Displaying items by tag: AFCP

Data is starting to emerge from South American countries for the first half of 2020 and it’s not necessarily what one might expect. Countries had different trends in play before the coronavirus pandemic established itself and then governments acted in their own ways with mixed results. Here’s a brief summary of the situation in the key territories.

Graph 1: Cement sales in selected South American countries in first half of year, 2018 – 2020. Source: Local cement associations and national statistics offices. Note: Colombian data is for January – May for each year.

Brazil’s cement sector looked set to become the big loser as global events seemed poised to dent the recovery of cement sales since a low in 2018. This didn’t happen. The Brazilian national cement industry union’s (SNIC) preliminary data for the first six months of 2020 shows that sales grew by 3.7% year-on-year to 26.9Mt. This is above the growth rate of 3% originally expected. Indeed, the monthly year-on-year growth rate in June 2020 was 24.5%. SNIC is not wrong in describing this kind of pace as being ‘Chinese.’ All this growth has been attributed to the home improvement market as people used their lockdown time to renovate their homes, renovations and maintenance in commercial buildings during lockdown and growing work on real estate projects. The government’s decision to implement weak lockdown measures clearly helped the sector but this may have cost lives in the process.

SNIC’s president Paulo Camillo Penna pointed out that producing and selling cement could co-exist with fighting coronavirus. However, trends such as a slowing real estate sector, less large construction projects and mounting input costs are all seen as potential risks in the second half of 2020. What SNIC didn’t link to the wider fortunes of the local cement industry was the economic consequences of coronavirus. The World Bank, for example, has forecast an 8% fall in gross domestic product in Brazil in 2020 due to its coronavirus, “mitigation measures, plunging investment and soft global commodity prices.”

Peru, in contrast to Brazil, implemented a strong lockdown early in March 2020. Unfortunately, it didn’t seem to work as well as hoped possibly due to informal and structural issues such as reliance on markets, the informal economy and residential overcrowding. This means that production and sales of cement are significantly down without any public health benefit. Both production and despatches fell by about 40% to around 2.9Mt in the first half of 2020 with close to total stoppages in April 2020. In terms of coronavirus, Peru is at the time of writing in the top 10 worldwide for both total cases and deaths, behind only Brazil in South America. It should be pointed out though that Peru’s testing rate is reportedly high for the region and this may be making its response look dire in the short term. All of this is particularly sad from an industrial perspective given that Peru was one of the continent’s strongest performers prior to 2020. One consolation though is that the economy is expected to recover more quickly compared to its neighbours.

Argentina started 2020 with a downward trend in its local market. Cement sales had been falling since 2017, roughly following a recession in the wider economy. Throw in a strong lockdown and sales more than halved at its peak in April 2020. So far this has led to a drop of 31% to 3.83Mt for the first half of 2020 compared to 5.51Mt in the same period in 2019. Unfortunately, a recent spike in cases in Buenos Aires has led to renewed lockdowns in the capital. Due to this unwelcome development and the general economic situation Fitch Ratings has forecast an overall decline in cement sales volumes of 25% for 2020 as a whole.

Finally, Colombia’s cement production fell by 24% year-on-year to 3.90Mt in the first five months of 2020 from 5.14Mt in the same period in 2019. April 2020 was the worst month affected. The country’s lockdown ended on 13 April 2020 for infrastructure projects and on 27 April 2020 for cement production and residential and commercial construction. On 5 May 2020 Cementos Argos said that domestic demand was at 50% of pre-lockdown levels. Data from DANE, the Colombian statistics authority, shows that local sales fell by around a third year-on-year to 0.71Mt in May 2020 from 1.06Mt in May 2019.

Most of the countries examined above follow the pattern of reduced cement production and sales in relation to the severity of the lockdown imposed and the resulting intensity of the coronavirus outbreak. Stronger lockdowns suppressed cement production and sales in the region of 20 – 40% in the first half of the year as governments shut down totally and then released industry and commerce incrementally. The exception is Peru, which has suffered the worst of both worlds: a severe lockdown and a severe health crisis. Local trends have continued around this, like the recovery in Brazil in the construction industry and the general recession in Argentina.

SNIC’s president has said that making and selling cement needn’t be exclusive with public health measures. He’s right but Brazil’s surging case load is an outlier compared with most of its continental neighbours and the rest of the world. Cement sectors in countries with growing economies like Peru and Colombia are expected to bounce back quicker than those with stagnant ones like Argentina. The risk for Brazil is what its government health strategy will do to the construction sector in the second half of 2020.

Argentina: Producers sold 649,000t of cement in May 2020, down by 33% year-on-year from 965,000t in May 2019. Data from the Asociación de Fabricantes de Cemento Portland (AFCP) shows that the sharpest decline, of 80%, was in Buenos Aires. Total sales nonetheless grew by 61% month-on-month from 404,000t in April 2020. Five-month sales to 31 May 2020 fell by 35% year-on-year.

Argentina: The Portland Cement Manufacturers Association (AFCP) has reported that cement dispatches in the period between 1 January 2020 and 30 April 2020 were 2.3Mt, down by 36% year-on-year from 3.6Mt in the corresponding period of 2019. Between March and April dispatches fell by 20% to 408,000t, down by 55% year-on-year from 907,000t in April 2019. The El Economista newspaper has reported that the decline ‘reflects the worsening of the fall in the private and public demand for housing, road, public works and infrastructure in all the districts of the country.’

Argentina: Data from the Association of Portland Cement Manufacturers (AFCP) shows that cement consumption fell by 6% year-on-year to 8.5Mt in the first nine months of 2019 from 9Mt in the same period in 2018. Local despatches dropped by 5% to 8.5Mt to 8.9Mt, although exports rose slightly.

Argentina: Argentina’s Association of Portland Cement Manufacturers (AFCP) has reported on a 5.0% month-on-month growth in cement volumes sold to 1.05Mt in August 2019 from 1.00Mt in July of the same year. Domestic production continues to meet the entirety of demand, which grew by 5.1% year-on-year to 1.00Mt in July 2019 from 0.95Mt in July 2018.

Argentina: Cement sales fell by 6.4% year-on-year to 5.51Mt in the first half of 2019 from 5.89Mt in the same period in 2018, according to data from AFCP. This trend was driven by a fall in local sales. Local sales fell by 6.6% to 5.46Mt but exports rose by 28% to nearly 50,000t.

Argentina: Cement sales rose by 4.7% to 0.97Mt in Argentina in May 2019, compared to May 2018, according to data from AFCP. Sales totalled 4.65Mt in the first five months of 2019, a 5.4% drop from 4.91Mt in the year-earlier period. Out of the volume sold in May 2019, 942,762t of cement was sold domestically, with just 8891t exported.