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World: Investment firm Insight Partners has forecast a composite annual growth rate (CAGR) of 3.3% in the global green cement and concrete market between 2023 and 2030. This will result in a total value of US$990m in 2030, compared to US$806m in 2023. Regionally, the firm expects the sharpest growth in South and Central America, with a CAGR of 10% to US$7.9m in 2030. North America is expected to grow at a rate of 5.4% annually, to US$190m, followed by Europe, at 4.5% to US$226m, Middle East and Africa, at 2.9% to US$13m, and Asia-Pacific, at 1.4% to US$553m. In 2023, Asia-Pacific commanded a 61% share of the global market. Europe’s share was 20% and that of North America was 16%.
Update on Türkiye, March 2024
13 March 2024TürkÇimento revealed this week that cement production in Türkiye grew by 10.5% year-on-year to 81.5Mt in 2023. In a press release describing the progress of the local cement sector, the cement association reported that domestic sales rose by 19% to 65Mt but that exports fell by 28% to just under 20Mt. Fatih Yücelik, the chair of TürkÇimento, also said that his country was the second largest exporter of cement in the world in 2023 and that its most important target market was the US. He noted that the construction sector grew by 8% during 2023, that reconstruction projects were enacted following earthquakes in early 2023 but that no further growth in domestic sales of cement was anticipated in 2024.
As is standard for these kinds of occasions, Yücelik also raised the association’s sustainability ambitions, describing his sector as one “whose main goal is to provide low-carbon production.” He added that the Turkish cement industry supports the country’s net zero target of 2053. To this end the association has also released its first sustainability report, for 2022, covering 48 of the country’s 52 integrated plants. The Hürriyet Daily News newspaper offered one reason for this enthusiasm for sustainability: the US$30bn in investment required to meet that 2053 net-zero target. It also reported that Yücelik said that the industry needed to spend US$2bn towards meeting the incoming requirements of the European Union Carbon Border Adjustment Mechanism (CBAM).
Graph 1: Domestic and export cement sales in Türkiye, January – October, 2017 – 2023. Source: TürkÇimento.
TürkÇimento’s data for 2023 currently runs up to October 2023 but it supports Yücelik’s assessment. As can be seen in Graph 1, domestic sales of cement rose sharply in the first 10 months of 2023, by 20% year-on-year to 53.1Mt, yet exports fell almost as abruptly, by 18% to 13Mt. This is noteworthy, as exports had been rising steadily each year since 2018. Italy-based Cementir provided some context here in its annual report for 2023 saying that it had decided to focus on the domestic market due to greater profitability. Heidelberg Materials’ joint-venture Akçansa echoes these comments, blaming declining exports on “historically low freight rates increasing competitiveness of southeast Asian suppliers” while emphasising that the shift to the domestic market was made to meet increasing demand.
Graph 2: Revenue of selected large Turkish cement producers, 2022 - 2023. Source: Company reports.
Financial information from the larger Turkish cement producers that have released their results for 2023 follows the same pattern. Three of the four companies included in Graph 2 saw sales revenue grow in 2023. The one that saw its revenue fall, Nuh Çimento, is a major exporter. In 2022 for example it supplied 18% of the country’s total cement exports. All of these companies saw operating profit or earnings increase though.
The other big Türkiye-based news story this week was that Taiwan Cement Corporation (TCC) completed the latest increase to its stakes of Cimpor Global Holdings joint-ventures in Türkiye and Portugal. TCC now owns a 60% stake of the business in Türkiye and a 100% stake in Portugal. With respect to the business in Türkiye this means that TCC now has control of the country’s largest cement producer, OYAK Çimento. Once again the CBAM received a mention, with TCC saying in its valedictory statement that it believed that, “whether it's domestic or imported cement, low-carbon cement will become the main competitive advantage for the cement companies entering the European market.”
The domestic market in Türkiye may have seen a bounce in 2023 but the attention of both TürkÇimento, TCC and others are firmly set on the wider market in the region. TürkÇimento’s Fatih Yücelik said that the country’s cement production capacity was 120Mt/yr and that the population would have to be 150m to eliminate the need for exports. Its population is currently just under 85m. Yücelik set a value of US$2bn for his sector to adjust to CBAM but he also remarked that the income from exports in 2023 was around US$1.3bn. This is not an easy investment ‘pill’ to swallow but one that the country will have to digest if it wants to keep its export levels up.
Sales grow for UNACEM in 2023
12 March 2024Peru: UNACEM reported sales of US$1.69bn in 2023, up by 6.6% year-on-year, despite a ‘significant downturn’ in the construction market. Its net profit dropped by 22% to US$139m.
Business News Americas has reported that the Peruvian Cement Producers’ Association (ASOCEM) recorded 9% month-on-month growth in domestic cement consumption in January 2024. Scotiabank forecasts 5% year-on-year growth in consumption in the first quarter of 2024, and a 3.7% expansion in the construction market in the full year 2024, following an 8% contraction in full-year 2023.
US: Global Cement understands from material published publicly on Breedon Group’s website that the UK-based company acquired ready-mix concrete, aggregates and building products company BMC Enterprises for US$300m on 6 March 2023. This marks the group’s first entry into the US building materials sector. Breedon Group described the acquisition as a ‘compelling opportunity’ in the ‘fragmented and growing’ market. It described BMC Enterprises as a highly attractive, established business upon which to grow a new group platform in the US, in addition to its existing platforms in the UK and Ireland.
Breedon Group CEO Rob Wood said “The acquisition of BMC represents a compelling opportunity for Breedon to launch our third platform. BMC has an excellent performance track record over a sustained period and is positioned in an attractive market for future growth. As a high-quality aggregates and concrete business that has grown at pace, organically and through acquisitions, with a strong management team and deep local knowledge, BMC’s culture and values are fully aligned with the Breedon business model.” Wood added "The acquisition is expected to be earnings-enhancing for shareholders, while allowing Breedon to maintain a conservative and flexible balance sheet to pay dividends and make further bolt-on acquisitions across each of our platforms as opportunities arise.”
Heidelberg Materials may follow other groups with US listing
26 February 2024Germany/US: Heidelberg Materials CEO Dominik von Achten spoke during the producer’s 2023 results presentation about ‘various scenarios’ to maximise the benefits of its high valuation in the US. Börsen-Zeitung News has reported that the company is considering a possible listing in the US. Alternative scenarios include the launch of an initial public offering (IPO) there.
India: Dalmia Cement has launched new branding identifying itself as a Roof Column Foundation Expert. The identity is accompanied by the slogan ‘Roof, column, foundation strong, home strong.’ The company says that the branding will help it to position its cement as first choice in business-to-consumer (B2C) building materials retailing. The campaign especially targets towns of 20,000 – 100,000 people, outside of India’s metropolitan centres. The producer aims to raise its B2C sales from 65% to 70% in the 2025 financial year. It now operates a 45,000-strong retail network. In order to support further growth in the segment, the company plans to deploy 600 technical staff and 150 vans across India.
Chief operating officer Sameer Nagpal said “We believe that the brand must play a vital role in consumer’s lives so that they can make informed choices. Dalmia Cement has over the years developed proprietary know-how of optimising cement recipes that makes it most suitable for roof, column and foundation.”
Managing director and CEO Shri Puneet Dalmia said “Our new brand campaign manifests not just an eminent legacy, but also a commitment to consumer centricity – it conveys a core message that building a home with due care means building it for generations to come.”
Seven Group Holdings offers to acquire Boral outright
19 February 2024Australia: Seven Group Holdings has offered US$1.24bn to acquire all outstanding shares of Boral. The conglomerate already holds 72% of shares in the building materials producer. Reuters has reported that this would correspond to a total valuation of US$4.35bn for the company.
Boral has undertaken restructuring since 2022, with a focus on Australian building and industrial products to capitalise on increased public sector investments, while divesting several international assets.
Peru: Cementos Pacasmayo recorded an 8% year-on-year drop in its full-year sales in 2023. Group sales volumes of cement and concrete fell by 14%. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) also dropped, by 2% to US$125m, influenced by a US$9.47m impairment due to the replacement of its former vertical kilns with a new kiln. The producer further attributed the decline to low construction activity in the private and public sectors, as well the effects of Cyclone Yaku in early 2023.
Update on Chile, February 2024
14 February 2024A few news stories from Chile give us the opportunity to take at look at the local cement market this week. Firstly, Freehill Mining was keen to promote a new order it has obtained from Cementos Melón. The Australia-based company operates magnetite mineral concessions at Yerbas Buenas, about 500km north of Santiago. The US$180,000 deal starts in March 2024 but the raw material supplier says it is currently negotiating a longer-term supply contract with Melón for larger volumes in the future.
A large order for raw materials is not unusual, although the public nature of the Freehill Mining one suggests that the mining company is promoting itself. The story also highlights the importance of the mining sector in Chile. However, a wider view of the Chilean cement sector could be glimpsed recently from the latest cement despatch data from La Cámara Chilena de la Construcción (CCHC). Despatches fell by 11% year-on-year to 5.2Mt in 2023 from 5.9Mt in 2022. As can be seen in Graph 1, despatches recovered in 2021 following the first year of the Covid-19 pandemic but they have declined since then.
Graph 1: Cement despatches in Chile, 2018 – 2023. Source: La Cámara Chilena de la Construcción.
Two of the three larger cement producers have reacted to these market conditions in the last couple of years by cutting costs. Cementos Melón started a restructuring process in late 2022 whereupon it closed down a concrete plant at Penalolen near Santiago and embarked on a spending review. Its income fell by 4% year-on-year to US$182m in the first nine months of 2023, from US$189m in the same period in 2022. Cemento Polpaico followed suit in November 2023 by closing two concrete plants in the Santiago Metropolitan Region and temporarily suspending operations at its Quilicura cement grinding plant with work shifted to the integrated Cerro Blanco plant instead. In June 2023 it reported that its income had risen slightly year-on-year for the first half of 2023, but it noted a loss compared to a profit previously. Cbb (formerly Cementos Bío Bío) managed to avoid the fate of its peers mainly through the performance of its lime division. Its cement and concrete shipments fell by 9% and 15% year-on-year to 775,000t and 750,000m3 respectively in the first nine months of 2023. It blamed the falling sales volumes on a decline in economic activity that dragged upon investment in infrastructure and housing. However, lime shipments grew by 2% following tough trading conditions in 2022 due to high fuel costs, amongst other reasons. Altogether this meant that the company’s earnings before interest, taxation, depreciation and amortisation (EBITDA) rose by 54% to US$44.3m from US$28.8m.
Finally, a third news story this week illustrated one reaction to the poor construction market in Chile, when Unacem Chile announced that it was buying two concrete plants, at San Antonio and Talca. Once the US$1m deal completes, the subsidiary of Peru-based Unión Andina de Cementos (UNACEM) will hold 12 concrete plants in the country. This follows its entry into the market in 2018 when it acquired Hormigones Independencia from Cementos Polpaico. In December 2023 Grupo Gloria subsidiary Cal y Cementos Sur (Calcesur) said that it was preparing to strengthen its presence supplying lime to the mining sector both at home in Peru and in neighbouring countries including Chile. While this isn’t a cement story, Grupo Gloria does operate the integrated Yura plant near Arequipa in southern Peru and this resonates with both the mining and lime sectors.
Chile’s cement market is suffering as the general construction market contracts. Yet as the stories from Freehill Mining and Calcesur show, the mining sector remains a key part of the national economy and this links to the cement industry. Another related story, for example, is a US$39m deal that Denmark-based FLSmidth signed in mid-2023 to supply equipment for a copper mine. Chile’s northern neighbour Peru has a cement sector that is nearly twice as large based on production capacity and some of its producers look internationally for expansion opportunities, as in the example of Unacem Chile. The CHHC didn’t hold back in mid-January 2024 when it said that it forecast that 2024 would be the worst year for investment and construction spending since the late 2010s. Yet it also expects the decline in the construction sector to slow as gains from government infrastructure spending continue to almost counteract falls in the private sector. Until the situation improves, it continues to lobby for economic reforms.
For more information on cement markets in South America read the feature in the February 2024 issue of Global Cement Magazine
Yamama Cement blames drop in sales in 2023 on poor demand
13 February 2024Saudi Arabia: Yamama Cement Company has blamed a drop in sales in 2023 on a decrease in local demand. Its sales revenue declined by 7.2% year-on-year to US$250m in 2023 from US$268m in 2022. Meanwhile, the company’s net profit dropped by 14% to US$81.1m from US$94.9m.