Concrete growth
DESPITE showing a mixed financial performance over the last three decades, the global cement industry is valued at $450 billion today and is expected to grow at a steady pace in the coming years.
Portland Cement Association (PCA) said in a report released late last year that it expects cement consumption to increase worldwide throughout this year, albeit at a slower pace. Among developed economies, cement consumption grew by roughly 9.2 million metric tons in 2014, followed by another 9-million-ton rise in 2015.
In a statement, PCA Chief Economist and Group Vice- President Edward J. Sullivan said most of the gains in developed-world cement consumption is attributed to North America.
“With an expected growth of more than 7.4 million metric tons, the North American region is expected to continue to expand at a faster pace than most other developed countries due to continued national economic growth.”
PCA said it believes global cement consumption will record sustained growth between 2015 and 2018 at a less robust pace than previously expected. This year, it expects world cement consumption to grow by 3.7%, and retain a near- 4% growth during 2017 to 2018.
Further, it said cement consumption growth rates in Asia will decrease compared to previous years due to a slowdown in the region. In Europe, stronger gains are projected this year as well as the years ahead, with PCA saying that “this scenario reflects the gradual healing of distressed housing and nonresidential sectors, especially among several Eurozone economies.”
In the Philippines, data from the Cement Manufacturers Association of the Philippines ( CMAP) show that cement demand in the country grew by 14% last year on the back of a surge in public infrastructure- related construction activities. The continued growth of the private residential and commercial-industrial segments, which are mainly fueled by growing overseas Filipino workers’ (OFW) remittances and the services sector through BPOs, also contributed to the growth.
“With the growth of cement demand projected to continue for the next several years, local manufacturers need to increase their production and logistics capacity in order to keep apace with this rate of growth,” Paul Arcenas, CEMEX Philippines Vice-President for Strategic Planning & Marketing, said in an e-mail to BusinessWorld. “Government, for its part, should promote, provide and ensure that the environment encourages direct investment in the local cement industry because cement production is a strategic resource, a vital key to the country’s infrastructure program, and it creates a significant multiplier for the community and enterprises involved in its manufacture and distribution.”
KEY TRENDS
According to Mr. Arcenas, some of the major developments in cement manufacturing over the past five years involve initiatives geared towards innovation and sustainability.
The introduction of blended cements, for one, has resulted in the decrease in the proportion of energy- intensive materials used in cement production, while these still provide good setting time and strength performance in the end product. Moreover, the use of these blended cements has significantly lowered the carbon footprint of the majority of cement products currently sold in the market.
Another development he noted was the increasing proportion of the production of bulk cement in the industry, which he said was primarily due to the continued growth of the formal construction segment. He believes this is a step towards more sophisticated applications of concrete and, by extension, cement in the years ahead.
Asked about how indus t r y players like CEMEX are promoting sustainability in the way they do business, Mr. Arcenas said that the company prioritizes sustainability from both an environmental and economic perspective.
“Sustainability from an environmental lens is taking place on several fronts and we in CEMEX see the promotion in the use of blended cement for all types of construction, including government infrastructure, as having the most benefit to the environment due to the significant [carbon footprint] reduction,” he explained. “Sustainability from the standpoint of maintaining a viable and developing local cement manufacturing sector would require the government’s leadership and cooperation to promote, provide and ensure a level playing field for all local manufacturers to be able to thrive against production from other countries that are often aided by government subsidies, incentives, and overly simple inbound trading requirements.”
Ultimately, Mr. Arcenas believes the Philippine economy will continue to reap the benefits of a good fiscal position, as well as favorable demographics.
“This will result in a steady increase in the rate of construction activities in the years, and in turn, we are confident that cement will remain the building material of choice needed for this construction growth,” he concluded. .