Global cement demand to rise
• Growth in developed countries to drive infrastructure spending
Global demand for cement is on the rise again after years in the doldrums as developed markets recover in Europe and the US, says the World Cement Association.
Global demand for cement is back on an upward trajectory after years in the doldrums as developed markets recover in Europe and the US, says the World Cement Association.
Pent-up demand in developed markets will increase cement consumption by 1.5% in 2018, following an expected rise of 1% in 2017, said association head Emir Adiguzel.
When China, the world’s largest cement market, is removed, the market is expected to increase by 3.3% in 2018.
This is good news for companies such as Switzerland’s LafargeHolcim that have been battling with falling volumes in recent quarters.
“Every year since 2009, cement industry demand has been going down,” Adiguzel, who is also an executive at HeidelbergCement, said ahead of the association’s annual conference in London.
“But in 2017 … the trend has changed dramatically. Prices are going up worldwide and the volumes are going up in both mature and emerging markets together for the first time since the financial crisis.”
Most of the improvement will come from developed countries, where growth is expected to be more than 3% in 2018, he said, with a new upward trend expected to last for the next five to seven years.
The French market is forecast to increase by 4% and Germany by 5%, while previous laggards such as Spain will rise by more than 10% and Italy will turn positive with 1% growth.
New projects getting under way after years of austerity and increased spending on infrastructure are the main reasons for the increase, Adiguzel said.
SOME MARKETS SUCH AS SAUDI ARABIA AND RUSSIA WILL REMAIN TOUGH, WHILE CHINA IS EXPECTED TO REMAIN FLAT
The US is expected to be a strong driver of growth, with cement demand increasing by 6% in 2018 from 2% in 2017, as infrastructure spending gets under way.
“This year was a big disappointment, but there is a lot of rebuilding work to do in the country after the hurricanes this year,” Adiguzel said. “If Mr Trump does 10% of what he says in terms of infrastructure, there will be a big demand for cement in the US,” he said.
Despite the upswing, some markets such as Saudi Arabia and Russia will remain tough, while China is expected to remain flat in 2017 and 2018 as the country tries to reduce excess cement production and the building boom cools.
Overcapacity remained a challenge, Adiguzel said, but decommissioning ageing plants and consolidating the industry into fewer players could solve the problem.
“I think we will be entering another era of consolidation,” he said. “There is a huge cash accumulation in the hands of Chinese producers and they are expanding in Southeast Asia. I wouldn’t be surprised if they move to the West.”