Shah has stated that the provincial government would start building homes and other civil infrastructures for flood victims as soon the water has receded in Sindh province. The other provinces will follow in their footsteps. Furthermore, Pakistan’s top cement manufacturers expect domestic demand for cement to pick up in 3-6 months, as soon as rehabilitation works are started under aid from various foreign countries and government allocation. The federal government has already shifted some funds from Public Sector Development Programme to flood refugees.

The recent floods have severely impacted Pakistan, leading to massive damage to the country’s physical infrastructure, including homes, roads, bridges and crops. According to the National Disaster Management Authority (NDMA), in the period up to 14 September 2022, there has been a cumulative loss of 1.76m houses (partially and fully damaged), 390 bridges and 12,718km of roads.

Topline Research surveyed Pakistan’s leading cement manufacturers to understand better the situation and sector’s outlook after the floods. These manufacturers cumulatively represent 76 percent of the total industry size in terms of plant capacity. The research house expects a fall in cement dispatches in FY22-23. It anticipates cement dispatches to decline by 12 per cent in FY22-23, followed by an increase of 11 per cent in FY23-24, as the reconstruction of infrastructure will result in increased demand for the sector, especially when federal and provincial governments will increase spending in an election year.

However, cement prices remain flat during FY22-23 from the current levels as it would be tough for manufacturers to increase costs further, given the existing economic environment.

Still, there are concerns about planned capacities that could again cause pressure on cement pricing. But the research house believes that the planned capacities could face delays, especially in greenfield projects where the central bank had imposed restrictions on the import of machinery. Thus, the scheduled capacities expected in FY22-23 and FY23-24 could be delayed to FY23-24 and FY24-25.

Qassim Cement to acquire Hail Cement

Qassim Cement has concluded a non-binding memorandum of understanding (MoU) with Hail Cement for acquisition of the latter’s issued shares. After any acquisition takes place, Qassim Cement plans to issue US$377m-worth of share capital in favour of Hail Cement’s existing shareholders.

Fauji Cement more than doubles revenue in FY2022

Pakistan-based Fauji Cement Company Ltd has reported revenue of PKR54,243m (US$227m) in the year ended 30 June 2022, compared to PKR24,271m in the same period a year earlier. Over the 12-month period, operating profit advanced from PKR5053m to PKR11,982m, while profit for the year improved from PKR3471m to PKR7112m. Earnings per share in the year ended 30 June 2022 came in at PKR3.26, up from PKR2.52 in the year ended 30 June 2021.

The company’s board of directors has also approved the setting up of an 11.25MW solar power plant at its Nizampur site. The PKR1600m project is due to be completed in the first half of 2023 and will boost Fauji Cement’s solar power capacity to 40MW.

IMS Research has added that FCCL has registered decent full-year earnings after the amalgamation of Askari Cement. In the future, it believes that higher synergies, coupled with the early expansion of Askari Cement, will increase the market share and elevate the company’s overall profitability, the analyst predicted.

Lucky Cement to buy back up to 3.1% of shares

Lucky Cement has informed investors that it plans to buy back shares up to an equivalent of 3.1% of its registered share capital, which it has valued at US$417,000. The company will commence the purchase from 29 September 2022, and continue until its completion or 27 March 2023.

Fauji Cement Posts Profit of Rs. 4.4 Billion in 2021-02

Fauji Cement Company Limited, one of the largest cement makers, has released its financial results for the fiscal year ending June 30, 2022, The company’s profit was Rs. 4.416 billion, up from Rs. 3.469 billion in the same time previous year.
As a result of the outcome, FCCL announced a 12.5 percent bonus issuance of 273 million shares (12.5 shares for every 100 ordinary shares).
In addition, the firm has announced the combined earnings of FCCL and Askari Cement Limited (ACL), with per-share earnings computed on the new number of shares after the merger, i.e., 2.2 billion shares.