This week the European Commission (EC) announced its latest plan to change the emissions trading scheme (ETS). Meanwhile, in New Zealand, the government gave Fletcher Building around US$35m to keep its Golden Bay Cement Northland plant open. Read on to find out how the two stories are linked.

Following pressure from European heads of state earlier in the year, the EC published its proposal to amend the scheme. The commission has presented it as an Electrification Action Plan and an ETS review. However, the latter proposal is the main concern for the cement sector in the short term. It wants to add more free permits and slow the rate at which they are phased out. The Linear Reduction Factor (LRF) will be reduced to 3.7% for 2031 - 2035 and 1.7% for 2036 - 2040. This compares to the current LRF of 4.3% and the next one of 4.4% for 2028 - 2030. Both the amount of free permits or allowances for carbon credits and the rate at which they are phased out are a major concern for heavy emitting sectors, like cement, because it exposes them to the carbon price faster. The commission has spun this slowdown in its ambitions for the ETS as aligning it with the “domestic climate ambition level.”

Naturally, these changes come with strings attached. Free permits will be given to industry for longer but on the condition that investment is made towards decarbonisation. 80% of the value of the free permits will be given in advance but the remaining 20% will only follow once decarbonisation plans have been verified. Likewise, the free permit system will continue to operate to and the full version of the Cross Border Adjustment Mechanism (CBAM) will start from 2038, instead of 2034 previously.

Cement Europe welcomed the proposed changes, noting that they were an “acknowledgement of the need to maintain sufficient liquidity in the carbon market beyond 2040.” It also liked the inclusion of CO₂ transport infrastructure within the definition of ETS ‘installation.’ However, it did not like the slower phase out of the free allowances for CBAM sectors, as it is seeking a “level playing field” for carbon costs for both imports and exports. It is also looking forward to any progress on electricity prices, noting that such prices in the European Union (EU) remained higher than those in many competing countries that produce cement and clinker.

Climate think tanks such as Sandbag were less enthusiastic. In response to the proposed changes it declared in a LinkedIn post that the reforms would torpedo the EU’s legally binding target of a net emissions reduction of 90% by 2040 from 1990 levels. Its view is that the ETS currently has a surplus of permits representing 1.7x the emissions reported in 2025. If the EU tries to meet an 85% target it runs the risk of having too many free permits and crashing the EU ETS price. Sandbag reckons, more realistically, that the most likely scenario, if the current proposals are enacted, is that the 1.7x surplus will endure to 2040 leading to a 75% reduction of total emissions. Or, in other words, the EU appears to be softening its emissions reduction targets.

All of this links to a cement plant in New Zealand because the owners, Fletcher Building, partly blamed the threat of closing the site on local carbon taxes. Following an ‘independent assessment’ the company said that it might have to close the integrated plant and import clinker instead by 2030. Instead, the government has made a “specific, one-time response to an exceptional set of circumstances” and local subsidiary Golden Bay Cement has committed to investing around US$87m and keeping the site open until at least 2040. As Fletcher Building pointed out in its accompanying press release, it supplies nearly 60% of the cement used in the country and 95% of the plant’s output is sold domestically. It is worth noting, that despite major differences between the two systems, the carbon price in New Zealand is currently around €50/t compared to around €80/t in the EU.

These kinds of situations are going to continue as carbon taxes grow and mature around the world. Schemes will be tweaked following political pressure and governments may have to decide whether they want to bail out heavy emitters that they might deem as essential to society. One absurdity of the current argument in the EU about the ETS is that the commission has now issued its response softening the system following a record-breaking heatwave.

Market data on the cement sector in Pakistan was released this week. It is looking promising with combined despatches up. Let’s dig a little deeper.

Overall despatches grew by 7% year-on-year to 50.1Mt in the 2026 financial year (FY2026) from 46.2Mt in the previous period, according to data from the All Pakistan Cement Manufacturers Association (APCMA). Note that in Pakistan the financial year runs from July to June. Local sales drove the trend with a rise of 9.5% to 41.5Mt. However, exports fell slightly to 9Mt. An APCMA spokesperson said that demand for cement both locally and in export markets was expected to remain strong in the coming months. They added that decreasing geopolitical tensions at that time could help to reduce the sector’s energy prices. Arif Habib’s view backed that of the APCMA. It added that “...budgetary relief for the construction sector and any further decline in interest rates are expected to support demand.”

Graph 1: Local and export cement despatches in Pakistan, 2018 - 2026 financial years. Source: All Pakistan Cement Manufacturers Association.

Graph 1 above shows the wider picture and the evolving dynamic between domestic and export despatches. Exports have typically grown as local sales decline. Combined despatches in FY2026 were 50.5Mt, the third highest figure since FY2018. Within the country the cement plants in the north of the country tend to supply the domestic market and the ones in the south split their output between local and export markets. Exports notably dipped significantly in the FY2022 due to high energy prices making them less competitive. They have since recovered but they did soften slightly in FY2026. Exports fell in the north due to the closure of the border with Afghanistan in late 2025 due to hostilities between the two countries, according to AKD Research. Exports rose in the south of Pakistan due to growing demand from Africa but it wasn’t enough to bring up the total.

It is within this environment that local media reminded its audience this week that the Special Investment Facilitation Council has been helping cement companies in the country build new capacity. Back in April 2026 the council approved projects with a US$700m investment and also helped to resolve regulatory delays. Companies that received approvals were Flying Cement, Lucky Cement, Bhutta Cement, Asian Precious Minerals, Orient Cement, Dandot Cement and Maple Cement. Lucky Cement announced this week that it had completed and commissioned a process optimisation and capacity enlargement project at its Karachi plant. The production capacity at the unit has now increased by 300,000t/yr to 5.35Mt/yr. In its note to the market it highlighted that the work was expected to reduce fuel consumption per tonne of cement produced. The company now has a total production capacity of 15.6Mt/yr and it says it is the largest producer in Pakistan. Lucky Cement’s ambitions are not restricted to Pakistan. It was also reported this week that the company had met with the chair of the Privatisation and Investment Board in Libya. It is considering building a 2.5Mt/yr cement plant in Khoms, Libya. If the project is realised it will join the group’s other overseas plants in Iraq and the Democratic Republic of Congo.

Financial results in FY2026 for the main cement producers are not due until August 2026. Nine-month data to March 2026 showed particular sales revenue gains for Power Cement and Lucky Cement. Both companies attributed this to rising sales volumes, particularly domestically. Many of the other large producers also reported this although the local-export sales mix affected overall revenue in some cases.

Overall the situation is looking good for cement in Pakistan at the moment. Local demand is up and the export market is buoyant with the exception of Afghanistan. Recent government policy looks set to further stimulate domestic sales in the near future. One major risk is the cost of energy related to the Iran war. At the time of writing, the April 2026 ceasefire between the US and Iran has been declared “over” by President Trump.

Brazil is the focus this week with the news that local sales reached 32.9Mt in the first half of 2026. The market is also facing change in its composition with the change in ownership of InterCement earlier in the year and the ongoing sale of CSN Cimentos.

Graph 1: Cement sales in Brazil, 2018 - June 2026. Source: National Cement Industry Union (SNIC)

The latest data from the National Cement Industry Union (SNIC) shows that cement sales rose by 2.3% year-on-year to 32.9Mt in the first half of 2026 from 32.1Mt in the same period in 2025. As can be seen in Graph 1 above, this is the largest first-half figure since at least 2018. There has been a general trend of sales growth in this time, from 52.8Mt in 2018 to 67Mt in 2025. 2026 as a whole looks reasonably likely to surpass this barring any market shocks. SNIC has identified the Minha Casa, Minha Vida (MCMV) house building programme as the main driver of sales. It says that it accounted for 50% of new real estate project launches in the first quarter of 2026 and created a 10% rise in sales. An expansion of the programme in April 2026 to higher income families and revised government house building targets are expected to generate an additional 5Mt of cement consumption. The union also mentioned that the increased use of rigid concrete pavement (whitetopping) road projects is likely to contribute to infrastructure-related cement sales.

Unfortunately, SNIC’s list of potential risks to the cement sector is weighty. Rising and volatile fuel costs in relation to geopolitical events are similar to the rest of the world. The local interest rate, the Selic rate, is not expected to fall as much as anticipated by the end of the year. Other local issues include a change in regulated working hours that is expected to push up labour costs when it becomes law in the second half of 2026. SNIC also flagged up the growing economic cost of online gambling upon household debt and the direct consequence of this upon the self-build sector. This issue has been part of a national debate in Brazil and stricter rules were expected to be implemented in mid-July 2026.

Clarity on the future of CSN Cimentos should start to emerge in mid-August 2026. The deadline for bids is on 7 August 2026. Then a contract might be signed in September 2026 with a potential buyer if all goes well. However, as reporting by Valor Econômico has revealed, there may be a gap between the price CSN wants for its cement division and what the potential buyers are prepared to pay. The vendor reportedly wants around US$2.5bn but potential bidders were expecting a lower price, nearer to US$2bn. This is an issue with the Chinese companies. China-based companies linked to the sale previously have included Anhui Conch, Huaxin Cement and Sinoma International. Local companies Votorantim and Polimix Concreto were linked to the sale previously but it is unknown whether they will make bids or not.

Regarding InterCement, a consortium led by LATCEM, Redwood Capital Management and Moneda Patria Investments took control in April 2026. The three companies also injected US$110m into the company during the process. In an interview in July 2026 Marcelo Mindlin, the controller of LATCEM, confirmed that the new management is preparing to divest Loma Negra. InterCement is currently the controlling shareholder of the Argentina-based cement company. He added that the consortium is still building its strategy for InterCement and working out which sections of the business offer the best return.

Finally, the government in Brazil announced preliminary plans for its carbon market in May 2026. Cement is set to be included in the first phase of the scheme that will start in 2027. The paper, ​iron and steel, aluminium, oil and gas, and air transport sectors will also be included. The scheme will include a four year preparation period where emissions monitoring is prepared, conducted and then allocations set. So, if the market continues in its proposed form, the local cement market might start facing carbon fees from 2031 onwards.

The current state of the cement market in Brazil is looking promising but it is delicate. It is understandable why CSN might be optimistic about the price it could get for selling its cement business given the sales figures so far in 2026. We’ll have to wait a few weeks to find out what the potential bidders think. The rise in cement sales may also have given the new management at InterCement an easy introduction to taking charge of the business before they have to take any tough decisions. Plans for a carbon market in Brazil mean that another major cement producing country is engaging with decarbonisation at the legislative level.

Another week and we have another large heavy building materials acquisition in the US. Martin Marietta said it was spending US$13.5bn to buy Lhoist North America (LNA). This time the target is a lime company. Let’s find out what’s been happening with this one.

In an earnings call this week, Martin Marietta’s CEO Ward Nye described the deal as “totally in our wheelhouse” and one covering “mission critical products.” He went on to highlight the lime business’ higher margins, strong market position, diversified end markets and pricing power. He also noted the sector’s resource scarcity and its high barriers to entry. These are clearly the kind of comments investors might want to hear about a multi-billion dollar investment. Despite this, however, the stock price of Martin Marietta fell slightly after the announcement.

The deal has been described as a “definitive agreement to combine” with the North America-based subsidiary of Lhoist Group rather than a plain acquisition. This starts to make sense because Martin Marietta is buying LNA but Lhoist’s owners will also gain a stake in its subsidiary’s new owner. Martin Marietta will pay US$13.5bn in cash and shares of its common stock for the transaction. The deal will make FGI, the Berghmans family holding group that owns Lhoist, the largest single shareholder of Martin Marietta, with representation on its board of directors. Lhoist's operations in Europe, Latin America, Asia-Pacific and Middle East and North Africa will remain fully owned by FGI.

The attraction of the deal is that it gives Martin Marietta control of a major lime producer in North America with over 2Bnt of limestone reserves in “Sun Belt metropolitan corridors.”  Martin Marietta reckons these reserves will last over 200 years. LNA operates a network of 20 quarries and production facilities and 45 distribution terminals. The privately owned subsidiary reportedly generated sales of US$1.8bn and adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) of US$786m in 2025. In that earnings call Nye explained that his company is aiming to target its aggregates, lime and specialty products business lines at “...infrastructure and industrial mega projects, including highways, data centres, semiconductor fabrication, and liquefied natural gas (LNG) facilities across the southern US, most notably in Texas, our largest and one of the most attractive construction markets in North America.” Focusing on Texas he went on to point out, for example, the potential synergies between lime and aggregates products for road building. He also noted the role of lime in demand for steel products in the southern US and the boosting role of America First government trade policy.

As discussed in last week’s Global Cement Weekly the Martin Marietta deal ties in with an ongoing trend in market reorganisation in heavy building materials companies in North America. CRH’s recent agreement to buy Arcosa, a US-based supplier of infrastructure-related products and services, for US$8.6bn is one example. Quikrete’s acquisition of Summit Materials for US$11.5bn in early 2025 is another. Martin Marietta is linked to that last one since it sold its cement and concrete business in Texas to Quikrete in exchange for the latter’s aggregates business and US$450m in cash in early 2026. Other instances of large deals in the US-based building materials sector include Lowe's acquisition of Foundation Building Materials for US$8.8bn in 2025 and US Depot’s purchase of SRS Distribution for around US$18bn in 2024. Both of these deals covered the distribution of light building materials but are indicative of the state of the sector.

The other aspect to note with Martin Marietta and LNA is the geographic focus on North America. The continued involvement of FGI in LNA is similar to the spinoff of Amrize by Holcim. Once again a Europe-based building materials company is separating off its division in North America. One smaller and anecdotal reflection on the perceived strength of the US cement market can be seen in some other news stories we reported upon this week. These included two items on exports from North Africa to the US and the opening of a new cement import terminal in Florida.

To conclude, here is one more large deal in the US building materials sector. Martin Marietta looks set to return, in part, to selling calcined building products. It’s not worth reading too much into that dip in Martin Marietta’s share price after the deal was announced but it may suggest that the market is reflecting upon the size of the proposed transaction.